December’s labor market trends
Friday, January 20, 2023
Workforce Partnership chief economist Daniel Enemark analyzes December’s labor market trends.
2022 closes out on a high note
Today’s jobs numbers are great news all around. We have a spectacularly low unemployment rate of 2.9%, nearly a half-point drop from November’s revised 3.3%. That’s twice the normal dip we see in December—in seasonally adjusted terms, we went from 3.5% down to 3.1% last month.
That stunning drop was the result of 15,200 more San Diegans working in December. And the labor force grew by 7,900, reaching its highest seasonally-adjusted level since the onset of the pandemic. The fact that unemployment decreased so much despite an influx of new workers into the labor force shows just how strong our labor market was last month.
Phil Blair, executive officer of Manpower San Diego put it this way, “San Diego’s job market continues to be robust. At 2.9% unemployment and with a growing pool of talent, we are the envy of most metropolitan areas.” Phil pointed out two additional causes for optimism, “It’s great to see the growth in construction. And I think we’ll see San Diego companies benefiting from the availability of highly-skilled workers coming off of layoffs at big tech companies.”
Construction and our economy’s need for housing
Indeed, Construction led the gains last month with 1,700 new jobs, and that’s great news. As we say month after month, San Diego needs more housing yesterday—or maybe 35 years ago. New construction rose in 2022 over previous years, and we hope to see that trend continue. But new construction hasn’t kept pace with population growth for decades, and McKinsey found that California ranks 49th out of 50 states in housing units per capita. Our deficit not only makes San Diego the least affordable metro area in the country, it also drives our homelessness crisis. As Kwofi Reed, President & CEO of San Diego Habitat for Humanity said Wednesday at San Diego’s 39th Annual Economic Roundtable, “we have to accept the fact that some other neighborhood is not going to solve affordable housing or homelessness. It’s going to happen in your neighborhood. If you’re concerned about homelessness, go to your community planning board and speak up for additional density accepting the fact that if you want a place for your kids to live here, your neighborhood will have to look a bit different.”
Tech layoffs
The tech sector’s continuing layoffs are a bit of a mystery; some attribute it to recession fears and overoptimistic assumptions about how chronically online people would be post-pandemic, and one Stanford business professor thinks it’s merely social contagion. Regardless, low unemployment and unusually strong growth in the region’s related industries (like Professional, Scientific, and Technical Services) suggests that many workers who were subject to tech layoffs may have a soft place to land in San Diego.
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