Tag: COVID-19

Economy in crisis: Closer look at August employment report reveals troubling trend

By Nate Kelley,

KEY TAKEAWAYS

  • A deep dive into San Diego’s employment report for August reveals a troubling trend.
  • Thousands of workers have fled the labor force since February, which has artificially lowered the unemployment rate and puts San Diego’s economy at risk.

THE SNAG

We’re taking a deeper dive into San Diego’s employment report for August. The region added 20,500 payroll jobs last month as businesses forced to close again in July were allowed to reopen with restrictions in August. Additionally, the unemployment rate fell 2.5 percentage points from 12.4 percent in July to 9.9 percent, which is more than three times the largest downward move in the rate observed before the pandemic. However, a closer look at the record drop in unemployment last month reveals a troubling trend.

In order to be counted as unemployed in the Labor Department’s employment report, workers must still be in the labor force, which is defined as actively seeking employment over the four weeks prior to the survey. This means that the unemployment rate can theoretically drop in a given survey month, even if there were no job gains, if enough workers leave the job market.

Some 16,400 workers exited the labor force in August, the largest single-month exodus in more than six years. Without last month’s contraction in the labor force, the unemployment rate would have stood at 10.8 percent. Widening the temporal aperture a bit, San Diego’s labor force has withered by 36,200 workers since February before the COVID downturn took hold. If those workers had not fled the workforce, August’s unemployment rate would have stood at an even more elevated 11.9 percent in August, two full percentage points above the officially reported 9.9 percent, and would have peaked at 17.6 percent in May, 2.4 percentage points higher than the officially reported rate of 15.2 percent that month.

WHY IT MATTERS

The above creates at least two issues that can have tangible effects on the real economy that span well beyond any technical foibles underpinning the calculation of the unemployment rate:

  1. Workers who drop out of the labor force cannot receive unemployment insurance (UI) benefits. The average weekly UI payout in California is $305.82. Using that figure as a guidepost (UI payout data aren’t readily available at the metro or county levels), the loss in household income conservatively amounts to roughly $20 million dollars each month—or almost a quarter billion dollars per year. And that’s just accounting for the 16,000 or so workers who left in August. Including the roughly 20,000 other discouraged workers who have left since February, that $240 million balloons to nearly $600 million that is no longer reaching households’ wallets—and, therefore, local businesses—in a given year.
  1. Marginally attached workers are significantly less likely to rejoin the labor force as time wears on. The longer that workers remain on the sidelines, the more effectively they can adjust household spending habits and re-examine the trade-offs between working and being home with family. On average, it takes higher pay to entice workers to rejoin the labor force than to keep them in the labor force to begin with.

A significant rise in worker pay sufficient to draw re-entrants back to the job market will hinge on a dramatically lower unemployment rate, which is well off in the future, perhaps as late as 2022. Given that, there’s a good chance that many of those who’ve already left the job force will not return. It will also give many more the opportunity to exit if they are not rehired soon.

Ultimately, this translates to San Diego’s economy relying on fewer workers to drive growth and maintain economic stability. The economic literature on this topic suggests that future economic downturns could become more frequent and deeper if growth and stability rest on a smaller number of employees. That’s why we need to get this recovery right – learn more here.

That’s why a path forward for discouraged workers that includes upskilling and reskilling is so necessary. The prospect of a more stable and lucrative career would likely draw many people who have left over the past six months back to the labor force. This could put money back into people’s pockets well ahead of late next year or early 2022 and could help to mitigate the possibility of any longer term damage to San Diego’s economy.

EDC’s Advancing San Diego initiative is exploring a viable path forward. With better connectivity to academia, business leaders can begin to communicate the specific skills required to successfully perform jobs in any number of high-demand positions, providing the roadmap for colleges and universities to enhance their curricula perhaps by building out “micro-credential” certificates or academic programs designed to prepare workers in a matter of weeks—rather than years—to take on those jobs.

For more COVID-19 recovery resources and information, please visit this page.

Regardless of how this all plays out, EDC is here to help. You can use the button below to request our assistance with finding information, applying to relief programs, and more.

Request EDC assistance

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San Diego Science & the Global Pandemic: A Recap

By Taylor Dunne,

San Diego Science & the Global Pandemic: a Recap

In August, San Diego: Life. Changing., a program of San Diego Regional EDC, wrapped up a series of virtual events highlighting the innovation economy and spirit of collaboration that exist in San Diego. The series looked at how the life sciences industry is playing a role in shaping the pandemic, and life after the pandemic, for our region.

