Unemployment among federal works in CA spikes. What’s the impact on economy?
Unemployment claims from former federal workers haven risen more in California than almost any state in the country, a new analysis by the Century Foundation said Friday.
The federal shutdown began October 1. For the week ending October 11, the first full week after the closing, 1,274 former federal workers in California had sought jobless benefits. The unemployment claims were the third-highest number among the 50 states, topped only by Maryland at 1,792, because of its proximity to Washington, D.C., and Texas at 1,667.
Nationally, the 7,224 former federal employees seeking benefits is the highest such one week total since January 2019, during that 35-day shutdown.
The foundation, a progressive-leaning group which studies employment trends, compiled the data as the federal Bureau of Labor Statistics has stopped providing its weekly reports on unemployment because of the shutdown.
Despite this spike in unemployment claims, economists said Friday it is still too early to know how the ongoing government shutdown, now into its third week, will impact the Golden State’s economy.
Then and now, they’re going to feel financial pain, said Andrew Stettner, an unemployment expert at the foundation who was an unemployment policy official in the Biden administration.
Alongside the layoffs, an unknown number of federal employees have been furloughed or are working without pay while Congress attempts to pass a new budget bill. The impact of those employees not receiving salaries on local economies is not clear at this point, said Sarah Bohn, the vice president and director of the Public Policy Institute of California’s Economic Policy Center.
Bohn said that if there was going to be an impact on California, she expected it would be felt in parts of the state that have a large federal presence, such as counties along the U.S.-Mexico border.
Gov. Gavin Newsom said that the signs of the shutdown have already appeared in California’s labor market.
“Since the shutdown began, California has seen an uptick in requests for unemployment benefits from federal workers, with the number of requests increasing by hundreds in just the first few days of the shutdown,” Newsom said in a Saturday announcement.
Federal workers in CA represent small fraction of total workforce
Michael Bernick, a former state Employment Development Department director who is now an employment attorney at Duane Morris LLP, said California has been averaging 37,000 new unemployment claims per week in recent months. On top of over 360,000 continuing claims per week, the 1,274 unemployment claims filed by federal workers will not move the numbers, Bernick said.
“Federal worker unemployment definitely will not impact the overall unemployment rate in California, where we have over 18 million payroll workers,” he said in an email.
The California Labor and Workforce Development Agency said from Oct. 1 to 16, EDD received approximately 3,000 claims for unemployment benefits from federal workers. During that same period in 2024, EDD received 208 unemployment claims from federal workers.
California’s Employment Development Department has a web page where federal workers affected by the shutdown can determine whether they qualify for benefits.
Generally, workers qualify if you are “out of work through no fault of your own, your official duty station of your last federal employer was in California, or you are a current California resident and are a U.S. citizen and your official duty station was outside the US, or have worked in California after your last federal employer,” EDD says.
Federal employees who continue to work without being paid are not regarded as unemployed and do not qualify for unemployment benefits, EDD said. If a federal employee does receive benefits and later gets back pay from their employer for the same time period, they have to repay the benefits.
The exact number of federal employees who have lost jobs during the shutdown has not been confirmed by the federal government.
A lawsuit filed on behalf of workers in a federal district court in California claimed that over 4,100 employees have received layoff notices. Earlier this week, the judge in that case blocked the federal government from issuing more layoff notices.
Economic impacts of shutdown
One impact of the shutdown on business operations is the disruption of data supplied by the federal government, said Gökçe Soydemir, a professor of finance and economics at California State University, Stanislaus. The Bureau of Labor Statistics and the Bureau of Economic Analysis have both stopped releasing crucial numbers around employment indicators, wages and gross domestic product, he noted. The usual monthly national unemployment report did not appear October 3 as scheduled.
Soydemir said we’re no longer in the early stages of the shutdown and the uncertainty is creating confusion among business owners, investors and consumers.
“If you can’t make decisions, economic growth will suffer,” Soydemir said in an interview.
Earlier this week, the EDD announced that its release of California’s September 2025 employment data would be delayed because “federal statistical activities have been suspended.”
Even if California’s economy was taking a hit from the shutdown, it would be impossible to know, said Chris Thornberg, an economist and founding partner at Beacon Economics. But past government shutdowns had negligible impacts on the state, he added.
This is business delayed, not business cancelled, Thornberg said. Additionally, he noted that much of the public, aside from those visiting national parks, is ignoring the shutdown. If the shutdown lasts, Thornberg said, that will change.
“When grandma doesn’t get her Social Security check, that’s when all hell will break loose,” Thornberg said.
Bohn, with PPIC, said the ultimate impact of the shutdown on California will depend on what happens after it ends.
“All of this could just be a temporary hold that then can be resolved in a couple of months, or however long it takes,” Bohn said. “But that’s very different if those resources are cut completely.”
If the Trump administration decides not to resume federal funding of programs in California, or follows through with its threat not to provide furloughed workers back pay, Bohn said it would be painful for those organizations and people affected.
This story was originally published October 17, 2025 at 2:37 PM.
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