San Diego County’s unemployment rate fell to its lowest level in more than two years in May, driven by strong tourism hiring ahead of the summer season. The region’s jobless rate was 3.9%, down from a revised 4.1% in April, and below both the California average of 4.7% and the national average of 4.1%.
The county added 4,300 jobs in May, marking the sixth straight month of a falling jobless rate. The San Diego Union-Tribune reported that the figure represents the lowest unemployment level since December 2023, based on data from the California Employment Development Department.
The leisure and hospitality sector led the gains, adding 3,600 jobs from April to May as hotels, casinos, bars, and restaurants staffed up for the summer tourism season. Construction added 900 jobs, government added 600, financial activities increased by 300, and manufacturing added 200 positions. However, trade, transportation and utilities lost 700 jobs, professional and business services shed 300, and private education and health services declined by 300.
Despite the positive headline numbers, economists pointed to concerning undercurrents. The region’s labor force continues to shrink, dropping by 9,200 people from April to May to 1.64 million. San Diego County’s labor force peaked at 1.68 million in March 2025, meaning 35,500 people have left the workforce in 14 months.
San Diego economist Ray Major cited several factors affecting the labor force, including potential workers leaving for lower-cost cities, stock market gains prompting retirements, younger adults choosing not to work, and the Trump administration’s immigration crackdown. He also pointed to UC San Diego’s enrollment topping 45,000 for the first time as evidence that the region educates students but struggles to absorb them into the local workforce.
“We’re educating a tremendous amount of university students,” Major said. “I don’t believe we’re absorbing all of those into the workforce. We don’t have enough high-paying jobs for that.”
Defense contractor Northrop Grumman led new job advertisements in May with 109 postings, according to state data. Other top hiring companies included Sharp Healthcare with 85 postings, General Atomics with 84, and Allied Universal with 78. Tech giant Qualcomm had the most overall open positions with 870 advertisements, many requiring specialized AI skills that have remained unfilled for months.
Over the past 12 months, San Diego County has added 13,100 jobs, down from 16,000 the previous year. The federal government sector saw the biggest annual decline, losing 8,100 jobs due to federal cuts from the Trump administration. Private education and health services led annual gains with 15,400 new jobs, followed by leisure and hospitality with 7,000.