The series kicked off in May through a partnership with Alexandria Real Estate Equities Inc., featuring a research institution searching for a vaccine, a therapeutics company working on a treatment, and a med-tech company developing ventilators and other devices to aid in COVID-19 treatment. The expert panel included Dr. Sumit Chanda, professor and director at the Sanford Burnham Prebys Medical Discovery Institute; Joseph E. Payne, president and CEO of Arcturus Therapeutics; and John Stevens, VP of IT at Thermo Fisher Scientific.

San Diego: where collaboration happens.

The scientists that participated in the first webinar agreed that the collaborative spirit of San Diego is what makes the life-changing work that happens here possible. Dr. Chanda stated:

“I don’t know if it’s the weather or the synergy, but the partnerships that happen here don’t happen anywhere else. We are working with Scripps, UC San Diego, and a number of local companies across different disciplines.”

Stevens agreed, in saying: “The partnerships are really important – different companies with everyone working together is truly how we’re going to combat this going forward.”[Thermo Fisher] has leveraged a lot of great relationships in the San Diego area. New partnerships come in every day, and I think it’s important to keep working together as one team.”

Then, in June, EDC partnered with investor Illumina to have genomics experts weigh in on the pandemic. We were joined by Gary Schroth, distinguished scientist and Vice President at Illumina, and James Lu, Co-founder and Chief Scientific Officer at Helix. Gary and James helped us untangle the complicated world of DNA and understand how next-generation genome sequencing is helping scientists understand the intricacies of COVID-19.

Still hiring!

In July, we took a break from the scientists and heard from some of San Diego’s top hiring professionals as they shared pro tips for finding new career opportunities during the global pandemic. Jessica Serrano, Sr. Director of Talent Acquisition and Talent Systems at Lytx; Chris Shoemaker, Senior Talent Acquisition Partner at MindTouch; and Lee Wills, Head of Talent Acquisition and Employee Engagement for Sony North America shared their recommendations for finding and starting a new job while navigating this new remote-first environment. All three of these companies, and so many others, are still hiring for positions that could lead to a meaningful career in San Diego.

See the recorded event here

Stay inspired, San Diego.

Finally, with the help of trusted investor West Health, we wrapped the San Diego Science & the Global Pandemic webinar series up with a look at what he region is doing to ensure our senior population is receiving the care they deserve in a safe and accessible way as they continue to be among the most vulnerable to COVID-19. Moderated by Dr. Zia Agha, Chief Medical Officer and Executive Vice President of West Health, the conversation hit on the most important topics from food security for older adults, to dental care, to healthcare policies that will ensure long term success…as well as what WE can do to help the seniors in our community.

See the recorded event here

If you were able to tune in to our series, we hope that it provided you with some insight on the ongoing and impactful efforts of some of San Diego’s brightest, in a time in our world when we need it most. As always, San Diego steps up to change lives.

San Diego’s economic recovery must be inclusive.

By Julian Parra,

A note from Our board chair

In 1967, my parents fled Cuba to seek freedom and a better life in the United States. Due to travel restrictions, they were forced to move to Spain, where I was born, before finally arriving in the City of Chicago in January 1968. My parents never dreamed that within a generation, their son would become a senior executive at one of the largest financial institutions in the world. Growing up in the Rogers Park neighborhood of Chicago, I certainly never thought that the community I would find myself living and investing in all these years later would be San Diego, California. Yet here I am.

As I take on the role of board chair for the next two years at San Diego Regional EDC, I am fortunate, blessed, and humbled by the opportunities that life has given me. I also recognize that my story is not the norm for Latino immigrants in this country and that my journey thus far is not particularly common for a city kid from Chicago. I feel both an obligation and responsibility to use this time at EDC wisely, effectively, and purposefully. And as the threats and realities of COVID-19 and racial injustice continue to grip our community and our economy, like many, I feel the urgency and the need to accelerate the recovery that lies in front of us.

From the years following the Great Depression to those following the Great Recession, every recovery that the American economy has experienced has increased systemic poverty and widened the inequalities in Latino and African American communities. Too often, in a rush to restore economic normalcy for some, entire segments of our communities have been left further behind and unable to find and maintain their footing on a new and changing economic foundation. Our commitment at EDC is to do everything we can—drawing on the breadth and depth of every partnership and relationship we have—to get this recovery right.

This recovery requires us to redouble our commitment to inclusive economic growth, so that we build back a San Diego that is more resilient because prosperity reaches more people. Even in the midst of great economic uncertainty, we know one thing for sure: the innovation economy will lead us out of this recession just like it has every one before it. If the business community is thoughtful, strategic, and collaborative in this moment, we can ensure a stronger, bolder, more resilient San Diego in the years ahead.

