Now live: 2021 Downtown Demographics Study

The Downtown San Diego Partnership, together with the City of San Diego and San Diego Regional EDC released the findings from the 2021 Downtown Demographics Study. Among findings about Downtown’s residential population, workforce, and attractions, the study confirmed that Downtown is uniquely primed for a post-pandemic resurgence of residential and business growth due to several key factors.

“What we found most exciting about this research is that it confirmed through data what we’ve long heard from Downtown residents and stakeholders,” said Betsy Brennan, president & CEO for the Downtown San Diego Partnership. “Downtown is primed with a talented residential workforce that desires to live and work in our urban core. This, in combination with ongoing investment in world-class commercial and research spaces with access to the region’s enhanced transit system and a vibrant neighborhood lifestyle for residents, businesses and visitors alike, tells us that there is no better time to invest in Downtown.”

Authored by EDC, in coordination with UC San Diego Extension’s Center for Research and Evaluation, the update provides new data on the residential and workforce populations of San
Diego’s urban core, identifies areas for growth, opportunities for investment and advocacy, as well as a benchmark for the impacts of COVID-19. It’s intent is to serve as a helpful tool for anyone hoping to understand Downtown’s unique makeup and continue to fuel decisions to advance the economic prosperity and cultural vitality of the city’s urban core for years to come.

KEY TAKEAWAYS

  • Downtown’s residents are young, urban professionals primarily working in innovation industries and earning higher-than-average wages. The vibrancy of urban living is what they like about living Downtown and they would even prefer to work there if given the choice, though the cost of living remains higher in Downtown than the County at large.
  • Downtown’s over concentration of the most in-demand talent, combined with an increasing supply of commercial real estate, present timely opportunities for high growth companies – particularly Life Science and Technology companies securing record-breaking investment – who are seeking top talent surrounded by the amenities they desire.
  • Downtown’s legacy industry clusters are more vulnerable to economic downturns, making diversification advantageous. Job losses during 2020 erased the gains of the previous four years.
  • Downtown is widely viewed as a hub for arts and culture, as well as a top destination for professional networking and gathering.

“While San Diego’s innovation economy continues to drive the region’s recovery from the COVID-19-spurred economic downturn, we must ensure the building blocks of this recovering economy—quality jobs, skilled talent and thriving households—are accessible to more people,” said Mark Cafferty, president and CEO of EDC. “The data confirms that the pillars to build a more resilient economy through continued investment into Downtown by new, growing and diversified industries are in place and ready. More than ever, smart economic development means inclusive economic development.”

The Downtown Partnership first commissioned a demographic study in 2016, then a new tool for the organization’s advocacy efforts and the Downtown community. Providing an in-depth look at San Diego’s urban core and capturing a moment in time of the market’s recovery following the pandemic, the 2021 study was funded by the City of San Diego’s Economic Development Department, DSDP Clean & Safe Commercial Enhancement Program, Stockdale Capital Partners, and Urban Strategies Group.

Read the report

San Diego’s Changing Business Landscape: Increasing optimism after a year of struggle

Welcome to the final edition in EDC’s Changing Business Landscape Series, which is published bi-monthly in the San Diego Business Journal and here on our blog. If you missed them, check out all past editions here.

Surveying the changing business landscape in San Diego

The COVID-19 pandemic has impacted every facet of life, including how businesses operate. Companies in every industry are rapidly re-evaluating how they do business, changing the way they interact with customers, manage supply chains and where their employees are physically located. This has massive immediate and long-term implications for San Diego’s workforce and job composition, as well as regional land use decisions and infrastructure investment.

To identify evolving trends in local business needs and operations, ensuring their ability to grow and thrive in the region, San Diego Regional EDC surveyed nearly 200 companies in the region’s key industries on a rolling basis throughout 2021 to monitor and report shifts in their priorities and strategies. In addition, EDC constructed the San Diego Business Recovery Index (BRI)—a sentiment index to measure companies’ perceptions of current conditions, as well as expectations for the future across several factors such as business development, employment and commercial real estate needs. (An index value >50 reflects expansion, and a value <50 reflects contraction. More information on the index and how it is calculated is available at sandiegobusiness.org/research.)

