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March 12, 2021

San Diego’s job market continued to reflect the ravages of COVID-19 in January as infection rates soared and widespread lockdowns caused layoffs. Fortunately, the worst should now be fading as vaccination spreads throughout the county.

Unemployment

San Diego’s January seasonally adjusted jobless rate held at 8.0% in January (unadjusted numbers show the unemployment rate edged up just slightly to 8.1%). “December’s jobless rate was only able to remain stable because people dropped out of the workforce,” said Lynn Reaser, Chief Economist for Point Loma Nazarene University “More women left to help with their children’s schooling, while others became discouraged.”

“The next few months will be a roller coaster on the job front,” said Phil Blair, Executive Officer of Manpower West. He added, “Restaurants, hotels and other businesses will jump start their hiring but may struggle to find all the workers they need. Many people are earning more now with various benefits than when they were working. Employers may have to offer higher wages or jobs will remained unfilled.”

Industry Hiring

Nonfarm employers in San Diego County cut nearly 39,000 jobs in January. Much of the lost jobs were seasonal. Adjusting for the typical hiring cutbacks that occur early each year, the drop equaled about 15,000 positions.

Declines were generally widespread with few areas of hiring. San Diego Workforce Partnership’s Senior Economist, Daniel Enemark, said, “The good news is that the Workforce Partnership sees manufacturing jobs growing. Cue Health earned the FDA’s first approval for over-the-counter, at-home molecular COVID-19 diagnosis. They’ve also increased entry-level wages, decreased education requirements, and shifted toward full-time employment—great news for San Diego job seekers!” Enemark also pointed to the job growth in biotech related to COVID-19 diagnosis.

San Diego has a long road to go before returning to its pre-pandemic job levels. As of January, it had dropped to 89.6% of its February job total. It now lags behind both California (89.8%) and the nation (93.5%).

The region also displays the inequity in industry performance. Most industries experienced job losses in January. Utilities is the only industry exceeding February job totals. In stark contrast, leisure and hospitality is now only 60% of its pre-pandemic job level.

Fortunately, the worst of the downturn is moving behind us.

Outlook

“A powerful combination of widespread vaccination, government spending, support from the Federal Reserve, easing of lockdown restrictions and pent-up demand should fuel a vigorous expansion beginning in the spring and accelerating through year-end,” according to Lynn Reaser, Chief Economist for Point Loma Nazarene University.  She added that San Diego’s jobless rate will fall, while Enemark projects widespread job gains, and Blair expects competition for workers to boost wages.

The data will lag what is happening on the ground, which increasingly should grow brighter. Resistance to vaccination or vaccine-resistant virus mutants could pose roadblocks, but 2021 promises to be very different than 2020. Despair dominated last year. Optimism will emerge to define 2021.

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