San Diego’s Data Bites: June 2021

Presented by Meyers Nave, this edition of San Diego’s Data Bites covers May 2021, with data on employment, housing, and more insights about the region’s economy at this moment in time. Check out EDC’s Research Bureau for even more data and stats about San Diego.

KEY TAKEAWAYS

  1. San Diego establishments added just 2,000 net new payroll positions in May. Gains in Leisure and Hospitality were largely offset by losses in Construction and Professional and Business Services.
  1. The unemployment rate fell to 6.4 percent from April’s 6.7 percent even as several thousand people joined or rejoined the labor force.
  1. The sharp rise in home values appears to be over, but housing affordability is still well below pre-pandemic levels.

Industry view

Job gains were inconsistent across industries. Out of the 16 supersectors tracked by the California Employment Development Department (EDD), six sectors showed job growth, three sectors showed no change, and seven sectors showed job losses. Leisure and Hospitality led these sectors with 3,900 jobs added in May—3,100 of which were in the Accommodation and Food Services subsector—tacking on to the 7,000 jobs added in April. These gains were followed by increases in Government positions (1,200 jobs), Healthcare and Social Assistance (1,000 jobs), and Transportation and Warehousing (800 jobs).

Job losses in several industries countered some of the growth in May’s employment. Professional and Business services backtracked in May with a decrease of 2,500 jobs—2,100 of which were in the Administrative and Support Services subsector. Construction also reversed some of the headway made in April with a loss of 1,200 jobs in May.

While May’s employment report may have underwhelmed, year-over-year (YoY) growth continues to show just how far San Diego’s regional economy has come since the pandemic eliminated more than 200,000 jobs in the region. Employment in Clothing and Clothing Accessories Stores has increased 136.7 percent since May of last year, followed by growth of 44.3 percent in Leisure and Hospitality. See below for month-over-month (MoM) and YoY change by industry.

San Diego’s housing market comes back to earth, but remains largely unaffordable

Despite the unprecedented disruption to the regional labor market from COVID-19, house prices climbed at an accelerated rate. The average listing price for a home in San Diego climbed 38 percent from February 2020 to February 2021. Home values have fallen off those recent highs, but the fact remains that the average price of a home in May was still some 22 percent higher than it was in February 2020.

Fortunately, it looks like affordability (measured as the ratio of total income to average monthly mortgage payment) may be improving. After 13 months of deterioration, the aggregate affordability of a home in San Diego was up 14.3 percent in May from March 2021. Several factors are at play. First, wage income has increased as job gains have continued. Second, the rise in mortgage rates of 25 to 30 basis points has pushed home prices down to help lower average monthly mortgage payments by 12.1 percent. This is because lower mortgage rates are an important factor driving price gains for real estate in San Diego County. Mortgage rates account for 70 percent of house price changes locally, almost double the national average of 35 to 40 percent. This makes sense, considering that San Diego real estate isn’t cheap, and homebuyers have likely been trying to maximize the amount of house they can buy given their budget.

The progress on affordability is encouraging, but more work needs to be done. San Diego County’s housing market has been chronically undersupplied for more than a decade, putting upward pressure on prices. This has accelerated churn in the local population, where lower-income households are being priced out to other parts of the state or elsewhere across the U.S., but new residents are showing up with high-paying jobs in hand who can continue to drive real estate values higher. If it continues, this trend may only serve to exacerbate San Diego’s affordability problem and could limit homeownership to an even smaller proportion of the population. Ensuring San Diego remains affordable and attractive to business and people is critical to its economic recovery and future competitiveness.

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San Diego’s Data Bites: May 2021

Each month, the California Employment Development Department (EDD) releases employment data for the prior month. Presented by Meyers Nave, this edition of San Diego’s Data Bites (formerly the Economic Pulse) covers April 2021 and reflects the lingering effects of the coronavirus pandemic on the region’s labor market. Check out EDC’s Research Bureau for more data and stats about San Diego’s economy.

Key Takeaways

  1. San Diego establishments added 9,800 new payroll positions in April, with most industries adding jobs over the month, but March’s employment figure was revised lower by 2,500 positions.
  1. The unemployment rate edged lower to 6.7 percent from March’s 6.8 percent. However, this was due primarily to the loss of 16,500 workers from the labor force.
  1. The flood of women workers exiting the labor force could reverse progress made on gender pay gaps and prolong the recovery.

First impression

The April employment report for the San Diego region was mixed. On the bright side, employers added 9,800 positions last month across a majority of industries, and the unemployment rate edged lower to 6.7 percent from March’s 6.8 percent. However, it was the loss of 16,500 workers from the labor force, not job gains, that lowered the unemployment rate. Moreover, March employment was revised lower by 2,500, reducing the initially reported gain of 9,900 payroll positions to 7,400.

Industry view

The battered Leisure and Hospitality sector led gains with 7,000 new positions, followed by 3,300 more jobs in Construction. Meanwhile, Healthcare and Social Assistance logged another 1,700 jobs, while Other Services—which include gyms and salons, among others—gained 1,600 positions over the month.

The loss of 3,500 Administrative and Support Services jobs weighed on growth in the Professional and Business Services cluster last month. Even so, Professional, Technical, and Scientific Services added 1,500 jobs and Management positions held steady. Elsewhere, San Diego’s Transportation sector lost 1,600 jobs.

