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October 22, 2021

San Diego’s labor market made further progress on most fronts in September, although some areas of weakness remained. Companies added more jobs and the unemployment rate fell. Firms struggled further to fill job openings as the labor force shrank slightly. San Diego is lagging both the State and the Nation in its recovery from pre-pandemic job peaks.

Underemployment

San Diego’s September jobless rate declined to 5.7% from 6.3% in the prior month after adjusting for seasonal volatility (calculated by PLNU). “It was good to see continued movement toward recovery with a new low in San Diego’s unemployment rate,” said Daniel Enemark, senior economist for the San Diego Workforce Partnership. “This reflects a pattern in the national economy of people responding to new opportunities for more stable, fulfilling, flexible and/or better-paying jobs,” he added.

San Diego’s 5.7% rate is below California’s seasonally adjusted 7.5% rate, but above the nation’s 4.8%. The labor force still has a long way to recover fully in the San Diego region, with a loss of 51,000 potential workers since its pre-pandemic peak in February 2020.

Industry Hiring

San Diego firms boosted hiring by 3,200 employees after adjusting for the normal seasonal ebbs and flows in September. This was slightly less than the 3,600 reported before that adjustment. Public school hiring dominated last month’s hiring, with a gain of 7,800 positions, offsetting job losses in a number of other areas. As restaurants and others struggled to find workers, leisure and hospitality employment fell by 1,500.

“COVID-19 has caused havoc in normal seasonal trends, which has made month-to-month changes hard to interpret,” according to Lynn Reaser, chief economist for Point Loma Nazarene University (PLNU). On a year-over-year basis, all of San Diego’s major sectors have shown job gains with the exception of manufacturing and finance. “The biggest challenges that companies now face are the scarcity and cost of products, parts, materials and labor, with employee gaps looming particularly high. San Diego business owners wake up each day wondering where they will find the workers.”

Phil Blair, executive officer of Manpower West, expressed hopes that the reopening of schools, easing concerns over COVID-19 infections at work and higher pay will lure more people back to jobs. “We are seeing more people applying for positions, but client demands are rising even faster,” he remarked. “Companies are also doing a lot more permanent as opposed to part-time hiring. One firm wants to hire 50-150 production workers every month for the near year,” he added.

The September report showed that San Diego is still lagging the rest of California and the nation in payroll jobs. As of last month, despite a lower jobless rate, San Diego’s employment trailed both the State and the U.S. in terms of its recovery. San Diego jobs were at about 93% of their pre-pandemic February 2020 high. In comparison, California’s recovery was at 94% and the U.S. rebound was about 97% complete.

Outlook: Crosswinds, but Moving Ahead

Although the holidays might bump CVOID-19 infection rates higher, rising vaccination rates and new booster shots should provide the region with some protection. The easing of border restrictions should help both tourism and the supply of workers. Inflation is a concern, but wages are also rising. “As we move to the end of the year, the major barrier to faster job growth will be companies’ ability to fill all of the jobs they will desperately need for the holidays,” concluded Reaser.

The Workforce Partnership is glad to see continued movement toward recovery with a new post-pandemic low in unemployment. This reflects a pattern in the national economy of people responding new opportunities for more stable, fulfilling, flexible, or better-paying jobs by making a move. Our Income Share Agreement program can help fund your career move with a 12-week coding pre-apprenticeship program. If you’re happy where you are, consider strengthening your community and helping your job-seeking neighbors find their new career by volunteering as a Workforce Partnership Mentor.

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