The building blocks are clear: skilled talent, quality jobs, and thriving households.

  1. The hottest job market in a generation has become the weakest. However, there are still shortages for in-demand jobs. This means we need to do better at equipping San Diegans for the jobs of today, and those of tomorrow.
  1. Nearly 30% of small businesses have closed. And we know small businesses employ the majority of San Diegans. This means we must invest in entrepreneurship and resiliency by creating opportunities for diverse founders, and better connecting small businesses to big customers.
  1. Housing prices and unemployment are both at record highs. The economy cannot recover if people cannot afford to live here. This means we must prioritize access to and affordability of the essential infrastructure that working families rely upon—like housing, childcare, and broadband.

If past economic, financial, education, and workforce decisions have exacerbated systemic poverty and created barriers to opportunity for so many, it follows that the decisions we make now can change the future for our children and grandchildren. And with nearly 200 of the region’s largest employers, hundreds of community partners, and the proud legacies of my family and culture behind me—I plan on seeing San Diego Regional EDC through a period of historic and inclusive growth. We will get this recovery right.

—Julian Parra, EDC board chair
& SVP, Region Executive, Pacific Southwest Business Banking, Bank of America

Visit our Inclusive SD page for more

See Julian’s op-ed in the San Diego Union-Tribune

What you need to know about reopening your small business – September 2020

By Heather Dewis,

The state of California has established a four tier system for reopening nonessential business sectors. Businesses listed in Tier 2, including hair salons, places of worship, gyms, and restaurants, may reopen modified indoor operations that ensure employee and customer health and safety.

What you need to know

In addition to the information laid out in prior public health orders, new updates came into effect on September 1.

Hair Salons, Barbershops, Nail Salons, and Personal Care Services

  • Must require all customers receiving service indoors or using indoor facilities to sign in with their name and phone number

Places of Worship

  • Max 25% capacity or 100 people, whichever is fewer
  • May host religious, cultural, and wedding ceremonies indoors with modifications and in compliance with state guidance

Gyms and Fitness Centers

  • Max 10% capacity
  • Must require all customers receiving service indoors or using indoor facilities to sign in with their name and phone number

Restaurants, Wineries, Bars, Breweries, and Distilleries
(where meal is provided)

  • Max 25% capacity or 100 people, whichever is fewer
  • Must require all guests receiving service indoors or using indoor facilities to sign in with their name and phone number
  • Must maintain the list of names and phone numbers for three weeks
  • Must require guests to wear face coverings at all times while in the facility, including when seated at a table before the meal is served and after the meal is finished
  • Highly encouraged: limit indoor guests to only members of the same household at each table

MORE business RESOURCES

New Statewide Financial Assistance

Governor Gavin Newsom recently signed several bills intended to bolster small businesses across California. This includes excluding forgiven Paycheck Protection Program loans from taxable income, and offering up to $100 million in tax credits for small businesses impacted by the pandemic that agree to hire new or laid-off workers. For more information, visit the State website and fact sheet.

Business Revitalization and Assistance Grant Program 

The County of San Diego has introduced a new program that offers businesses located in unincorporated areas up to $8,000 to help improve the front exteriors of their buildings. Applications will be accepted from October 1-15, 2020. For more information on the application process, eligibility, and general grant guidelines, please visit the County website.

Employment Training Panel

The Employment Training Panel’s Small Business Program reimburses some training costs for small businesses with 100 or fewer employees. The program covers between eight to 200 hours of instruction for both small business owners and their employees, and includes re-training to adjust and shift with COVID-19 regulations. For more information, visit the State website.

Check out more business resources on our COVID-19 page

Economy in crisis: Local housing market stays hot, unaffordable despite COVID

By Nate Kelley,

THE TAKEAWAYS…

  • House prices continued to climb locally, despite record job losses from COVID
  • Lower mortgage rates, strong population growth, the addition of high-earning newcomers to the region, and a razor-thin inventory of available houses have fueled house price growth
  • The evidence suggests that thousands of people are being priced out of San Diego each year, which could cause talent bottlenecks for local employers and drive labor costs higher
  • Building new housing will be crucial to making San Diego a more affordable place for people to live in the future

HOUSING STILL ON A TEAR

COVID-19 has done little, if anything, to cool down San Diego’s hot housing market. Depending on the source, the median home price in the region was up in July of this year anywhere from roughly 5% to more than 10% from a year prior. Meanwhile, rents are essentially flat to just slightly down over the past year even as personal income cratered an estimated 10.5% from February to April. Earnings have crawled back as job gains resumed in the summer months but still remain well below pre-COVID levels.