The story for year-over-year growth has changed dramatically in the past two months. The jobs numbers for April 2021 show Total Nonfarm employment is 10.4 percent above April 2020 levels, when San Diego was in the throes of the pandemic. Payroll employment at clothing stores is up by more than 158 percent from a year prior while employment at restaurants is up an impressive 60.8 percent.

Fewer female workers could prolong (or even jeopardize) the recovery

Nationally, it has been widely reported that women have left the workforce in droves since the pandemic began. According to the U.S. Bureau of Labor Statistics (BLS), the female labor force participation rate declined from 57.9 percent in February 2020 to just 54.4 percent in April 2020, representing the weakest participation for women since 1986. By comparison, the rate for men declined from 69.0 percent to 65.9 percent during that time period.

Labor force participation for women has recovered somewhat since bottoming in April 2020 but has vacillated at roughly 56 percent for the past year, well below the pre-pandemic peak of almost 58 percent. The BLS estimates that some 2.4 million women are yet to rejoin the labor force, representing five percent of all female workers.

California EDD does not provide separate labor force statistics for men and women. However, assuming a similar U.S. trend has played out in San Diego, there still may be as many as 35,000 to 40,000 women still missing from the regional pool of workers. This is compared to just over 30,000 male workers who are yet to come back.

There are two key reasons why female labor force participation has dominated the headlines in recent months. First, it may erode some of the progress made on the gender pay gap. Second, women workers have historically helped to replace men as they dropped out of the labor force; nationally, female labor force participation rose from just 30.7 percent in 1948 to 57.9 percent in February 2020 as male labor force participation declined from 88.7 percent to 69.0 percent during that time.

Unpacking these points, employers are inclined to pay workers less who have been on hiatus for an extended period than workers who never left the workforce. This is because it is widely assumed that some skills erosion may have occurred during that time. This could mean a smaller paycheck for a larger number of women workers than men once (or if) they return to the labor market in the coming months or years.

Since a larger swath of the female population has left the workforce than men, this could put measurable downward pressure on average pay for women workers, thereby reversing some of the progress made in closing the gender pay gap in recent years. Worse, if pay is adjusted too much lower for female workers, then it may dissuade them from returning at all. And, while the same could be said for men, males tend to be far more likely to be employed in high-paying innovation industries, thereby mitigating the risk that men will choose not to return.

The addition of female workers over the past 60 to 70 years has also helped to stabilize the broader economy as more men dropped out of the labor force. Gross Domestic Product (GDP) can be conceptualized in a variety of ways. One way to estimate GDP growth is to calculate the sum of labor force growth and productivity growth. Through this lens, we can see that a contracting labor force is a significant drag on GDP growth. Given that men have consistently left the workforce since the late 1940s, future growth will hinge on women workers continuing to take their place. Otherwise, the U.S. economy—and San Diego’s—will have to rely exclusively on productivity gains to drive overall growth, an especially risky gamble since productivity growth has slowed immensely in recent decades.

Granted, the estimates provided above are based on national figures. But, even if the dynamics have played out somewhat differently here than across the rest of the country, we need to ensure steady engagement of our women workers. It is not an exaggeration to say that our regional economy depends on it.

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San Diego’s Data Bites: April 2021

Each month the California Employment Development Department (EDD) releases employment data for the prior month. This edition of San Diego’s Data Bites (formerly the Economic Pulse) covers March 2021 and reflects the lingering effects of the coronavirus pandemic on the region’s labor market. Check out EDC’s Research Bureau for more data and stats about San Diego’s economy.

Key Takeaways

  1. San Diego establishments added 9,900 new payroll positions in March, but gains were uneven across industries.
  1. The unemployment rate edged lower to 6.9 percent from February’s 7.2 percent. However, this was due primarily to the loss of 10,300 workers from the labor force.
  1. Consumer spending has improved significantly as households spend stimulus checks and unwind the savings accrued over the past year or so; this could mean tens of thousands of jobs in Leisure and Hospitality and Retail in the coming two to three months.

First glance

The March jobs report for San Diego was a mixed bag. Employers added 9,900 new payroll positions, and the unemployment rate edged lower to 6.9 percent from 7.2 percent in February. However, job growth was uneven across industries, with gains in Leisure and Hospitality, Professional and Business Services, and Government partially offset by declines in Construction, Manufacturing, and Retail. Moreover, 10,300 workers left the job market in March—or roughly a third of the 29,800 people who either joined or rejoined the labor force in February. In fact, it was the loss of these workers that pushed the unemployment rate lower more than employment gains.

Industry view

Job gains were apparent in just nine of the 16 supersectors tracked by the EDD. This is somewhat surprising, given March’s blowout employment report for the U.S., which showed nearly a million new jobs were created.

Leisure and Hospitality establishments added 5,000 jobs in March, building on the 13,200 positions recovered in February. Also encouraging, more than half of these jobs came from restaurants. Meanwhile, Professional and Business Services logged an additional 3,300 positions thanks to a big push from the crucial Professional, Scientific, and Technical Services segment, which notched 2,900 more jobs in March than the month prior.

Builders let go of 1,500 workers in March, reversing most of the 2,100-worker gain from February. And, while losses in Construction aren’t completely unheard of in March, they’re certainly the exception rather than the rule. Builders have let go of workers in March in only seven of the past 31 years.

Manufacturing, Retail, Finance, and Real Estate companies let go of a combined 1,100 workers in March. These figures may reflect some statistical noise and potentially even some buyback after February’s strong report. Nonetheless, the loss of 400 Retail positions is a surprise, especially following the March U.S. retail sales report, which showed a huge rebound in consumer spending last month.

