San Diego’s labor market displayed some good news for August, but some of the underlying data gave reasons for pause. A good part of the job gain appears to have been seasonal, while an increase in the number of people exiting the workforce helped to push the jobless rate lower.
Unemployment
San Diego’s unemployment rate showed that the region’s labor market is continuing to tighten. San Diego’s August jobless rate declined to 6.3% from 6.5% in the prior month after adjusting for seasonal volatility (calculated by Point Loma Nazarene University, PLNU). San Diego’s 6.3% rate is below California’s seasonally adjusted 7.5%, but above the nation’s 5.2% rate. Last month’s jobless rate’s decline in San Diego was partly due to a reduction in the number of people in the labor market at a time when the economy needs more people coming back to work. The unadjusted jobless rate also declined but only to 6.6% from the prior month’s 6.9%.
Industry Hiring
Headline numbers showed that San Diego County’s nonfarm employment reversed July’s 5,300 loss with an equal gain in early August. By contrast, in numbers calculated to exclude typical seasonal swings, the California Employment Development Department (EDD) reported a 6,100 job loss, which only partly reversed July’s 15,200 job surge.
The headline 5,200 job gain in August reflected notable increases in construction and leisure/hospitality, which includes restaurants, hotels and entertainment venues. Construction employment is now 7.5% above its pre-pandemic high of February 2020, while leisure and hospitality is up to only 83% of its peak level. Finding workers has hampered all industries and has been especially acute in hospitality. Restaurants have struggled to rapidly reopen and respond to surging demand for dining out.
The August report showed that San Diego is still lagging behind 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 over 96% complete.
“August was another month where job growth could have been even stronger if companies could have found employees,” said Lynn Reaser, chief economist for PLNU. “With at least 1.3 jobs available for every unemployed person, companies continue to compete aggressively for people, ranging from those with advanced degrees to those with limited education and training,” she added.
“The large number of potential workers waiting in the wings continues to be a concern,” according to Phil Blair, executive officer of Manpower West. “It will be hard to reenergize the San Diego economy until workers are vaccinated and comfortable going back to work. Our unemployment rate is lower than California’s but still much higher than the U.S. With new guidelines coming soon from the Occupational Safety and Health Administration (OSHA), being vaccinated will be even more important when it is time to seek out employment,” Blair stressed.
“Companies are also looking to strengthen their workforces from within,” according to Daniel Enemark, senior economist for the San Diego Workforce Partnership. “This is advancing the career potential for many employees throughout the region. At the Workforce Partnership, we’ve seen an upswing in businesses seeking resources for upskilling their current workers. Employers like Westfield, CVS and the San Diego Zoo are collaborating with us on career readiness and professional development training,” he explained. Businesses interested in recruiting, retaining and upskilling talent can reach out to business@workforce.org.
Outlook: Navigating the Barriers
San Diego’s job outlook now faces three primary constraints, according to Reaser. “The Delta variant’s progress with school reopenings, supply chain problems and worker availability all pose risks for San Diego’s economy in the near-term. These problems should gradually subside over the next several months, which should allow a fuller economic recovery,” she concluded.