Seasonal trends punished December’s job numbers, but the unemployment rate managed to decline further.
Unemployment
San Diego’s December jobless rate dropped from 4.6% to 4.4% after adjusting for seasonal volatility (calculated by PLNU). The unadjusted figure fell from 4.6% to 4.2%. Part of the drop, however, was due to a shrinkage in the size of the labor force with more people either retiring or at least temporarily halting their job search.
Industry Hiring
Although the immediate read on San Diego firms was gloomy with a loss of 1,200 jobs, it was primarily seasonal. After adjusting the data for seasonal fluctuations, as done by the California Employment Development Department (EDD), companies added 4,200 jobs.
“People should not overreact to the headline read,” emphasized Lynn Reaser, chief economist at Point Loma Nazarene University. “December typically sees a pullback in such industries as construction and hospitality. Although the report may indicate some red flags, companies’ major problem continues to be finding enough workers.”
Employees are quitting their jobs at record numbers as they search for possible better opportunities. Companies are struggling to retain their current staffs, while striving to fill open positions.
“Underscoring the continued demand for employees, temporary help and employment service firms saw further hiring gains,” Phil Blair, executive officer of Manpower West, observed. “The growth in professional services and bio sciences and research hiring is encouraging for the San Diego economy since these are high paying jobs. Drops in construction can be attributed to the holidays and the constant effects of Omicron on both those vaccinated and especially unvaccinated.”
“Despite a normal seasonal dip in employment, our region continued its recovery from the pandemic recession, with bright spots in retail and professional services,” said Daniel Enemark, senior economist at the San Diego Workforce Partnership. “Whether you’re just getting a start in the world of work or aspiring to a high-paying career, there are significant opportunities across the labor market.”
For the year as a whole, San Diego created 67,600 jobs, an impressive number. San Diego still has sizable ground to cover. Total employment in the County in December stood at 94.8% of its pre-COVID-19 peak in February 2020. California’s job total was at 95.6% of its pre-pandemic level, while the nation was at 97.7% of its pre-COVID high.
Five industries have now fully recovered their COVID losses: retailing, professional services, transportation and warehousing, construction, and utilities. Leisure and hospitality, along with private education, remain the primary laggards.
Outlook: More Challenges, but Hope Remains
A wage-price spiral represents the economy’s most immediate risk. Companies will continue to boost wages to retain and attract workers. Although they will bear some narrowing of profit margins, they will also raise prices.
As 2022 progresses, “a subsidence of Omicron and the waning of government stimulus should bring more people back into the workforce,” noted Reaser. Blair is also hopeful for some relief but believes that employees will have the upper hand in the job market for at least the next year or two.
Enemark emphasized that youth ages 16–24 can sign up now to get connected with paid work readiness training, internships and employment.