WHY HOUSING HASN’T FALTERED

So, how can the local housing market possibly support climbing prices and some of the highest rents in the country amid record unemployment? A combination of factors are at play, many of which are specific to San Diego.

First, falling mortgage rates lured more homebuyers into the market in the summer following an initial decline in April and May as the COVID outbreak worsened. Existing-home sales rebounded sharply in June and were up more than 10% from a year prior by July. Additional buyer interest drove prices higher.

Second, the pandemic disproportionately hurt workers in lower-paying fields while many workers in higher-paying industries shifted to remote work, allowing landlords and home sellers to charge prices at or near (or higher) than before the outbreak, especially for upper-tier properties.

Finally, San Diego boasts a national and international allure for high earners for its climate, lifestyle, and concentration of tech-related innovation jobs. More people have moved out of San Diego than moved here in recent years, but those moving in to the region tend to make about four times as much than those moving out, allowing home sellers and renters to keep prices elevated.

Therein lies the problem. Reframing the point above, it appears that residents are being forced out because they simply can’t afford to live here anymore, while the people moving in have secured employment in high-paying fields.

It’s important to note that net migration only measures people moving across county lines and doesn’t include organic population growth as people start families, people live to be older, etc. Overall, San Diego’s total population grew by more than 235,000 residents, or 7.6%, between 2010 and 2019—well above the 6.1% growth experienced nationwide. Housing supply has failed to keep up, and the result has been a steady climb in already-high housing prices locally.

THE REPERCUSSIONS

Housing affordability—measured as the ratio between earnings and median house prices—fell for all workers between February and July. This is in spite of the fact that higher-paid workers were, in most cases, able to continue working through the pandemic. However, housing affordability in San Diego is still farther from reach for lower-paid workers, underscoring the affordability issue faced for employees in fields outside of San Diego’s innovation economy, which includes tech and life sciences. Earnings for workers making less than the median salary of $73,596 per year dropped an estimated 19.5%, compared with a relatively less severe 7.3% decline for workers making above the median.

This creates an issue, since it limits the number of workers available in the region for fields outside of white-collar professions and may potentially create a talent bottleneck that could ultimately force labor costs higher. This is especially important for businesses operating within the tourism sector, including restaurants, bars, hotels, casinos, and retail shops already operating on tight margins that could have more difficulty absorbing rising labor costs than firms in other industries with greater pricing power.

Above-average population growth, above-average earnings for many employees, and a constricted housing inventory have created a perfect storm of unaffordable housing in San Diego. Expanding the supply of housing, as well as cultivating additional mass transit options—another topic in and of itself—will therefore be crucial to helping balance the market and ensuring San Diego retains its diverse talent pool.

Regardless of how this all plays out, EDC is here to help. You can use the button below to request our assistance with finding information, applying to relief programs, and more.

Request EDC assistance

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Economy in crisis: SD tourism holds up, but the recovery remains uneven

By Nate Kelley,

THE KEY TAKEAWAYS…

  • San Diego’s accommodation sector is performing well as summer draws to a close.
  • Hotels have been slow to rehire workers, but recent metrics suggest that a strong spate of hiring is in the cards.
  • The recovery has been uneven, but a number of industries have recouped most of the jobs lost to COVID-19.
  • A number of industries still have a long way to go, and many may never recover all of the jobs lost from COVID as businesses shift their business models.

SAN DIEGO TOURISM ON THE UPSWING

San Diego’s accommodation sector is holding its own despite another wave of COVID-related closures amid a spike in cases. Hotels in particular are closing out the summer on a high note, with the supply of rooms within striking distance of pre-COVID levels as of mid-August. The average daily rate (ADR) for rooms is climbing back somewhat more slowly but, at about $150 per night, is up some 67.4% from COVID lows in early May.

It took about a month, but as the COVID downturn intensified, accommodation employment tracked changes in room supply and average daily rates nearly one-for-one. That relationship would have suggested that accommodation employment should have grown by about 3,500 positions in July. Instead, employers only added back just 100 jobs, signaling caution on the part of hotels as the economy slowly climbs out of the crater left by the COVID-19 outbreak.

