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San Diego’s job outlook: ‘There is still a sizable hole in the labor market’

Chula Vista bakery workers work on desserts.
San Diego County unemployment hit its lowest point of the pandemic in September. Pictured: Baker and owner Jose Barajas, left, who previously competed on Food Network competitions, works alongside his staff at his bakery, Mmm… Cakes, at Chula Vista on Thursday.
(Kristian Carreon/For The San Diego Union-Tribune)

The county added 3,600 jobs last month and the unemployment rate dipped to 5.6 percent but employers are still struggling to fill positions.

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San Diego County’s unemployment rate hit its lowest point of the pandemic in September, adding 3,600 jobs, mainly in education.

The jobless rate was 5.6 percent, the state Employment Development Department reported Friday. It was down from 6.6 percent the previous month and marked the lowest unemployment rate of the pandemic.

San Diego County’s jobless rate reached a height of 15.9 percent in April 2020 but has struggled to return to pre-pandemic levels of around 3 percent. San Diego’s 5.6 percent rate is still higher than the national average of 4.6 percent, but lower than California’s rate of 6.4 percent.

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September’s growth was almost entirely led by increases in education hiring as students returned to school. A dark cloud still hangs over the recovery as employers struggle to fill open jobs — a nationwide problem not unique to San Diego — and supply chain shortages, said Lynn Reaser, chief economist at Point Loma Nazarene University.

“The biggest challenges that companies now face are the scarcity and cost of products, parts, materials, and labor, with employee gaps looming particularly high,” she said. “San Diego business owners wake up each day wondering where they will find the workers.”

Extra federal unemployment benefits — typically around $300 a week for most workers — ended Sept. 6. Experts said other factors have kept workers from coming back: Concerns about COVID-19 infection, childcare needs and shifting priorities.

Compared to one year ago, when the region was still coming out of lockdowns and there was no vaccine, things have improved considerably in San Diego County. The biggest change has been in the leisure and hospitality sector, regaining 24,400 jobs in hotels, restaurants and bars.

Other big gains were in the high-pay professional and business services sector (scientific research, legal services), adding 9,200 jobs; Construction, adding 7,600 jobs; and education and health services (ambulatory services, nursing homes) added 2,200 jobs. Financial activities (insurance, real estate) were still down 1,000 jobs annually, as was manufacturing, down 500 jobs.

When adjusted for seasonal swings, San Diego County’s unemployment rate was closer to 5.7 percent, Reaser said. That compares to the seasonally adjusted 7.5 percent rate in California and 4.8 percent nationwide.

On a monthly basis, government hiring — which includes teaching jobs — was the biggest gainer with 9,500 added positions. The overall job picture was weighed down by losses in the catch-all other services category (repair and maintenance, laundry services) that lost 1,800 jobs; and 1,500 jobs lost in educational and health services.

Leisure and hospitality also lost 1,500 jobs, which experts said had more to do with struggles getting workers than pandemic-related shocks to tourism or eating out.

Phil Blair, executive officer of staffing agency Manpower West, said children going back to school and increasing wages may soon tempt more people to return to the workforce — but, so far, it is hard to keep up with staffing requests.

“We are seeing more people applying for positions, but client demands are rising even faster,” he said. “Companies are also doing a lot more permanent as opposed to part-time hiring.”

Some companies have announced large hiring plans. BAE Systems announced this week it was hiring roughly 50 workers in San Diego with remote and hybrid positions and 26 Fridays off a year. The aerospace and defense company said it would offer tuition reimbursement and leadership development programs.

Bonuses are being offered across industries to entice workers to return. Amazon is offering a $1,000 signing bonus for warehouse workers; Food safety company Ecolab is offering $4,000 for a service representative; Sunrise Senior Living is offering $2,000 for a receptionist; and Liberty Mutual is offering $5,000 for a sales representative.

Taner Osman, a research manager at Beacon Economics and the UCR Center for Forecasting, wrote in an analysis of this month’s numbers that the state’s jobless rate should continue to lower as California continues to catch up to the rest of the nation.

“Job gains in California continue to show strength relative to the nation overall, but while these gains have been solid, there is still a sizable hole in the labor market, with a million fewer people employed than pre-pandemic,” he wrote. “Some states, by contrast, have already recovered all of the jobs lost due to the pandemic.”

Compared to other parts of California, San Diego County is about middle of the pack with its jobless rate of 5.6 percent. State labor officials do not seasonally adjust jobless rates for individual counties.

The rate was 8.2 percent in Los Angeles County, 5 percent in Orange County, 4.1 percent in San Francisco County, 5.7 percent in Monterey County, 3.9 percent in Santa Clara County and 6.6 percent in Riverside County.