Relief for Hospitality and Retail is (finally) on the way

U.S. retail sales, which include sales at restaurants and bars, jumped by 9.8 percent in March, blowing past analysts’ expectations. The meteoric rise was in large part the result of stimulus payments that were distributed to millions of households last month as part of the Biden administration’s $1.9 trillion COVID-19 rescue package.

In addition to stimulus-related spending, consumers may have also begun unwinding some of their savings now that a sustained recovery appears to be in the offing. To be sure, households began hoarding cash at the onset of the downturn last year. The U.S. personal saving rate peaked at 33.7 percent last April, decimating the previous record of 17.3 percent that was set in May 1975, and remained perched at an elevated 13.6 percent in February 2021, which is nearly double the pre-pandemic average of 7.3 percent observed between 2010 and the end of 2019.

As long as the news around COVID cases continues to be positive and residents continue to be vaccinated at current rates, it’s not unreasonable to suspect that consumers will continue to spend freely into the summer and fall months.

This is particularly good news for San Diego’s restaurant and bar scene. Given the region’s status as a premier tourist destination, changes in national spending at eating and drinking establishments correlate strongly with job growth here at home. If sustained, March’s leap in U.S. retail sales could mean as many as 50,000 to 60,000 payroll positions at San Diego’s bars and restaurants, in addition to March’s jobs build as employers continue to meet rising demand.

Retailers can also expect a big boost. If historical relationships hold, 15,000 to 20,000 positions could appear in April and May if consumers continue to loosen their purse strings. The correlation between local Retail employment and national consumer spending is quite a bit looser than the relationship for eating and drinking places. However, as a point of comparison, local consumer spending data from Affinity also reveal a rebound, which reinforces the notion that job gains will continue for at least the next several months barring any unexpected hiccups.

Bottom line

Even though it wasn’t quite as strong as expected, March’s employment report is further evidence that the job market has finally turned the corner after a temporary slump in December and January. Nonetheless, it will still take some time before the damage wrought by the COVID downturn is undone. Payroll employment is still 7.2 percent below year-ago levels and 8.1 percent lower than the pre-pandemic level reached in February 2020. Moreover, the unemployment rate remains elevated, and 57,140 workers are still missing from the labor force.

All of this is to say, we should be cautiously optimistic. On balance, odds favor a strong rebound this year and into 2022, but there is still a lot of work to be done. Now, more than ever, it is necessary that we get this recovery right.

Training and upskilling will be vital for the thousands of workers whose jobs may never return. EDC’s Advancing San Diego program is facilitating this by connecting employers, educators, and students to the training and education they will need to thrive in the coming expansion. Just this week, Advancing San Diego announced its Preferred Providers of Manufacturing talent, and opened applications for small businesses seeking interns.

It will also be imperative that San Diego small businesses are connected to large buyers in order to keep remaining businesses in the region healthy and to help spur a new wave of entrepreneurship to meet the needs of San Diego’s largest institutions and employers. EDC’s Anchor Collaborative is working with large local businesses to help ensure big companies “shop local” for their procurement needs. Our research estimates that a one percent shift in procurement spending by large companies to local businesses could create thousands of new jobs in the region.

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San Diego’s Data Bites: March 2021 Pt. 2

SAME INTEL, NEW GREAT ‘TASTE’

In case you missed it, EDC has launched a fresh take on our long-standing Economic Pulse. Welcome to the second edition of San Diego’s Data Bites!

Each month the California Employment Development Department (EDD) releases employment data for the prior month. This edition of San Diego’s Data Bites covers February 2021 and reflects the lingering effects of the coronavirus pandemic on the region’s labor market. Check out EDC’s Research Bureau for more data and stats about San Diego’s economy.

Key Takeaways

  1. San Diego employers added back 31,900 jobs in February, undoing the lion’s share of January’s loss of 37,900 payroll positions.
  1. The unemployment rate dropped to 7.2 percent from January’s 8.0 percent even as nearly 33,000 people joined or rejoined the labor force.
  1. February’s employment report is reason for cautious optimism that the economy has turned the corner, but there is still work to be done. Employment remains 8.7 percent below year-ago levels, the labor force is still 2.1 percent smaller than a year ago, and the outlook is wrought with uncertainty.

First glance

San Diego’s labor market bounced back in February, following two consecutive months of declines. San Diego employers added back 31,900 jobs, undoing the lion’s share of January’s loss of 37,900 payroll positions (revised from -38,600) and lowering the unemployment rate to 7.2 percent from January’s 8.0 percent (revised from 8.1 percent). Even better, the unemployment rate dropped as 32,900 people joined or rejoined the labor force—more on that below.

Industry view

Job gains were widespread across industries. Every sector except Wholesale Trade, Retail, and Healthcare and Social Assistance added jobs, and losses in those sectors were de minimis.

The volatile Leisure and Hospitality industry added 12,800 new jobs, following a loss of 11,500 in January. Business and Professional Services firms also added 6,800 jobs, while Construction and Other Services—which includes dry cleaners, laundromats, and other personal services—each gained 4,100 positions.

Gains in Business and Professional Services were led by Administrative and Support Services, which added 4,900 new positions. This subsegment also includes temporary staff, and growth in this field can sometimes be a positive bellwether for future gains as those temporary staff members are hired on permanently.

