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Local employment situation predicted to gradually improve in 2011

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Since the summer of 2010, San Diego County unemployment has hovered between 10 percent and 11 percent. Trends during the fall suggest a gradual improvement, with the percent unemployed inching down from 10.7 percent in September to 10.2 percent in October. But what about 2011? Will the New Year bring with it a chance to finally see unemployment dip below 10 percent for the first time since May 2009?

Chuck Flacks, research director for the San Diego Workforce Partnership, thinks that’s a real possibility, and says we may even see unemployment fall below 8 percent by the year’s end.

“I am cautiously optimistic about our hiring growth in 2011.”

Kelly Cunningham, economist and senior fellow at the National University System Institute for Policy Research and a close observer of the local economy for more than 25 years, concurs that the labor market is likely to be stronger in 2011, but predicts the decline in unemployment will be “slow and modest,” with unemployment levels not dipping below 10 percent until late in the year.

While this is good news for the unemployed, Flacks said many of those hired will be accepting entry-level jobs in low-paying fields. Locally, the five fastest growing jobs between 2010-2015 are predicted to be retail salespersons, office clerks, cashiers, maids and housekeepers, and waiters and waitresses. So while local hiring may pick up in 2011, Flacks said “the bad news ... is that these are all poverty-level wage positions.”

Cunningham said what we are likely to see in San Diego in 2011 is modest hiring at “both ends of the spectrum; high-tech, high-paying jobs and low-wage, low-skill service jobs.”

Even as the economy begins to stabilize and unemployment slowly improves, there is still evidence of layoffs yet to come. The final quarter of 2010 saw Worker Adjustment and Retraining Notices (WARN) from large employers in the area including Marriott, NASSCO and Physician Management Group. Whether these are “a sign of trouble ... or seasonal fluctuations, is hard to tell,” Flaks said.

Much attention has been paid to the challenges facing new college graduates seeking work during the recession. Nationally, the rate of unemployment among 18- to 29-year-olds is nearly double the general unemployment rate.

According to James Tarbox, director of career services at San Diego State University, there are early indications that 2011 may be the year when things finally start to turn around. Compared to this time last year, “more recruiters are planning to come to campus in 2011 ... especially in areas like retail and tourism, which had been weak during the recession.”

Despite these promising signs, Tarbox still has significant concerns about employment levels for educated workers as “we continue to see many older alumni coming back to campus, interested in accessing career services to help them with a frustrating job search.”

Even a small improvement in employment levels in San Diego is likely to help the battered residential real estate market, said Louis Galuppo, director of residential real estate at the Burnham-Moores Center for Real Estate at the University of San Diego. “The correlation between the housing market and the job market in San Diego is huge,” he said.

With home ownership rates in the county around 57 percent, there are still a few hundred thousand San Diegans households that may be ready to enter the residential real estate market as the economy and job market improve, Galuppo said. “Even if these jobs pay $7-$15 an hour,” he said, “we will still see new households forming and this will impact demand for homes.”

Nationally, recent reports about improved consumer confidence have provided retailers with some good news. Last month, the Research Board’s Consumer Confidence Index reported the highest levels of consumer confidence seen in five months. This coupled with a gradual increase in the number of San Diegans bringing home a pay check may finally help the sluggish retail sector improve; though again, improvements are predicted to be modest.

According to a report issued by the National University System Institute for Policy Research, San Diegans drastically contracted their retail spending during the recession at a rate “not seen since the Great Depression,” in large part because they were “uncertain about their employment situation.”

Cunningham said that while a gradual increase in the number of San Diegans with jobs will help area retailers, “the sector has a big hole to dig out of, with one in seven local retail establishments closed during the recession.”

The local economy was one of the first to feel the pain of the economic recession, and local observers of the economy are hoping that the San Diego economy will also be on the leading edge of recovery. Yet that recovery -- especially in terms of jobs and hiring -- may be slow in coming. Cunningham characterized this recession as “severe and not cyclical ... we simply have not seen the big rebound in hiring that we typically see after a deep recession.”

Bouris is a San Diego-based freelance writer.

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