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Job Experts Assess Year-End Numbers and Look at 2021

Labor Market analysis from Daniel Enemar -San Diego Workforce Partnership, Phil Blair – Manpower West, and, Lynn Reaser-Point Loma Nazarene University

San Diego CA— San Diego’s job market ended 2020 on a somber note as soaring COVID-19 infection rates shuttered many restaurants, entertainment venues, hotels, and other businesses. Overall payrolls fell in the region for the first time since July and the jobless rate lurched higher.

Unemployment

San Diego’s December seasonally adjusted jobless rate jumped to 8.1% from 6.7% in November. (Unadjusted numbers showed a rise to 8.0% from 6.6%). “December saw a surge in people looking for work,” said Lynn Reaser, Chief Economist for Point Loma Nazarene University “Unfortunately, not all of them could find work, while others were laying off staff.” December’s jobless rate contrasts with a number of less than 3.0% at the end of 2019 when businesses were scrambling for workers.

Industry Hiring

Despite year-end hiring gains in such industries as construction and retailing, San Diego’s employers cut 5,300 jobs from their payrolls in December relative to the prior month. Correcting for the typical seasonal swings, the loss was somewhat less at 3,500, but still broke a string of four consecutive monthly gains.

A new round of lockdowns hit hard such businesses as restaurants, hotels, and personal service, including hair and nail salons. “Temporary help was a bright spot,” according to Phil Blair, Executive Officer at Manpower West. “When times are tough and uncertain, companies typically look to stop-gap measures until they can gain a clearer picture of what lies ahead.”

Year-over-year comparisons underscore the severity of the blow the virus has inflicted on the region’s economy. Between December 2019 and December 2020, the region lost 106,000 jobs This compares to a job loss of about 60,000 at the peak of the last recession in 2009.

San Diego has a long road to go before returning to its pre-pandemic job levels. As of December, it had reached 92.5% of its February job total. While ahead of California’s recovery pace (91.7%), it is below the national rate (93.5%).

The region also displays the inequity in industry performance. Professional and business services and construction have reached levels exceeding their February job totals. In stark contrast, leisure and hospitality is only 75% of its pre-pandemic job level. San Diego Workforce Partnership’s Enemark expresses his worries, “We’re concerned that low-wage workers continue to be disproportionately affected by the COVID recession. Today’s data show the hardest-hit industries are those with low average annual wages.”

Outlook

“Patching the social safety net with new funding for unemployment insurance and direct payments to households as recently passed by Congress comes at a critical time,” all three analysts agreed. More may be needed.

San Diego’s full recovery is tied to its ability to conquer the virus. Hopefully, vaccination rates will allow its vital tourism sector to reopen by this summer. If so, pent-up demand should allow a strong rebound in the second half of the year.