The caution within the industry makes sense. Laying off workers is painful for employers and employees alike, which is a likely reason why hotel employment didn’t falter until April and May, even though the impacts of COVID were felt as early as March. Similarly, instead of bringing workers back on just to have to let them go again in the event of another flare-up of the virus accompanied by additional closures, hotel managers may be taking a wait-and-see approach to rehiring. Nonetheless, recent industry performance suggests that hotels should be bringing about 8,000 to 8,500 workers back on to accommodate the increase in room supply and rates over the past couple of months once they feel it’s safe to do so.

As of the July employment report, accommodation employment rested at 17,800, up 43.4% from May’s low of 12,400 but still 43.3% below its pre-COVID peak of 31,400 in February. Given that expected hotel revenues—measured by the room supply multiplied by average daily rates—are just 16.5% below pre-COVID levels, employment should quickly follow. An increase of 8,000-plus employees would bring hotel employment more in line with expected foot traffic at hotels and would follow the trend seen so far during the downturn.

SAN DIEGO FACES AN UNEVEN RECOVERY

To say that the COVID downturn and subsequent recovery have been uneven across industries would be an understatement. The hotel industry’s improvement is encouraging, and a number of industries are at or near their pre-COVID employment levels, including: Heavy and civil engineering construction; building equipment contractors; computer and electronic product manufacturing; aerospace manufacturing; grocers; securities and commodities investment; and scientific research and development services.

However, total nonfarm employment in San Diego is still down 10.5% from February due in large part to slower rehiring in industries like restaurants and bars; personal services, such as dry cleaners and other laundry services as people work from home; and local government education, likely reflecting school jobs aside from teachers—like administrators, janitors, etc.—as the county waits to resume in-person teaching.

Unfortunately, many of these jobs will be slow to come back due to their face-to-face nature. What’s worse, many of those positions may not return at all. Even with the advent of a safe and effective vaccine, many businesses have changed their fundamental business models and have adopted new operational norms—like Twitter, who made working remote a permanent option for employees. As a result, the same positions required for those companies before the COVID outbreak may no longer be necessary to operate in the post-COVID world.

The impact of COVID has not only affected the lowest-paid among us in San Diego, but it has hurt communities of color the worst. Now, more than ever, targeted and effective solutions are needed to help these communities not just recover but thrive in the future. Reskilling and training of the workforce and offering equal access to capital for minority-owned businesses are not just ethical and moral necessities—they are economic ones, too. Because, we all do better when everyone is doing better; and a more resilient San Diego economy will help us all in the long-run.

Regardless of how this all plays out, EDC is here to help. You can use the button below to request our assistance with finding information, applying to relief programs, and more.

Request EDC assistance

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A legacy of discrimination: Redlining in San Diego

By Bree Burris,

Economic inequality is a pre-existing condition. And just like in the rest of the country, a history of housing discrimination and redlining policies has burdened San Diego with decades of mounting inequities that can still be seen and felt more than 80 years later.

Less than 20 miles apart, the 1938 redlining policy presented two vastly different lending practices that have shaped our socioeconomic reality decades later.

  • La Jolla: “Residents embrace nearly all types of professions and are all white. No threat of foreign infiltration. Homes are well maintained.”
  • Logan Heights: “Racial concentration of colored fraternity. Homes show only slight degree of pride of ownership and are on the average negligently maintained.”

Scroll over the map below to visualize how redlining policies set in 1938 still impact where people live and what they earn, today.

 

Today, San Diego is a majority-minority region, meaning no single race or ethnic group makes up more than 50% of the total population. It is a much larger, smarter, and more diverse region than it was 80 or 90 years ago, but we are still segregated. That is the legacy of deliberate investment in some parts of our county, and deliberate disinvestment in others. So, as we talk about getting this economic recovery right, we must address the ways in which communities of color and small businesses are most impacted.  It’s no coincidence the above map mirrors that of COVID-19 impacts.

Learn more about San Diego’s economic recovery

Economy in crisis: Fresh thinking on career advancement is needed

By San Diego Regional EDC,

THE TAKEAWAYS

  • Fresh thinking on career advancement is needed in order to create a more resilient San Diego economy.
  • San Diego’s lowest-paid workers were the first to be let go during the COVID downturn and will likely be the last to be called back to work.
  • Upskilling and reskilling employees in lower-paying sectors like retail and leisure and hospitality will improve living standards and help businesses in other industries find qualified talent without draining the pool of workers for retailers, restaurants, and bars.
  • Colleges and universities will need to rethink curricular requirements in order to adapt to the changing needs of the business community.

San Diego’s economy has emerged from the depths of the COVID downturn, but the road to a full recovery is looking longer (and bumpier) than many expected. A second wave of business shutdowns and restrictions amid a rise in positive cases last month portends a significant weakening in the outlook heading into late summer and fall.