Nonetheless, it’s important to keep last month’s positive report in perspective. Employment in every industry, except Construction and Utilities, remains below year-ago levels. For example, despite last month’s push, Leisure and Hospitality employment still rests some 33.4 percent below its February 2020 level, and Other Services employment is still 22.9 percent lower than it was a year ago.

San Diego workers flock back to the workforce

Perhaps the most encouraging piece from February’s employment report is the surge in the labor force. Labor force participation among women and minorities has plummeted across the country since the pandemic ensued; and while EDD doesn’t report labor force statistics across demographic groups like the U.S. Bureau of Labor Statistics (BLS) does, it can be safely assumed that a similar dynamic has played out locally. As such, the return of these workers is a welcome sign, if sustained, because it will help to mitigate the cumulative effects of income losses among those most vulnerable groups.

Again, however, it is important to keep this all in perspective; San Diego’s labor force is still 2.1 percent smaller than it was in February 2020, and this has masked the true extent of the remaining weakness in the job market. This is because people who leave the labor force are no longer counted as unemployed by EDD and the BLS. If there were as many people in the labor force in February 2021 as there were a year earlier, the unemployment rate would still be perched at 9.4 percent, more than two percentage points higher than the officially reported 7.2 percent last month.

Wrapping it up

In sum, the February employment report suggests the regional economy may be turning the corner after a couple of disappointing employment reports in December and January. To be sure, COVID-19 cases have declined steadily in San Diego County in recent weeks, and the strong drive to get vaccine shots into people’s arms is most likely reassuring companies that the end of the pandemic is finally within striking distance. If so, then we can expect job gains to continue in coming months.

Nonetheless, the outlook is wrought with uncertainty. It remains unclear whether current vaccines will be effective in protecting against new variants of COVID-19. If not, then a future spike in coronavirus cases could force additional closures and restrictions, thereby hamstringing the recovery. In addition, the pandemic has led to wholesale shifts in how companies do business. Consequently, not every company will need to replace all of the workers that were let go, and thousands of the jobs lost over the past year may never return. Moreover, many businesses forced to shut down over the past year may not reopen, meaning that the weight of the jobs recovery will rest on fewer companies, which could push the timeline for a full recovery further into the future.

All of this is to say, we should be cautiously optimistic. On balance, the prognosis is good that San Diego will enjoy a relatively strong recovery this year and into 2022, but there is still much work to be done. Now, more than ever, it is necessary that we get this recovery right.

Training and upskilling will be vital for the thousands of workers whose jobs may never return. EDC’s Advancing San Diego program is working to do just that.

It will also be imperative that San Diego small businesses are connected to large buyers in order to keep remaining businesses in the region healthy and to help spur a new wave of entrepreneurship to meet the needs of San Diego’s largest institutions and employers. EDC’s Anchor Collaborative is working with large local businesses to help ensure big companies “shop local” for their procurement needs. Our research estimates that a one percent shift in procurement spending by large companies to local businesses could create thousands of new jobs in the region.

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San Diego’s Data Bites: March 2021

Same intel, new great ‘taste’

EDC is excited to unveil a fresh take on our long-standing Economic Pulse. Welcome to San Diego’s Data Bites!

Each month the California Employment Development Department (EDD) releases employment data for the prior month. This edition of San Diego’s Economic Pulse—now ‘Data Bites’—covers January 2021 and reflects the effects of the coronavirus pandemic on the labor market as well as benchmark revisions to 2020 employment data. Check out EDC’s Research Bureau for more data and stats about San Diego’s economy.

Key Takeaways

  1. San Diego employers eliminated 38,600 payroll jobs at the start of the year. Job losses in January are typical as temporary holiday staff is let go, but December’s report showed no surge in holiday hiring in 2020.
  1. Job losses nudged the unemployment rate higher to 8.1 percent from December’s 8.0 percent even as nearly 18,000 workers fled the labor force.
  1. Annual benchmark revisions to 2020 employment data revealed that the economy suffered steeper job losses last Spring and ended 2020 with roughly 30,000 fewer jobs than were initially reported.

San Diego’s labor market kicked off 2021 on a sour note. Local employers eliminated 38,600 payroll jobs in January, nudging the unemployment rate higher to 8.1 percent from 8.0 percent in December even as nearly 18,000 workers fled the labor force.

Job losses are typical in January as businesses roll off temporary holiday help. However, what makes this report unique is that January’s job losses followed a decline of 6,200 positions in December (revised from an initially reported -5,300 jobs), which is extremely atypical for the holiday season. In fact, December’s decline marks only the sixth time in 72 years where employers have let more workers go than they hired.

January’s dismal jobs report likely reflects the struggles of local businesses amid the ongoing COVID-19 pandemic rather than seasonal factors. Burning Glass estimates that San Diego consumer spending is still trending about 10 percent lower than it was before the pandemic, and data from Womply show that roughly 30 percent to 40 percent—or between 30,000 and 40,000—local businesses have been forced to close over the past year.

Industry view

Employment declines were widespread across industries. With the exception of Manufacturing and Utilities—which added a meager 100 jobs apiece—every industry either lost jobs or stayed flat. Hardest hit was Leisure and Hospitality, which gave up 12,200 positions and continues to be the most negatively impacted by the pandemic. Retail, which shed 6,300 jobs, was a distant second, erasing nearly all of the gains made since Spring 2020. The decline in Retail, although disheartening, was somewhat expected, however, since national retail sales and local consumer spending have both remained weak in recent months.

