San Diego Employment Trends: A Mixed Outlook for 2026

In the fourth quarter of 2025, San Diego experienced a 1.4% increase in employment compared to the same period in 2024, according to the San Diego Regional Economic Development Corporation (EDC). This growth is notable, especially when contrasted with the 0.57% growth recorded between the end of 2023 and 2024. The EDC's Quarterly Snapshot highlights significant sectoral shifts, with a 6.6% growth in health care and social assistance jobs, while professional and business services jobs saw a decline of 2.3%.

Times of San Diego

The EDC report emphasizes the critical role of innovation jobs, stating that each such job supports two additional jobs in the economy. However, it warns that challenges in high-impact sectors could threaten San Diego's long-term competitiveness amid economic uncertainty. The life sciences industry, which accounts for over 160,000 jobs and generates $31 billion in economic impact, faces potential funding disruptions that could hinder future growth.

Times of San Diego

Despite a 27% increase in funding for life sciences startups between the third and fourth quarters of 2025, overall venture capital funding for these startups fell by 47% compared to 2024. San Diego-based startups secured $759 million in venture capital across 36 deals during the last quarter of 2025, approximately half of the funding amount from the same quarter the previous year.

Times of San Diego

The report also notes a decline in National Institutes of Health (NIH)-funded projects, which dropped from 402 in 2024 to 336 by the end of 2025. This reduction, coupled with proposed NIH funding cuts, poses a significant risk to long-term commercialization opportunities in the life sciences sector.

Times of San Diego

Looking ahead to 2026, the EDC indicates that while housing affordability showed signs of improvement and home price growth slowed at the end of 2025, the overall cost of living in San Diego remains a critical issue. These challenges could be exacerbated by declines in employment and investment, potentially impacting economic growth in the coming year.

Times of San Diego

The EDC stated, “With each innovation job supporting two jobs elsewhere in the economy, challenges in these high-impact economic sectors threaten San Diego’s long-term competitiveness amid a year of heightened economic uncertainty.” They also noted that funding disruptions in the life sciences industry could constrain future growth.

Times of San Diego

Some analysts express concern that the decline in professional and business services jobs may indicate broader economic vulnerabilities. Critics argue that without strategic interventions, San Diego's economy could face significant challenges in maintaining its competitive edge.

Times of San Diego

• “With each innovation job supporting two jobs elsewhere in the economy, challenges in these high-impact economic sectors threaten San Diego’s long-term competitiveness amid a year of heightened economic uncertainty,” — San Diego Regional Economic Development Corporation

Times of San Diego

• “This small rebound didn’t offset the overall drop in life sciences VC funding, which was down 47% from 2024,” — San Diego Regional Economic Development Corporation

Times of San Diego

As San Diego navigates these economic complexities, stakeholders will need to address funding challenges and cost of living issues to foster sustainable growth in the region.

Times of San Diego