These insights will help inform long-term economic development priorities around talent recruitment and retention, quality job creation, and infrastructure development. Companies are surveyed on several topics, with varying emphases in each wave.

Here are three key findings from the final wave of surveying conducted in December 2021:

    1. Companies have settled into their pandemic modes of operation. Revenues and employment have stabilized, driving positive sentiment of San Diego’s current business environment.
    1. Pandemic-driven challenges aren’t going away soon. Businesses report greater struggles with hiring, retention, and supply chain disruptions than at any other point in 2021.
    1. Businesses enter 2022 with a renewed level of optimism. The challenge will be in meeting industry’s growth with infrastructure investment needed to sustain it.

San Diego businesses reported mainly positive views on both the current conditions and expectations for region’s economy during the next six to 12 months. Although there was significant variation in these sentiments depending on the size of establishment, the overall results of December’s Changing Business Landscape survey were positive. The BRI climbed 9.4 points from 54.1 in October to 63.5 in December, reflecting more positive views of current economic conditions as well as much more bullish view of the future.

Companies have settled into their pandemic modes of operation

Across firm size and industry, business perceptions are that San Diego’s economic engines have adapted better than peer metros in the United States during the pandemic. As new coronavirus variants continue to surface, this adaptability is paramount to the continued success of the region’s businesses, both large and small. Furthermore, businesses rated San Diego’s economic health higher in December than at any other point in the year.

The biggest driver behind the rosy views of current business conditions surrounds employment, with San Diego businesses indicating that they have significantly increased their workforce since the start of the pandemic. This is principally driven by innovation industries, such as Life Sciences and Manufacturing. Life Sciences companies, in particular, are growing rapidly, raising $5 billion in venture capital funding in 2021 alone.

Along with growing payrolls, San Diego businesses are also reporting a rebound in both revenues and earnings. However, the magnitude of the rebound varies by business size. Businesses with fewer than 50 employees reported milder up swings (BRI values in the low-50s) compared to businesses with more than 250 employees (BRI values in the mid-70s). Here again, Life Sciences and Manufacturing led the way. However, some surprising results came from Software companies which reported declines in both revenues and earnings back in October. This could also be attributable to a surge in venture funding during the fourth quarter of 2021.

Finally, business leaders appear to have adapted to the constant disruption from new coronavirus variants and we enter the third year of a pandemic. More are reporting additional changes to their human resource policies and related procedures to operate effectively, and satisfaction with remote work arrangements remains high.

Pandemic-driven challenges aren’t going away soon

The employment gains reported by companies have not come easily. Employers indicated that hiring difficulty has reached a new low with December’s BRI at a dismal 8.4, a massive drop from October’s already low level of 28.4. Not only are the region’s businesses spinning their wheels over ever-increasing difficulty hiring, but a new record rate of workers quitting across the U.S. has made the war for talent a two-front war. San Diego entered 2021 with more than 122,000 people unemployed. Over the course of the year that number has fallen by half and while there is technically surplus of workers in the region, demand for workers is even greater. In fact, during the month of December employers posted more than 158,000 unique jobs—nearly half of which are new positions. Nearly every industry is in need of more workers and the demand is translating into higher advertised salaries.

In addition to their troubles recruiting and retaining talent, San Diego businesses reported a sharp decline in their ability to manage suppliers and vendors as the global supply chain knot continues to disrupt normal business operations. These issues appear to be worse for larger companies, as they often require intermediate inputs from international vendors in larger quantities than smaller businesses, making it more difficult to find new suppliers when there is a delay in production or shipping. Despite these disruptions, San Diego’s transportation cluster continues to grow. This is important because it supports more than 90,000 local jobs while propelling San Diego’s global competitiveness.

Businesses enter 2022 with a renewed level of optimism

Businesses reported strong future expectations across every single forward-looking BRI segment in December. Notably, San Diego companies with more than 250 employees once again expect to lease or purchase additional commercial space in the next six to 12 months after expressing desires to reduce their collective footprint in October. Here again, medical device manufacturers, and manufacturers more broadly, are driving the trend. Additionally, expectations for future remote work were strongest in December by a large margin. Companies of all sizes and industry have embraced remote work, to some degree, as a part of how they operate going forward.

