Job experts see more signs of San Diego’s recovery but also distress

Friday, October 16, 2020

San Diego’s jobs recovery continued in September, but many companies and individuals continue to struggle with the ravages of the pandemic. The region added jobs but at half the pace seen in August. Unemployment fell, but the jobless rate is still triple its pre-pandemic level.

Unemployment

San Diego’s jobless rate in September moved to a seasonally adjusted 9.1%, down slightly from the prior month’s 9.2%. More people entered the labor market to look for work and even more found jobs. People have dropped out of the workforce, however, to care for aging parents or to help with children with school. Others may fear catching COVID-19 at work. A total of 30,000 San Diegans have dropped out of the workforce just since February.

Mel Katz, Executive Officer of Manpower West, says, “While there are lots of production jobs available, San Diegans are still hesitant to go back to work. We are seeing hourly wages increasing by two or more dollars per hour to entice workers to leave home and enter the workforce.”

“Another disconcerting recent trend is that more temporary layoffs are turning into permanent job losses,” noted Lynn Reaser, chief economist of the Fermanian Business and Economic Institute. Nationally, nine of every ten unemployed individuals in April were furloughed or on temporary layoff. Today, the number of permanent job losses has climbed to almost equal those on furlough.

Industry hiring

San Diego’s job market improved further in September, although gains were far from universal. More openings at restaurants, hair salons, and retailers helped created a net gain of nearly 12,000 jobs. This was, however, about half the gain recorded in the prior month.

The opening of schools, albeit primarily online, boosted jobs in education. Health care hiring also advanced. While monthly reports can be volatile, construction and manufacturing jobs both declined. Notably, business and professional services, which typically are a reliable job driver, showed no job growth over the month.

San Diego’s job gain outpaced that seen both nationally and in California on a percentage basis last month. As of September, San Diego’s employment was about 91% of its February peak, matching California, but below the national average of 93%.

Peter Callstrom, CEO of the San Diego Workforce Partnership commented on what he is seeing from the ground. “We have seen a recent rise in layoff notices in local companies related to tourism, air travel, aerospace engineering, and manufacturing. Hiring in construction, energy, and utilities remains strong and we are working on several large recruitments and short-term training programs for new workers in these fields. Now is the time to make a move if you are interested in a career transition into energy, utilities, or construction.”  

September’s numbers continue to underscore the economic divide between different sectors and industries. Most industries are well below their February job levels. Leisure and hospitality remains at 76% of its February level, while private education, personal services, and information services are also lagging sharply. Financial services, warehousing, business services, construction, and utilities have seen much more recovery success.

Outlook

San Diego’s economy remains on edge as the public anxiously awaits the latest update on its health rating each week, hoping that it will retain or improve its current placement in the “Red Zone.” Consumers, businesses, and public officials remain on guard against a “second wave,” which could be compounded by the onset of the flu season.

“Uncertainty and fear are the economy’s nemesis,” observed Lynn Reaser. Even healthy businesses will put off hiring, while other businesses may finally not have enough cash to survive. These trends will limit any potential job growth. Many low-income workers will still not find jobs in tourism. Better-off individuals, who can work remotely, may decide to quit after finding that working, along with caring for the health and education of family members, represents too great of a burden.

We are most probably much closer to the end of the pandemic than the beginning, but the remaining months will be hard on the region.

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