The nearly ubiquitous loss of employment across industries is another indication that labor market weakness in January stems from COVID-related measures rather than seasonality. In a typical year, January job losses would be focused around Leisure, Hospitality, and Retail as holiday staff is let go. However, in more normal times, most other industries have remained stable instead of laying off workers like they did this year.

2020 was even worse than we thought

Also included in January’s jobs report were benchmark revisions to the 2020 employment figures. Typically, in periods of contraction, employment revisions are negative, and that is exactly what EDD reported.

Benchmark revisions revealed that San Diego hemorrhaged 248,000 jobs between February and April 2020, which is 25,000 more job losses than initially reported. Leisure, Hospitality, and Retail accounted for around 16,000 of those additional losses. By the end of the year, revisions showed 30,100 fewer nonfarm payroll jobs in the region compared to the initial estimates.

The additional loss of jobs also meant that the unemployment rate was revised higher. Initial estimates showed the rate peaking at 15.2 percent in April 2020; revised data revealed that joblessness peaked at a significantly higher 15.9 percent, which is more in line with EDC’s estimates at the time.

You can use the below graphic to explore how revisions impacted total employment in the region, as well as each of the industries tracked by EDD on a monthly basis.

The road ahead

San Diego’s job market is entering 2021 on a weaker footing than initially thought. More jobs need to be recouped, and there are fewer businesses to help carry that weight. Together, this implies that the recovery will take longer than anticipated even after San Diegans have been vaccinated against the novel Coronavirus.

Still, there are actions we can take to help speed things along and emerge even stronger than before. Now, more than ever, it is necessary that we get this recovery right.

Training and upskilling will be vital for the thousands of workers whose jobs may never return. EDC’s Advancing San Diego program is working to do just that.

It will also be imperative that San Diego small businesses are connected to large buyers in order to keep remaining businesses in the region healthy and to help spur a new wave of entrepreneurship to meet the needs of San Diego’s largest institutions and employers. EDC’s Anchor Collaborative is working with large local businesses to help ensure big companies “shop local” for their procurement needs. Our research estimates that a one percent shift in procurement spending by large companies to local businesses could create thousands of new jobs in the region.

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San Diego’s Economic Pulse: January 2021

Each month the California Employment Development Department (EDD) releases employment data for the prior month. This edition of San Diego’s Economic Pulse covers December 2020 and reflects some effects of the coronavirus pandemic on the labor market. Check out EDC’s Research Bureau for more data and stats about San Diego’s economy.

Key Takeaways

  1. San Diego lost 5,300 jobs, on net, in December, which is not typical during the holiday season.
  1. The unemployment rate jumped to 8.0 percent from 6.6 percent in November amid job losses and growth in the labor force.
  1. San Diego’s “K-shaped” recovery will exacerbate longstanding structural problems in the economy, making the case for an inclusive growth strategy even stronger.

Labor Market Overview

San Diego’s labor market suffered a setback in December after new business restrictions were put into place to combat a surge in COVID-19 infections and an alarming decline in ICU bed capacity. Local employers let go of 5,300 workers, on net, last month, lifting the unemployment rate to 8.0 percent from 6.6 percent in November. A drop in employment for the month of December is atypical, since holiday hiring is usually in full swing. Last month’s decline marks only the sixth time in 72 years where employers have let more workers go than they hired in December.

San Diego’s unemployment rate is lower than California’s 8.8 percent but significantly higher than the nation’s rate of 6.5 percent in December.

The causes for the rise in San Diego’s December unemployment rate are two-fold, and the news isn’t entirely bad: First, and most obviously, job losses drove the rate higher. However, this was compounded by an increase in the labor force of 12,200 people. The labor force vacillated for most of 2020 but ended the year close to its February, pre-pandemic level—good news for the labor market heading into 2021, if it is sustained.

Industry View

Leisure and Hospitality employers let go of 9,600 workers in December, which was more than enough to lower total employment. The lion’s share of hospitality job losses came from Accommodation and Food Services, which gave back 10,300 positions. Other Services, Government, Manufacturing, Educational Services (private, non-government), and Financial Activities each lost jobs. However, the losses for all of those industries totaled just 4,300, less than half of the layoffs experienced in Accommodation and Food Services alone.

The weakness in Leisure and Hospitality drove an even larger wedge between the jobs recovery for high-paying and low-paying positions, exacerbating a worrisome trend where the income and wealth gaps in San Diego will likely widen exponentially as a result of the pandemic-fueled recession.

Despite the decline in topline employment, job gains were apparent in a number of industries. Business and Professional Services added a healthy 2,500 workers in December, fueled by a gain of 2,700 in the crucial Professional, Scientific, and Technical segment, while retailers brought on 1,900 additional employees despite weak retail sales.

Behind the Numbers

All in all, December’s lackluster employment report is a downer, but not an unexpected one. With COVID-19 cases surging in the region and hospitals running out of valuable space for patients, business restrictions became necessary from a public health perspective.

As mentioned, the decline in employment last month is not typical for December, but it may bode well for January’s employment report. Under more normal circumstances, January typically reveals job losses as seasonal workers are let go. However, given that seasonal hiring was more tepid in 2020, layoffs in January may be less pronounced.