While the impacts of omicron are not necessarily captured during the last wave of surveying, businesses nonetheless feel that San Diego has fared well in adapting to changing regulations and continuous staffing and supply chain uncertainties. If this is, in fact, the next normal, San Diego’s economic engines are well positioned to drive that growth.

While businesses surveyed leave 2021 with a renewed sense of optimism, 2022 will bring more questions than answers. Will remote work and a continually rising cost of living begin to drive talent away? Will the ‘great resignation’ translate into surge of new startups? Will record venture capital prove to be circumstantial or drive a new Life Sciences boom? Will the billions of dollars of public funding from the state align to support growth? EDC will be monitoring these trends and how companies continue to adapt in the face of an ever-changing business landscape.

For San Diego to fully emerge from this global pandemic, it must reconcile an economic recovery that is full of contradictions. The region is simultaneously experiencing strong job growth and eye-watering venture capital investment, along with widespread labor shortages, small business closures, and a housing market that is nearly 30 percent more expensive. Moreover, these impacts were not felt evenly across the region. The brunt of the adverse health and economic impacts of the pandemic were incurred by low-income earners and people of color.

The past year was one of adaptation and endurance, but also a year that reinforced the need to focus on the fundamental building blocks of a strong economy—quality jobs, skilled talent, and thriving households. The next year will be one where resilience means connecting more people to innovation industries; competitiveness means more San Diegans have the skills the economy needs; and prosperity means that working families can afford to live here. More than ever, smart economic development means inclusive economic development.

For more data and analysis, visit our research page.

This research is made possible by:

San Diego’s Economic Snapshot: Q4 2021

Every quarter San Diego Regional EDC analyzes key economic indicators that are important to understanding the regional economy and the region’s standing relative to the 25 most populous metropolitan areas in the U.S.

EDC explains San Diego’s Q4 2021 economic data:

Key Findings from Q4 2021:

  1. VENTURE CAPITAL: Venture capital investments are making it rain cold, hard cash in sunny San Diego. The region’s companies closed out the year with another bonanza of VC funding in Q4, totaling more than $2.6 billion across Angel, Seed, Series A, and Growth stages–just shy of the $2.69 billion in Q1. Once again, Tech was the most funded industry, raking in north of $1.5 billion, compared to $0.6 billion in Life Sciences. Surprisingly, VC in Consumer companies reached $437 million, with apparel company Vuori pulling in $400 million alone, one of the largest investments in a private apparel brand in history. All in all, total VC funding for 2021 came in at $9 billion, compared to the $5.3 billion in 2020.
  2. COMMERCIAL REAL ESTATE: Life Sciences companies drive demand growth in commercial real estate. A record year in venture funding is beginning to manifest itself in the commercial real estate market, as current demand for lab space is 2.75 million square feet—more than triple the amount of new deliveries expected in the next year according to a market report by CBRE. Despite 4.8 million square feet of new deliveries in the industrial market, much of this was pre-leased, doing little to stop the steady decline in the vacancy rate which ended 2021 at 2.4 percent. On top of this, asking rates for low-finish industrial space were 8.8 percent higher at the end of Q4 compared to a year ago. Furthermore, increased demand for office space resulted in the third straight quarter of declining vacancy rates, with a positive net absorption of 340,000 square feet in Q4.
  3. HOUSING: Despite slightly lower home prices, San Diego’s affordability crisis deepens. The median home price in San Diego came in at $836,700 in December 2021, $13,300 lower than the end of Q3, as year-ago home sales fell 11.2 percent. However, home prices remain 14.6 percent higher than a year ago, worsening San Diego’s affordability crisis. Simply put, the growth in housing supply is not keeping up with demand, which could have lasting impacts on the region’s capacity to compete for the talent that drives San Diego’s innovation economy.

