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August 20, 2021

San Diego’s labor market made further strides in July after correcting for summer’s typical volatility. Adjusting for those distortions, the region added more jobs and the unemployment rate moved lower. Leisure and hospitality rebounded as the economy reopened. San Diego is lagging behind both the State and nation in moving to a full recovery.

Unemployment

San Diego’s unemployment rate showed that the region’s labor market is continuing to tighten. San Diego’s July unemployment rate declined to 6.5% from 6.8% in the prior month after adjusting for seasonal volatility (calculated by PLNU). More people came back to the job market last month, but even more found jobs. July’s jobless rate was the lowest seen all year although it is still about double its pre-pandemic low.

Industry Hiring

Headline numbers showed that San Diego County’s nonfarm employment dropped by a large 7,800 people between June and July. Summer school vacations caused the sharp downturn.

After removing these and other summer effects, California’s Employment Development Department (EDD) reported a 9,700 job gain for the month.

Most areas outside of private and public education added jobs last month. “Restaurants, hotels, and entertainment venues were star performers,” observed Lynn Reaser, Chief Economist for Point Loma Nazarene University (PLNU). Restaurants, hotels, and entertainment venues added 6,100 jobs last month. “Hiring would have been even stronger if businesses had been able to recruit workers,” she added.

July’s report showed that San Diego is still lagging the rest of California and the nation. As of last month, San Diego’s employment trailed both the State and the U.S. in terms of its recovery. San Diego jobs were at about 94% of their pre-pandemic February 2020 high. In comparison, California’s recovery was at 94.5% and the U.S. rebound was over 97% complete.

San Diego’s major sectors continue to recover at different rates. As of July, summer vacations had helped to push private education hiring down to just 77% of its pre-pandemic. In contrast, leisure and hospitality employment moved to 82% of its prior high, its first reading above 80%. Construction and utilities payrolls are now above their previous peaks.

July’s shortfalls continue to come from the supply rather than the demand side. “Companies are knocking on my door every day, desperate for employees,” said Phil Blair, Executive Officer of Manpower West. In public and private forums, he continues to encourage people to “capture the opportunity of a lifetime in establishing positions in businesses that will enable them to move upward.”

Blair added, “Open job postings for San Diego continue at an all-time high. Too many people are stalling going back to work so the unemployment numbers continue to be high compared to national rates. With extended and supplemental job benefits ending in a few weeks, now is the time to go back to your old or a new job, if at all possible. Beat the rush of returning workers and get the best pay, highest signing bonuses, and best shifts now. It will not be an employees’ market forever.”

“We’re seeing strong demand for workers across most sectors of the economy, but especially in leisure & hospitality (with 6,100 new jobs in July) and construction (up 2,800),” said Daniel Enemark, Senior Economist for the San Diego Workforce Partnership. “This is a great time to look for a job in hospitality; wages are rising and we believe further increases will help employers rebuild the workforces they need,” he emphasized.

For those interested in building a career in construction, Workforce Partnership is offering a $1,000 stipend to participate in training that leads to entry-level positions earning $18-$19 an hour. This paid, hands-on program will cover the fundamentals of a construction skilled tradesman position, including safety, trenching, jackhammering, proper usage of other power tools and other essential skills. Trainees will be certified in several skills upon graduation.

Outlook: Delta’s Next Move

“COVID will once again determine the fate of the job market in the period ahead. As the race between vaccination rates, including booster shots and new variants continues, the economy will be caught in the crossfire,” observed Blair.

Enemark will be focusing particularly on the leisure and hospitality sector. “With its recent upswing, any pullback would be a big disappointment for the region,” he said.

“Companies hate uncertainty and they now have it in spades,” said Reaser. “They do not know how consumer confidence and spending will hold up. They do not know if they can find workers, which may partly depend on the successful reopening of schools. The job market should improve further, but it will not be without obstacles.”

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