The unexpected and historically severe drag on San Diego’s job market since March underscores the need to build a more resilient workforce that can better weather future downturns. More than half of the 223,700 jobs shed between February and April were in leisure and hospitality and retail alone. These jobs could be slow to come back, since shops, restaurants, bars, and venues won’t be able to operate at full capacity until an effective and safe vaccine has been widely produced and distributed—something that’s not expected until at least early next year.

THE MOST VULNERABLE HAVE BECOME THE MOST VULNERABLE…AGAIN

Other sectors have undoubtedly been rocked by the economic shockwave of the COVID pandemic, but retail and leisure and hospitality workers were especially susceptible, particularly those in accommodation and food services. Not only were they the first to be let go, but many will likely the last to be rehired. What’s worse, San Diego’s accommodation and food service employees made just over $30,000, on average, last year compared to about $74,000 for all workers.

The outsize damage to leisure and retail is not isolated to just the past few months. Both industries have historically been more volatile over the past few decades. During the Great Recession of 2007-2009, total nonfarm employment in San Diego fell 8.9%. However, retail employment tumbled 16.2% and leisure and hospitality gave up 14.1%. It stands to reason that a similar dynamic could play out when the next downturn inevitably arrives.

TAPPING INTO NEW TALENT

Tourism, which includes retailers, accommodation, and eating and drinking establishments, is a large and important piece of the economic pie (pun intended) here in San Diego. Luckily, tourism-related industries have a huge supply of readily available workers. Upskilling and reskilling of many of the employees looking to get out of hospitality could expand the base of workers in relatively higher-paying, less volatile occupations without draining the pool of qualified workers for local restaurants, bars, and hotels. This could be extended to retail and other lower-paying sectors and would simultaneously improve living standards while alleviating stress on local employers who can’t find qualified talent in non-tourism fields. It would likely keep a greater number of people employed during future downturns, too.

Looking at job postings data for the region, local employers have had a tough time filling roles in a wide variety of occupations. Software developer and engineering roles are ubiquitous on lists like these, but it extends well beyond the buzzy positions du jour and includes others like marketing managers, sales reps, and truck drivers. The average annual pay for these and other in-demand positions is over $63,000 per year versus $36,720 for jobs where more than enough applicants can apply.

SO, WHAT’S THE CATCH?

As usual, the devil’s in the details. Even after things begin to normalize, walking out on one’s barista job to immediately pursue a post-secondary degree in electrical engineering typically isn’t an option. Consequently, career advancement would have to occur more gradually and require some serious curricular agility from local colleges and universities.

EDC’s Advancing San Diego initiative is exploring a viable path forward. The initiative serves to boost lower-paid employees into more stable, higher paying jobs with greater potential for upward mobility, called “lifeboat jobs.” An example would be someone like a forklift operator at a local factory who could ultimately climb the rungs into Operations Management.

With better connectivity to academia, business leaders can begin to communicate the specific skills required to successfully perform lifeboat jobs in any number of high-demand positions. Then, local colleges and universities could build out “micro-credential” certificates or academic programs designed to prepare workers in a matter of weeks—rather than years—to take on those jobs.

Given the deeply-seeded roots of tradition in academia, this would likely emerge most immediately as a strategy in the universe of Continuing or Extended Studies. However, the swiftly evolving landscape of business in the 21st century seems to suggest that a more targeted and flexible approach to general coursework would provide the best value for students (and parents) and would also be of great service to businesses looking for a reliable pipeline of skilled workers upon graduation.

For more COVID-19 recovery resources and information, please visit this page.

EDC is here to help. You can use the button below to request our assistance with finding information, applying to relief programs, and more.

Request EDC assistance

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Economy in crisis: July jobs report likely to be overhyped

By Nate Kelley,

THE TAKEAWAYS

  • The July jobs report is likely to look better than it should because of the timing of data collection by the Labor Department.
  • San Diego’s tourism sector continued to recover through mid-July, before renewed shutdown orders were given, but U.S. air travel remains well below year-ago levels.
  • Any setback from last week’s partial shutdown is unlikely to show up until the August jobs numbers are released.

First, it’s important to note that the May employment report was revised 7,300 lower, making for a net 46,700 positions added in June to May’s pre-revised figure—almost exactly matching our prediction for 45,000 net new positions.

June’s employment report also aligned with expectations; San Diego employers added 54,000 jobs last month. The additional jobs lowered the local unemployment rate from 15.2 percent (revised higher from an initial estimate of 15.0 percent) to 13.9 percent. However, this is still nearly 3 percentage points higher than the national rate of 11.2 percent in June, due in large part to the higher concentration of food services, retail, and tourism in San Diego, which were ravaged by the COVID-19 downturn.