Labor force growth in December is also encouraging if it can be sustained. The extension of federal emergency unemployment benefits should help to keep a floor under the workforce, since only people in the labor force can claim them. Additionally, despite the sharp drop in Leisure and Hospitality employment last month, many firms in the region are still hiring. Therefore, we can expect people to remain in the labor force as long as job growth resumes as we enter 2021.

Unfortunately, these are about the only silver linings in December’s jobs report.

Annual revisions to the 2020 jobs numbers will be released by California EDD on Friday, March 12. Typically, revisions show greater job losses than were initially reported during recession periods. This is because the Labor Department estimates the pace of business formations in a given month, which usually assumes the addition of at least some new jobs as new firms come online. However, a Census-like count of business formation carried out after the initial estimates are released usually shows more business closures, on net, which thereby reduces the level of employment. So, in all likelihood, 2020 revisions could reveal deeper job losses last year than initially reported.

The shape and timbre of the jobs recovery means that even more work will be needed to shore up the local economy. The exponential widening in wealth and income gaps from the “K-shaped” recovery to-date will mean even more aggressive policies aimed at protecting and empowering our lowest-paid workers. Also, declines in the labor force earlier in 2020 were in large part the result of women leaving the workforce. If 2021 exhibits a repeat of that contraction, then it will almost certainly lead to greater disparities in gender pay. Finally, housing has continued to become even less affordable amid high unemployment and rising home values across the region.

It will take intentional and effective action to get this recovery right. It is now more important than ever to ensure greater access to higher education and worker training for our region’s lower-income households. Additionally, companies may also want to consider employee-ownership models, like the one Taylor Guitars recently announced, to give workers a larger stake in their economic fortunes. By offering a pathway to higher paying, more stable employment, we can ensure a more resilient and vibrant San Diego in the future, which will benefit all of us for decades to come.

Learn more about San Diego’s right recovery

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San Diego’s Economic Pulse: December 2020

Each month the California Employment Development Department (EDD) releases employment data for the prior month. This edition of San Diego’s Economic Pulse covers November 2020 and reflects some effects of the coronavirus pandemic on the labor market. Check out EDC’s research bureau for more data and stats about San Diego’s economy.

Key Takeaways

  1. Unemployment falls to 6.6 percent.
  1. San Diego retailers gear up for holiday season by hiring 1,800 employees, but sales continue to suffer.
  1. Shop local this holiday season and wear a mask.

Labor Market Overview

The region’s unemployment rate was 6.6 percent in November, down from a revised 7.5 percent in October 2020, and still more than twice the year-ago estimate of 2.9 percent. Unemployment continues to increase in San Diego’s unincorporated and poorer areas, while falling in wealthier areas. The highest unemployment area in the region was Bostonia at 12.4 percent followed by National City at 10.3 percent, and the lowest was Solana Beach at 3.6 percent.

The region’s unemployment rate remains lower than California’s unemployment rate of 7.9 percent, but slightly higher than the national rate of 6.4 percent. While unemployment continues to fall, much of the improvement can be attributed to government support. In fact, unemployment claims increased again this week showing as emergency aid has dried up—proof the local job market could once again backtrack in the coming months.

Total nonfarm employment increased by 14,300 in November. Trade, transportation, and utilities accounted for the largest monthly gains, adding 8,200 jobs last month, primarily concentrated in retail trade (up 1,800 jobs). Even so, compared to a year ago, retail trade is still down 6,200 jobs. Professional and business services followed with an increase of 2,800 jobs. Job gains were driven by administrative and support services, which added 1,800 jobs. Food services and drinking places continue to struggle, shedding 1,000 jobs last month, even before the mandatory closures that took place in December.

Compared to a year ago, San Diego nonfarm employment remains down 97,700 jobs, or 6.4 percent. Leisure and hospitality represent the largest share, down 35,300 jobs. Accommodation is down 12,900 jobs over the year, and food services and drinking places are down 22,400.

Retail Sales Decline

November marked the beginning of the holiday shopping season as shown by an increase in retail employment in San Diego. However, nationwide retail sales numbers were gloomy. Retail sales were down 1.1 percent from October (seasonally adjusted), which was much worse than expected and likely impacted by increased COVID-19 infections and decreasing household income as expanded unemployment benefits expired. Without a stimulus relief package from Congress, retail sales declines will likely continue and perhaps become severe as millions lose unemployment benefits the day after Christmas.

Department store sales in the U.S. declined by 19 percent since this time last year and 7.7 percent since last month. Clothing and clothing accessories stores declined by 16.1 percent since last year and 6.8 percent since last month. Food service and drinking place stores declined by nearly one percent since last year and 4 percent since last month due to mandatory stay at home closures.

November’s retail sales were the worst since April, adding to the already growing list of signs that a slowdown in the recovery could be imminent. As San Diego’s retailers hire more employees for the holiday season, the call to shop local and safely becomes more necessary, especially given what appears to be a slowdown in consumer spending. Small businesses drive San Diego’s economy and create thriving neighborhoods. Check out some local favorites around the County.

 

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

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San Diego’s Economic Pulse: October 2020

Each month the California Employment Development Department (EDD) releases employment data for the prior month. This edition of San Diego’s Economic Pulse covers September 2020 and reflects some effects of the coronavirus pandemic on the labor market. Check out EDC’s research bureau for more data and stats about San Diego’s economy.

Key Takeaways

  1. Unemployment falls to 9.0 percent.
  1. Long-term unemployment continues to increase.
  1. Investments in workforce development and retraining become increasingly more important.

