Job experts expect a brighter outlook in late spring or early summer

Friday, December 18, 2020

San Diego’s job market at the surface appeared strong in November, but deeper analysis reveals red flags. The jobless rate fell primarily due to a drop in the labor force and much of the job advance was seasonal. 

Unemployment

San Diego’s November seasonally adjusted jobless rate fell to 6.7% from a revised 7.5% in October. However, a large decline in the number of people looking for work was largely responsible. This has been a particular problem for women, who have dropped out of the work force to care for children and elderly parents. Even at its current level, the unemployment rate is more than double its pre-pandemic level.

Industry Hiring

San Diego’s employers continued to add to their payrolls in November and gains were generally widespread. Some occupations are experiencing strong demand. Phil Blair, Executive Officer at Manpower West, says, “We are recruiting like crazy to find light industrial and information technology (IT) workers.” He also noted that manufacturing, construction and professional services are coming back. “In stark contrast, leisure and hospitality remain severely depressed and will show little hope until travel and convention business return.” 

The widespread job gains posted in November, with special pockets of strength, support Blair’s observations. The major declines occurred in restaurants and hotels. The ending of the 2020 Census also brought the end of some temporary federal government positions.

Daniel Enemark, Senior Economist for the San Diego Workforce Partnership, points to the recent impact of vaccine distribution. “We are seeing spikes in demand related to COVID-19 treatment and vaccination, with a widespread search for entry-level pharmacy technicians who can administer the vaccine,” he observed.

Nonfarm employers in San Diego County added 14,300 jobs. However, much of that gain was seasonal as both brick and mortar and online retailers tried to get a jump-start on the holidays. Seasonally adjusted data, which gives a more accurate picture of the underlying trend, showed a gain of 6,200 jobs. This was only a third of the average hiring pace of the past three months. This slowdown was reported just as infections started to climb in the County, quickly moving San Diego into the State’s red zone.

San Diego still has a long ways to go before returning to its pre-pandemic job levels. As of November, it had reached 92.8% of its February job total. While ahead of California’s recovery pace (92.0%), it is below the national rate (93.5%).

The region also displays the inequity in industry performance. Professional and business services, transportation and warehousing, and construction have reached levels exceeding their February job totals. Leisure and hospitality is only 80% of its pre-pandemic job level. Enemark notes, “Low-wage workers continue to be disproportionately affected by the COVID-19 recession. The hardest-hit industries are those where average annual wages are below $40,000.”

Outlook

“The winter solstice underscores an ominous time for San Diego’s economy,” observed Lynn Reaser, Chief Economist for Point Loma Nazarene University. Many retailers, restaurants, gyms and personal care businesses will lay off workers or go out of business during the next two to three months. “Just as the days begin to have more light, however, so will the economy. By late spring or early summer, widespread vaccination will enable a major economic rebound throughout the region,” Reaser emphasized, as she anticipates a much better year ahead.

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