Even though June’s numbers were just released, it’s never too early to look ahead to the July report. With San Diego partially shutting down again last week, conventional wisdom suggests that the July report will show a fresh spate of job losses. However, timing is key. The July employment figures will be estimated using data collected the week of July 12, 2020. Therefore, any layoffs from last week’s move to shut down bars, indoor dining areas, museums, zoos, and hair salons will probably not be picked up in July’s report. In other words, the July employment report will most likely look better on the surface than it would had the data spanned through the end of the month—wrongfully implying that the regional economy fared better than it actually did in July.

TOURISM FORGES AHEAD…

Local tourism has a long road ahead of it before it fully recovers, but hotel occupancy data produced by the San Diego Tourism Authority through July 11, 2020 show that both the demand for and supply of hotel rooms has continued to rise since bottoming in April. Average daily rates for rooms in the region have also continued to increase. We can anticipate changes to accommodation employment given its tight relationship to the room supply and daily rental rates, since hotels need to be sufficiently staffed to manage tourist traffic in any given week.

Before the COVID-19 outbreak, San Diego hotels employed 31,400 workers. That number was slashed by more than 60 percent after statewide shutdown orders in March. The industry added back 5,900—or roughly one in three—of the jobs lost to COVID-19 shutdowns in June. And the tight relationship between hotel occupancy, room rates, and employment suggests that accommodation services could be shown in July to have recouped another 2,500 to 3,000 jobs, bringing total industry employment back above 20,000 for the first time since March.

…BUT…

TSA data shows a painfully slow recovery in air travel, with throughput at U.S. airports over the past week down an average of 74 percent from a year ago. Given San Diego’s stature as an international tourism destination, the lack of jet-setter traffic through airports means that San Diego hotels will face an uphill battle to fill open rooms. This underscores the tenuous nature of local tourism’s comeback.

 

LOOKING AHEAD

National employment numbers will shed some more light on what we can expect to see locally in the July jobs report. However, any positive takeaways from that report should be taken with a grain of salt, since the most recent round of local shutdowns will undoubtedly mean that companies have to once again let go of employees. The magnitude of job losses will hinge on the duration of the current shutdown, which is contingent on a number of metrics, including the rate of positive COVID-19 tests across the county, number of community outbreaks in a given week, and local hospital and ICU capacity, just to name a few.

Taken together, July’s employment report is more than likely to present another round of job gains, but August’s report is almost certain to reveal a setback in the recovery—although, how big of a setback won’t be clear for at least another several weeks. Moving forward, job training and retraining services will be increasingly vital to the long-term health of the economy, since temporary layoffs are more likely to become permanent ones in the coming months if businesses remain limited to partial operating capacity.

This is not to say that we advocate reopening at the risk of public health—instead, we are advocating for a path to opportunity for San Diego’s most vulnerable workers to reduce their reliance on inherently volatile industries and occupations.

EDC is here to help. You can use the button below to request our assistance with finding information, applying to relief programs, and more.

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COVID-19 Survey Results: Anticipated impacts become reality, minority owned businesses hit hard, and workspace changes will continue

By Jordan Latchford,

Earlier this year, we deployed a survey to assess the immediate economic impacts and evolving business sentiment in the wake of COVID-19.

To assess changes over time, we have deployed a follow-up survey with our partners at San Diego Regional Chamber of Commerce, San Diego and Imperial Small Business Development Center. The Downtown San Diego Partnership and National City Chamber of Commerce also served as survey partners. Information collected was from May 28 – June 8 and includes 194 valid responses.

Three trends stood out based on what employers told us:

  1. Anticipated revenue declines and staff reductions confirmed by businesses; 41 percent of businesses surveyed saw revenues decline by 81 to 100%, 93 percent saw  staffing declines of one to 50 employees.
  1. Minority owned businesses are hardest hit but may lead recovery. Long term, minority owned businesses anticipate continuing workspace changes (56 percent), teleworking (41 percent), offering online services (34 percent), and virtual programming and team building.
  1. Telework is here to stay, with 47 percent of firm surveyed reporting workspace changes to continue after the state of emergency is over.

Understanding COVID-19’s impact: an interactive visualization

Below is an interactive visualization of self-reported impacts to local employers, both in terms of employment and revenue. You can segment the data by industry, number of employees, and typical annual revenue. Additionally, please scroll over the tab to look at the breakdown of responses via zip code. Please note, this is not a representative sample – meaning we did not weigh responses operationally to the population and demographics of the region – so we strongly advise against drawing sub-regional conclusions from this data.