Labor Market Overview

The region’s unemployment rate was 9.0 percent in September down from a revised 9.5 percent in August 2020, and still three times above the year-ago estimate of 2.9 percent. Unemployment continues to increase in San Diego’s unincorporated and low income areas, while falling in wealthier areas. The highest unemployment area in the region was Bostonia at 16.5 percent and the lowest was Solana Beach at 5.0 percent.

The region’s unemployment rate remains lower than California’s unemployment rate of 10.8 percent, but higher than the national unemployment rate of 7.7 percent.

 

Looking at monthly employment, total nonfarm employment increased by 11,700 in September. Government accounted for the largest monthly gains, adding 6,800 jobs last month, primarily concentrated in local government education (up 5,300 jobs). Even so, compared to a year ago, local government education is still down 11,700 jobs. Leisure and hospitality followed with an increase of 2,500 jobs. Job gains were driven by accommodation and food services, which added 3,200 jobs. These gains were offset by a loss of 700 jobs in arts, entertainment, and recreation. Educational and health services increase this month, adding 2,400 jobs.

Compared to a year ago, San Diego nonfarm employment remains down 117,700 jobs, or 7.8 percent. Leisure and hospitality represents the largest share, down 52,400 jobs. Accommodation is down 14,000 jobs over the year, and bars and restaurants are down 24,400.

 

Long-Term Unemployment Continues to Increase

Long-term unemployment has increased substantially during the past few months of the pandemic, though it remains significantly lower than the peak experience in the Great Recession of 2007-2009. In September, the number of unemployed persons in the U.S. who were jobless for 27 weeks or more increased by 781,000 to 2.4 million. During the Great Recession, the highest rate of long-term unemployment was 6.8 million in April 2010.

Long-term joblessness can have a significant impact on workers’ future career prospects. If out of work long enough, skills become outdated. Moreover, long-term unemployed workers often face continual earnings losses, earnings volatility, and more frequent unemployment throughout their careers. Finally, long-term joblessness greatly increases the risk of workers leaving the workforce altogether, which can have lasting economic impacts.

Workforce development and retraining are becoming increasingly more important, especially as more workers face long-term unemployment. Jobs currently in high demand include software developers and software quality assurance analysts and testers, registered nurses, and retail salespersons and supervisors, which had the highest total job postings in September. While the hiring of retail might be a good sign, this may be due to the reopenings of stores and retail which will eventual level off. The top in-demand skills include merchandising, auditing, accounting, and selling techniques. Working to adjust these skills to the changing work environment is essential. Read more about workforce development and retraining, and how EDC is playing a part.

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San Diego’s Economic Pulse: September 2020

Each month the California Employment Development Department (EDD) releases employment data for the prior month. This edition of San Diego’s Economic Pulse covers August 2020 and reflects some effects of the coronavirus pandemic on the labor market. Check out EDC’s research bureau for more data and stats about San Diego’s economy.

Key Takeaways

  1. Unemployment drops sharply to 9.9 percent; remains highest in the unincorporated parts of the County.
  1. Employment up in nearly all industries, up 20,500 jobs month over month.
  1. Low-wage job losses are nearly 30 times greater than high-wage job losses.

Unemployment Drops

The region’s unemployment rate was 9.9 percent in August down from a revised 12.4 percent in July 2020, and far above the year-ago estimate of 3.4 percent. Unemployment declined monthly as the region continues to reopen and jobs recover. San Diego’s unemployment rate remains lower than the state unemployment rate of 11.6 percent, but higher than the national unemployment rate of 8.5 percent.

Unemployment was highest in the unincorporated areas of Bostonia (17.9%), Bonita (14.7%), Spring Valley (13.6%), and in the cities of National City (13.7%) and El Cajon (13.6%), and lowest in the cities of Solana Beach (5.5%), Poway (6.8%), Coronado (6.8%), Del Mar (7.3%), and Encinitas (7.3%). Wealthier areas are enjoying lower rates of unemployment, while neighborhoods with a larger share of lower-paid workers suffer from higher rates of unemployment – elaborated on below.

Employment Bounces Back

Total nonfarm employment increased in August, up 20,500 jobs. This follows similar patterns to the state and national data. In California, nonfarm employment increased by 140,400 in August from the month prior, while payroll employment increased by 1.4 million in the U.S. during the same time period.

However, compared to a year ago, San Diego nonfarm employment remains down 135,800 jobs or 9 percent. In California, total nonfarm employment is down 1.6 million jobs, or 8 percent compared to a year ago, while the U.S. is down nearly 13 million jobs, or 8.8 percent.

Sector Employment Gradually Returning

Government accounted for the largest monthly gains, adding 6,800 jobs in August, primarily concentrated in local government education (up 4,300 jobs) after last month’s large decline. Compared to a year ago, local government education is still down 11,400 jobs.

Professional and business services followed with an increase of 5,300 jobs. Most of those job gains were in the administration and support services sector, which added 3,100 jobs to the region.

Construction employment increased this month, adding 3,100 jobs.

Trade, transportation, and utilities employment increased this month, adding 2,600 jobs. This was driven primarily by retail, which added 2,300 jobs.

Leisure and hospitality employment as a whole declined by 400 jobs in August. Encouragingly, however, restaurants added 700 jobs last month amid measured reopenings across the region.

