Why this matters: Jobs bring in the income needed to rent or buy a home, and acquiring a home means a rental or sales transaction — for brokers that’s fees. The level of jobs throughout California’s population, the basis for real estate transactions, is tracked by our labor force participation rate which includes the job-seeking unemployed. The remainder of our population do not directly participate in producing the state’s gross domestic production.
The labor force participation (LFP) rate is the percentage of California’s population who are employed, or unemployed and actively seeking employment.
Presently, the LFP rate in California’s population is in a downward trend after peaking at 67% in 2000. Aging of our population contributes to the decline, though damaging drops occurred in the recessionary periods of 2009 and 2020. Further, the California population is slipping, as it always does as a cyclical matter in a recession.
During the years between periods of downturn, California’s LFP rate remains roughly one percentage point below the U.S. average. In 2025, the two rates will converge, as the U.S. LFP falters while California’s slow LFP recovery continues. For June 2025, California and the nation are both about 62% LFP rate.
When unemployed individuals drop out of the workforce by no longer seeking employment — the long-term unemployed, generally — a false impression of an improving jobs market is created. The unemployment number in the LFP drops. However, the more important statistic is what is happening to the number of individuals employed — did it drop, rise or hold steady. They rent and buy homes, and their employers rent or buy commercial space needed for employees.
California employment — jobs — grew from a pre-pandemic peak in December 2019 of 17.7 million employed individuals, reaching an all-time high of 18.2 million in December 2024. However, in June 2025 our statewide employment figure sits at 18.1 million, and trending down.
Brokers who watch the jobs numbers along with the LFP rate will find the trends useful for forecasting their future brokerage conditions — no need to be concerned about the unemployment rate as the unemployed have no income.
Updated August 5, 2025.
Chart update 07/23/25
Jun 2025 | May 2025 | May 2024 | |
| California labor force participation (LFP) rate | 62.2% | 62.3% | 61.8% |
| U.S. labor force participation (LFP) rate | 62.3% | 62.4% | 62.6% |
Jobs mean income, and their income is your income
The trend of the employed in California’s population has the most impact on the vigor of the real estate market, during good markets and bad. Further, when a jobholder considers a home to rent or buy, their financial decision to acquire a possessory interest in real estate is significantly influenced by their annual gross income from employment. A paycheck is the primary financial base for an individual’s ability to qualify to lease a residence or obtain mortgage funds to buy a home.
Looking forward, a continuing modest loss of jobs is expected through the 2026 period, maybe beyond. The forces triggering this decline include uncertain business conditions, volatile import taxes on products and material for consumers and producers, reduced ability to export, diminished tourism and travel, immigration and other 1930s-type isolationist conditions.
Related article:
Income means housing
Households respond to changes in their income by adjusting monthly housing expenses and location choices.
During periods of economic growth, local construction of homes and apartments increases to meet the growing demand for housing — not met by for-rent and for-sale inventory — resulting from the voluntary turnover of tenants and owners.
Reductions in local employment normally lead to lower rents and prices paid by tenants and buyers for the occupancy and use of all types of real estate, with rent for housing being the most stable.
Areas with higher LFP rates support higher absorption rates for properties available for rent or sale.
A sustained dip in LFP rates contributes to reduced transaction volume, especially in lower- and middle-income brackets.
When employment falters, the result is:
- fewer leases signed
- slower sales closing for housing
Additionally, buyers who are employed qualify for mortgage financing, with the amount of borrowing dependent on their household’s gross income.
Renting or buying means broker fees
Regional differences in LFP growth are used by agents and brokers to assess areas more likely to lead to more real estate transactions. Here, branch office operations come into play.
With lower absorption rates, brokers and agents observe:
- lower turnover
- fewer sales
- lower fees
In conclusion, a stable, rising LFP rate supports enhanced brokerage income flows. A higher LFP helps a broker in search of a client — more fees, more often.
