Job experts see more positive signs from October but warn of harder times ahead 

Friday, November 20, 2020

San Diego’s jobs market displayed further steps towards recovery in October as companies recalled workers and stepped up hiring. Even as many people returned to the workforce or looked for jobs, the unemployment rate fell from September’s 9.0% to 7.7%, seasonally adjusted, in October. 

While San Diego’s rate decreased to 7.7% last month, unemployment remains high among women and low-wage workers. Analysis of payroll data suggests that employment has fully recovered for the region’s high-wage workers but remains nearly 30% below pre-pandemic levels among low-wage workers.

The San Diego Workforce Partnership is continuing to see big layoffs in tourism-related industries, but last month also saw over 300 layoffs in tech and defense. They’re hearing from local employers that the expiration of federal aid programs is forcing layoffs.

Unemployment

San Diego’s October jobless rate is now about one-half its May peak of 15.6%, seasonally adjusted, highlighting the rapid initial phase of the rebound. Phil Blair, Executive Officer at Manpower West pointed to the wide divergence among workers in San Diego. “White collar, construction, and many manufacturing workers are doing well, but people who used to work at the hotels, convention center, or some part of tourism are struggling to hang on. At 7.7%, San Diego’s unemployment rate contrasts to February’s 3.3%, when companies were scrambling to find workers,” Blair observed.

Industry Hiring

San Diego’s job market improved further in October, as the region’s nonfarm employers added 21,500 jobs over the prior month. Many of these represented typical seasonal hires. Adjusting for those typical monthly gains, last month’s seasonally adjusted advance was a more moderate 13,200. Impressively gains were across most sectors and industries.

The Workforce Partnership has continued to see big layoffs in tourism-related businesses and last month saw some declines among defense firms, according to Daniel Enemark, Senior Economist. He also noted, “We’re hearing from local employers that the expiration of federal aid programs is forcing layoffs.”

On the positive side, the Workforce Partnership has seen an uptick in demand for general labor led by Tesla, who is working with the firm to hire and train 100-150 solar-panel installers. They are also seeing strong demand for caregivers, though they believe that if employers want to attract workers, they need to better compensate caretakers for the risk of COVID-19 exposure.

San Diego’s job gain outpaced that seen both nationally and in California on a percentage basis last month. As of October, San Diego’s employment was about 92% of its February peak, slightly ahead of California, but below the national average of 93%.

October’s numbers continue to underscore the economic divide between different sectors and industries. Most industries are well below their February job levels, but not all. Construction is actually above its February level, while business and professional services along with utilities have reached their pre-pandemic levels. In sharp contrast, leisure and hospitality is a shadow of its former self, with its employment level at less than 80% of its February pace.

Outlook

San Diego’s economy faces some tough times ahead as the region adjusts to its Purple rating and to surging COVID-19 infection rates. Many businesses will struggle and most will remain cautious. “The impressive progress with vaccines does bode well for the region’s future if we can manage to hold on until next spring or summer,” concluded Reaser.

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