Check out our most recent Economic Snapshot below

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Study: AI helps catalyze 10% employment growth in San Diego Transportation cluster through the pandemic

San Diego Regional EDC study quantifies the impact of AI in region’s Transportation cluster

Today, alongside Booz Allen Hamilton, San Diego Regional EDC released the third study in a series on the proliferation of Artificial Intelligence (AI) and Machine Learning (ML) within San Diego County’s key economic clusters. “Mobilizing the Future: AI and San Diego’s Transportation Cluster” quantifies the economic impact of the region’s Transportation cluster and explores how AI and ML technologies have helped position San Diego as a global trade hub.

While people begin to get more comfortable with the notion of autonomous-driving cars, San Diego is deploying AI and ML in Transportation even beyond consumer use. One in three Transportation and related Manufacturing companies in San Diego are either developing or adopting AI and ML technologies, thus achieving levels of precision and accuracy otherwise unattainable by humans. This is measurably higher than the average engagement rate of 25 percent across all industries.

Local startups like Airspace and Boxton are enabling the shipment of goods in the quickest, most cost effective way; large firms Lytx® and TuSimple are improving safety in transportation; established brands Cubic and SANDAG are streamlining travel and commutes for individuals; and defense contractors BAE Systems and General Dynamics NASSCO are mobilizing troops and supplies to drive mission success and safety.

Underwritten by Booz Allen Hamilton, the web-based study—transportation.sandiegoAI.org—includes video case studies on local Transportation companies, details on the $11 billion economic impact of the Transportation cluster including interactive data visuals, and demonstrates overall how the region’s rapid adoption of AI in Transportation has helped propel San Diego into the global magnet it is today.

“San Diego is home to some of the most innovative and influential Transportation technology companies in the world. The rapid development and adoption of AI in Transportation has uniquely positioned the region as a leader in solving global challenges such as climate change and supply chain disruptions brought about by the pandemic,” said Eduardo Velasquez, Research Director at San Diego Regional EDC.

KEY FINDINGS

  • San Diego’s Transportation cluster is big and growing. The cluster supports more than 90,000 local jobs and contributes $11 billion to the regional economy each year. Despite the pandemic, employment in the cluster has increased 10 percent during the last five years.
  • AI and ML in transportation is much more than just autonomous vehicles. Local developers are creating AI- and ML-based solutions to optimize shipping routes, automate and secure mass-transit fare collection systems, improve safety on roadways, and achieve extreme precision in the manufacturing of ships and aircraft.
  • The Transportation cluster drives global connectivity and competitiveness. These innovations bring enormous economic benefit to the region, including advanced manufacturing jobs, while propelling San Diego’s role in the global marketplace.

“It is important to remember that transportation in San Diego includes not only our personal vehicles, but also a globally connected market supported by an international border crossing, a shipping port, and an international airport,” said Joe Rohner, Director of Artificial Intelligence at Booz Allen Hamilton and leader of the firm’s West Coast AI business. “The study series continues to illustrate how the implementation of AI and ML technologies across diverse industries is perpetuating San Diego’s leadership in tackling global challenges. Booz Allen is ready to engage with our region’s leaders and industry partners to support this work.” Booz Allen employs approximately 1,400 professionals in San Diego, working on cybersecurity, analytics, engineering, and IT modernization.

Transportation is a key and rapidly growing piece of the San Diego regional economy. While employment in all other sectors contracted 2.3 percent since 2016, Transportation employment saw 10 percent growth even amid the coronavirus pandemic. This includes Transportation Manufacturing, Logistics and Freight, Passenger Transportation including Mass Transit, and Other Transportation Services. Importantly, each Transportation job creates another job in other local industries; this means 4,000 more jobs have been created elsewhere in the economy due to Transportation’s 10 percent growth over the last five years.

“At Lytx, we combine video telematics with machine vision (MV), AI, and driving data to help solve the transportation industry’s most critical problems, like distracted driving. We pioneered the use of MV + AI in fleet management solutions, and we firmly believe in this powerful technology’s ability to empower drivers, protect fleets, and create safer roadways—in San Diego and around the world,” said Rajesh Rudraradhya, Chief Technology Officer at Lytx. “The latest report in the series by EDC reinforces the importance of implementing advanced technologies such as AI and the increasing need for companies like ours to continue to innovate and improve outcomes in this space; doing so fuels regional growth while also increasing driver safety.”

