California workers increased the nation’s productivity in 2025.
According to the U.S. Bureau of Labor Statistics report “Productivity by State – 2025,” California workers in privately owned, nonfarm businesses increased their productivity by 4.2% last year, behind only the District of Columbia (5.2%) and Arizona (4.4%).
Why California had the biggest impact on U.S. productivity
California’s productivity had the most significant national impact, however.
“Representing about 14% of national output, California had the largest influence on national productivity growth,” stated the report. “The state’s 4.2% increase in labor productivity in 2025 contributed to nearly one-third of the 1.8% increase at the national level.”
The productivity of California workers seems unaffected by the large corporations that have left the state in recent years, including Charles Schwab, Chevron, Oracle, SpaceX, and Tesla.
What California’s workforce looks like
According to the California Employment Development Department, the state had about 18 million total nonfarm workers at the end of 2025. About 16 million were service providers, including retail, healthcare, transportation, food services, and leisure and hospitality. A little over 2 million workers were involved in construction or manufacturing.
California workers produced more while working fewer hours
The productivity statistics are based on each state’s share of the total current national output (in dollars), and not the number of hours worked.
Apparently, workers in California are working smarter, not harder, as the number of hours they work has decreased over the past few years. According to the bureau, people in the state worked fewer hours in 2025 (27,884 million total hours) than in any year since the pandemic.
The report, released on May 28, also included “long-term trends” showing data for 2007-2025 and 2019-2025. California was ranked third for “labor productivity by state, annual percent change, 2007-2025,” behind only the states of Washington and North Dakota.
Because of its population, however, California again had the most influence on “contributions to national labor productivity,” doubling the contributions of either Texas or New York, the next most productive states on the list.
How the government measures productivity
The bureau’s Office of Productivity and Technology measures productivity for six major sectors of the U.S. economy: business, nonfarm business, nonfinancial corporate business, total manufacturing, durable goods manufacturing, and nondurable goods manufacturing.
Comparing productivity statistics to working hours can determine how efficiently work in each state and in each sector is converted into goods and services.
This article originally appeared on Palm Springs Desert Sun: Why California drove a third of U.S. productivity growth in 2025
Reporting by Steve Pastis, USA TODAY NETWORK / Palm Springs Desert Sun
USA TODAY Network via Reuters Connect