Recovery Must Focus on Low-Wage Workers

Despite the gains observed in August, industry employment remains well below levels a year ago. The largest decline in employment has been in leisure and hospitality, which is down 60,100 jobs (shown in the chart above), or 29 percent since August 2019. Most of those leisure and hospitality job losses are concentrated in accommodation and food services, with a loss of 43,900 jobs. Trade, transportation, and utilities are down 17,100 jobs, with 11,700 of those jobs in retail. Government is down 15,400 jobs annually, with 14,000 local government jobs lost.

The lowest wages in San Diego County are concentrated in the sectors hardest hit by COVID-19: accommodation and food services, retail trade, arts, entertainment, and recreation, and educational services. Average wages for accommodation and food services are $30,560, retail trade are $41,785, arts, entertainment, and recreation are $45,040, and educational services are $49,826. Each sector hit hardest by COVID19 falls below the median regional wage of $73,596.

Layoffs in low-wage sectors have occurred at a rate much higher than those in high-wage sectors. According to Opportunity Insights, low wage jobs are down 31.8 percent. Meanwhile, high wage jobs are down only 1.8 percent.

Consumer spending has also suffered as wages continue to drop, especially for lower-wage employees. While low-wage workers hold less spending power, they spend more of their paychecks directly, rather than investments or savings. We can expect to see a larger proportion of spending come back into the economy as lower-paid employees get their jobs back, and ultimately advance to better paying positions over time.

Every previous economic recovery has increased systemic poverty and widened inequality. Too often in a rush to restore normalcy, entire segments of our community have been left further behind. The stakes could not be higher that we get this recovery right. We must rebuild an economy that is more resilient than before, so prosperity reaches more people. Read more about EDC’s recovery framework.

 

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San Diego’s Economic Pulse: August 2020

Each month the California Employment Development Department (EDD) releases employment data for the prior month. This edition of San Diego’s Economic Pulse covers July 2020 and reflects some effects of the coronavirus pandemic on the labor market. Check out EDC’s research bureau for more data and stats about San Diego’s economy.

Unemployment Slightly Lower

The region’s unemployment rate was 12.3 percent in July down from a revised 13.8 percent in June 2020, and far above the year-ago estimate of 3.6 percent. Unemployment declined monthly as the region continues to reopen and jobs recover. The region’s unemployment rate remains lower than the state unemployment rate of 13.7 percent, but higher than the national unemployment rate of 10.5 percent.

Unemployment was highest in the unincorporated areas of Bostonia (21.8%), Bonita (18.0%), Spring Valley (16.7%), and in the cities of National City (16.5%) and El Cajon (16.4%). Unemployment was lowest in the cities of Solana Beach (6.9%), Poway (8.6%), Coronado (9.1%), and Del Mar (9.1%). Areas with large Hispanic populations are facing higher rates of unemployment, as Hispanics are disproportionally employed in the most vulnerable occupations.

Employment Continues to Decline

Total nonfarm employment fell in July, down 2,200 jobs. This differs from state and national data. In California, nonfarm employment increased by 15,370 in July from the month prior, while payroll employment increased by 1.8 million in the U.S. during the same time period.

Compared to a year ago, San Diego nonfarm employment remains down 144,400 jobs, or 10.2 percent. In California, total nonfarm employment is down 1.6 million jobs, or 8 percent compared to a year ago, while the U.S. is down nearly 13 million jobs, or 8.8 percent.

Sector Employment Split on Gains

Government accounted for the largest monthly losses, losing 12,800 jobs in July, primarily concentrated in local government education (down 13,200 jobs) and state government education (down 500 jobs). Compared to a year ago, local government education is down 8,300 jobs, and state government education is down 4,900 jobs. Local government education employment is largely women occupied (70 percent). Job losses in local and state government education have the potential to set back women in the workforce, a trend already exasperated by the pandemic according to a United Nations report.

Construction followed with a decline of 1,100 jobs. Construction of buildings declined both monthly and annually, which is especially important as the region continues to grapple with a housing affordability crisis. Without construction jobs, home building stops. Home price growth continues to outpace incomes, as housing production is about half the rate necessary to keep up with job and population growth. Ensuring San Diego is an attractive and affordable place for talent and business is critical to maintaining its regional competitiveness.

Trade, transportation, and utilities employment increased this month, adding 6,100 jobs. This was driven primarily by retail, which added 4,200 jobs. Clothing and clothing accessories stores grew by nearly 13 percent in July. As California clarified social distance retail guidelines, many retail stores were able to reopen, leading to an increase in employment.

The leisure and hospitality industry gained back 100 jobs in July, but remains down 60,800 jobs compared to a year ago. Nearly 40 percent of leisure and hospitality industry employees are Hispanic. These jobs are not likely to return in large numbers while social distancing remains in effect.

A Long Road to Recovery

Industry employment remains well below pre-pandemic levels seen in February 2020. The largest decline in employment has been the leisure and hospitality industry, down 49,500 jobs, or 25 percent. Government employment is down 30,200 jobs, educational and health services is down 20,300 jobs, and trade, transportation, and utilities, which includes retail, has lost 18,000 jobs since February.

While some jobs have been recovered, many will be lost permanently. Creative training programs to get these workers employed in growing occupations will be key to our economic recovery. Furthermore, the pandemic has exacerbated the inequities that have long-plagued the region, particularly our Hispanic population. Developing an economic recovery strategy that promotes inclusive growth is essential to ensuring our future economic competitiveness.

 

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.

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