With this growth, and a unique convergence of public and private entities, among other factors, San Diego’s Transportation cluster is leading in the global fight against climate change and supply chain disruption.

The study series is underwritten by Booz Allen Hamilton and produced by San Diego Regional EDC. This report was sponsored by Northrop Grumman and Lytx.

Read the full study at transportation.sandiegoAI.org

Read the full AI series

San Diego’s Economic Snapshot: Q3 2021

Every quarter San Diego Regional EDC analyzes key economic indicators that are important to understanding the regional economy and the region’s standing relative to the 25 most populous metropolitan areas in the U.S.

EDC explains San Diego’s Q3 2021 economic data:

Key Findings from Q3 2021:

  1. VENTURE CAPITAL: Life Sciences and Tech companies continue to shine. San Diego experienced another phenomenal quarter for VC, reaching $1.9 billion, an increase of $52 million compared to Q2, and $1.1 billion more than the same quarter last year. Life Sciences companies attracted almost $1 billion via 23 deals, with Genomatica pulling in $118 million alone. Twenty Tech companies brought in more than $940 million, with Shield AI and Wiliot attracting $410 million combined.
  2. COMMERCIAL REAL ESTATE: Demand for office and industrial space continues to climb. For the second quarter in a row, San Diego showed positive net absorption of office real estate, pushing vacancy rates down and rents up. The delivery of Amazon’s 3.4 million square-foot warehouse in Otay Mesa led to net absorption of more than 4.7 million square feet of industrial space, the strongest quarter on record.
  3. EMPLOYMENT: San Diego continues to ride the wave of employment gains. Total nonfarm employment increased by 6,200 during Q3 and is up 51,300 compared to a year ago. However, gains were choppy across industries. Leisure and Hospitality led employment growth in Q3 with 7,900 jobs, as Accommodation and Food Services establishments continue to re-open and re-hire. Professional and Business services also had a positive quarter, adding 3,200 jobs to the region as venture funding fuels growth.

Check out our most recent Economic Snapshot below

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San Diego’s Economic Snapshot: Q2 2021

Every quarter San Diego Regional EDC analyzes key economic indicators that are important to understanding the regional economy and the region’s standing relative to the 25 most populous metropolitan areas in the U.S.

EDC explains San Diego’s Q2 2021 economic data:

Key Findings from Q2 2021:

  1. VENTURE CAPITAL: Investment into Technology companies more than quadrupled. More than $2.4 billion in venture capital went to San Diego Tech companies during Q2, a 433 percent increase from the previous quarter and the first time that Tech received more VC funding than Life Sciences since Q1 2019. Life Sciences funding fell from record levels, but still pulled in more than $1.9 billion during the quarter, more than doubling the amount received in the same quarter last year.
    *Correction: Dollar values for Venture Capital in the preceding paragraph include other sources of funding, such as IPOs, mergers, and Acquisitions.
  2. COMMERCIAL REAL ESTATE: Demand for office space jumps as State lifts lockdowns. Net absorption of office real estate was positive during the quarter, up more than 330,000 square feet, for the first time since Q4 2019 as San Diego businesses began transitioning back to the office. Additionally, Tech companies such as Apple and AppFolio are expanding their San Diego footprint, helping push office vacancy rates down and rent growth back up.
  3. EMPLOYMENT: Job growth returns amid continued battle for talent. San Diego’s Q2 employment reversed the past year’s downward trend as the vaccine rollout led to loosened restrictions on businesses and increased consumer confidence. Year-over-year total nonfarm employment increased by 17,700 in Q2, with Leisure and Hospitality leading the way. However, total employment remains about 100,000 jobs lower than pre-pandemic levels and some key industries, such as Healthcare, are in dire need of more workers.

Check out our most recent Economic Snapshot below

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San Diego’s Economic Snapshot: Q1 2021

Every quarter San Diego Regional EDC analyzes key economic indicators that are important to understanding the regional economy and the region’s standing relative to the 25 most populous metropolitan areas in the U.S.