Survey Overview

The economic impacts of this crisis disproportionately affect the parts of our community that are disconnected from growth: communities of color and small businesses. The right recovery means focusing on efforts that benefit all San Diegans in this unique moment in time.

The overwhelming majority of firms surveyed (93 percent) were small businesses (fewer than 100 employees) and most (73 percent) had revenues of less than $1 million in 2019. Survey respondents were concentrated in the food and beverage, professional services, manufacturing, and retail industries.

Nearly 93 percent of firms surveyed saw their revenue decline, with most (41 percent) declining by 81 to 100 percent. However, more than one third expect revenues to return to 2019 levels in six to 12 months. The majority cut back on payrolls, with nearly 74 percent reducing staff hours and 60 percent reducing staff. The food and beverage industry had the most (19 percent) full time layoffs, followed by professional services (17 percent). Overall, most firms in all industries expect layoffs to be temporary, but 32 percent are still unsure. The uncertainty might be due to growing concern that the economy will fully reopen within the coming summer months, but a second wave in the fall will turn temporary layoffs into permanent ones.

Nearly 87 percent of firms surveyed applied for government (federal, state, or city) or private (company grants or bank loans) funding, and 70 percent who applied received funding. Firms that received private (company grants or bank loans) funding received more than $260,000 on average and firms that received government funding received more than $245,000 on average

Firms located in the opportunity zone represent 12 percent of survey respondents, or 24 businesses. In terms of access to capital, nearly 63 percent of firms located in an Opportunity Zone cited access to capital as a long term need in response to COVID-19, while 43 percent of all survey respondents cited access to capital as a long term need.

When asked about the changes a firm has experienced as a result of the pandemic, the top response was “scope of work”, which indicates firms are adjusting their business models and changing the range in which they operate in response to COVID-19. Unsurprisingly, in the short-term, businesses’ greatest needs are increased revenues and additional capital. While many businesses are unsure of the longer-term impact, they still anticipate needing capital and replacing staff.

Anticipated Revenue Declines and Staffing Reductions Confirmed

Most anticipated revenue impacts in the beginning of the COVID-19 pandemic were realized, even as reopening continues across San Diego County. More than 95 percent of businesses surveyed that expected their revenue to decline saw an actual decline in their revenue. Nearly 97 percent of businesses that expected their revenue to decline by 81 to 100 percent saw an actual decline of that amount.

Most anticipated staffing impacts in the beginning of COVID-19 pandemic were realized as well. More than 73 percent of firms surveyed who anticipated staff reductions actually reduced their staff. Most staff reductions were between 1 and 50 employees. More than 78 percent of those that anticipated staff reductions of one to 50 employees actually saw these reductions.

Minority-Owned Businesses

A new report shows that because minority owned small businesses have been disproportionately impacted by COVID, they may demonstrate how US businesses will ultimately adapt. These businesses are experimenting with new ways of working to ensure their employees’ safety, offering relief to employees and community members, and introducing new services. In San Diego, the top adjustments minority owned businesses made in response to the pandemic that are working well are workspace changes (56 percent), teleworking (41 percent), offering online services (34 percent), and virtual programming and team building.

There were 44 minority owned businesses that responded to the survey. Nearly all (98 percent) of minority owned businesses surveyed were small businesses with fewer than 100 employees. These businesses are concentrated in professional services, food and beverage, manufacturing, and retail – the industries hardest hit by COVID-19. The latest employment data shows that from February to June 2020, local retail, food and beverage, and professional services lost a combined 86,200 jobs. More than 90 percent of minority owned businesses have seen their revenue decline, with most experiencing steep revenue declines of 81 to 100 percent.

Workspace Future

In order to keep operating, many businesses have made changes to their physical workspace and/or are have employees working remotely. Firms surveyed expect to maintain these arrangements even after the state of emergency is lifted. Nearly 76 percent of firms surveyed report physical space as critical for operation, with most of those businesses in food and beverage, professional services, and manufacturing. Only seven percent of firms reported the pandemic has shown them that office space is unnecessary. Firms were split in regards to whether physical workspace will decrease, increase, or remain the same in the future.

Resources for you

San Diego Regional EDC, San Diego Regional Chamber of Commerce, and San Diego and Imperial SBDC offer a variety of resources to help businesses.

If you would like assistance from EDC, please use this form. Once we receive your responses, we will make every effort to reach out to you within 24 hours.

Request EDC assistance