EDC explains San Diego’s Q1 2021 economic data:

Key Findings from Q1 2021:

  1. COMMERCIAL REAL ESTATE: Offices aren’t going anywhere. Regional shutdowns and new remote-work policies due to the COVID-19 pandemic have changed the nature of office space. While increased office vacancy (14.2 percent during Q1) suggests companies were abandoning their current offices, a recent survey of San Diego employers found that 39 percent plan to rent, lease, or purchase additional space in the next 12 months. Companies in the region’s innovation industries have more than recovered job losses from the early months of the pandemic and are looking to return to the office in some capacity over the coming months as health guidelines permit.
  2. VENTURE CAPITAL: Biotech leads venture capital investment. In Q1, San Diego saw $2 billion in venture capital (VC) investment come into the region by way of 59 deals—the highest number in a quarter since 2000. The top three deals were worth nearly $1.2 billion, all to local biotechs Mesa Biotech, Fate Therapeutics, and Blacksmith Medicines, and account for more than half of all VC investment in the region. These continued VC inflows are a testament to San Diego’s position as a global life sciences leader.
  3. HOUSING: Rising home prices further hinder affordability. The median home price in Q1 was $763,500—a historic high that has continuously climbed during the pandemic, despite job losses and economic uncertainty. Increasing home prices make it difficult for new homebuyers to enter the market. We can hope that increased vaccinations will encourage sellers off the sidelines and free up more inventory for buyers.

Check out our most recent Economic Snapshot below

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EDC, City of SD release study on creative economy

First-of-its-kind study highlights impact on San Diego economy, including $11B generated and more than 100K employed

Of note, data collected is pre-COVID from 2019.

In order to better understand the impact on our communities, EDC and the City of San Diego have released the first comprehensive study analyzing the intersection between San Diego’s creative industries and the local economy.

Together with the City’s Commission for Arts and Culture and the Economic Development Department, EDC authored the 2020 Creative Economy Study to examine the economic impact creative industries and their workers have on the region.

“San Diego’s creative industries have an important ripple effect in the broader economy. Every job in the creative industry supports another 1.1 jobs,” said Christina Bibler, Director of the City’s Economic Development Department. “This means that creative industries are a powerful component in the region, with many industries employing creative workers.” 

The creative economy is defined as a sector made up of non-profit and for-profit businesses and individuals who produce cultural, artistic and design goods or services and intellectual property. In San Diego, the creative economy employs more than 107,000 people at nearly 7,400 creative firms and organizations and generates more than $11 billion annually.

“To grow San Diego’s creative economy, we first need to understand it. This report is the starting point to understanding the space and trends over time,” said Jonathon Glus, Executive Director of the Commission for Arts and Culture. “Investing in creative industries can help advance San Diego as a creative city and it’s the ideal platform for cross-sector collaboration and innovation.” 

The study measured the size of the creative economy and identified characteristics unique to San Diego that could provide future economic growth potential. The study spanned 71 industries and 77 unique occupations.

Study findings include:

  • 59% of the creative economy in San Diego is for-profit, 34% nonprofit and others (including government employers and independent contractors).
  • The majority of creative firms and organizations are small, with 19 or fewer employees.
  • 41% of creative industry employers hire a large number of contractors.
  • The median annual income for creative occupations is $75,000.

“With a 23% decline in jobs, the arts have been hit even harder by the pandemic than most sectors of our economy,” said Mark Cafferty, president and CEO, San Diego Regional EDC. “As San Diego recovers, it is imperative we continue to work with our arts and cultural leaders to create a more diverse and resilient arts industry to weather future economic downturns—for the sake of the vibrancy of our communities and our culture.” 

Completed in May 2020, the study utilizes 2019 information. The data was collected pre-COVID-19 and prior to the implementation of Assembly Bill 5 Worker status: Employee and Independent Contractors (AB 5).

As of August 2020, the economic impact of job loss in San Diego’s creative industries due to COVID-19 is estimated to be a decline of $2.1 billion. 

READ THE REPORT

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

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.

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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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.

 

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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