Change in Employment

By Kelly Cunningham

Recovering from the 2008-09 recession has been prolonged and challenging. San Diego’s struggle in recovery was not broad based or spread evenly across all economic sectors.

Sectors of the local economy that rebounded and continued growing are being led by professional and business services, health care, private education, finance, and even manufacturing. Growth among these industries was enough to pull San Diego’s overall economy out of recession and onto record levels of production.

Other local sectors remain far from recovery, most notably information, construction, retail trade, food services, accommodations and transportation. Each of these economic sectors remains below pre-recession levels more than four years after recovery began.

Job changes tend to lag economic movements. Whereas San Diego’s economic output had stopped falling by 2010 and was fully recovered by 2012, employment continued dropping until 2011 and only recovered pre-recession levels by March 2014.

Similarly, employment was mixed with widely varying patterns of recovery within the region’s economic landscape. Employment in health care never faltered and continued growing throughout the recession. Professional, business and financial services lost relatively few jobs in recession, and grew far beyond in recovery.

But employment in construction, information, retail and accommodations sectors fell significantly more during the recession, and remain far from recovery. Although manufacturing production rose, employment remains below pre-recession levels. Food services production still remains below pre-recession levels, although employment more than recovered.

Comparing occupational categories by hourly wage earnings among San Diego’s job sectors further reveals widely diverging trends. According to California Employment Development Department data, San Diego’s lower-wage occupations decreased 5.4 percent during recession, before recouping 4.9 percent more recently. These occupations encompass employment in production, transportation and material moving, food preparation, building and grounds maintenance, personal care services, and healthcare support. Lower-wage occupations only slightly increased as percentage of total jobs during San Diego’s recession and recovery from 28.5 in 2007 to 28.9 percent in 2013.

On the other end of the scale, jobs among higher-wage occupations not only never decreased in recession but continued rising 2.8 percent between 2007 and 2011. These jobs subsequently accelerated in the recovery increasing another 8.8 percent between 2011 and 2013. Since the recession began, higher-wage jobs actually increased by a total of 11.8 percent.

Higher-wage occupations encompass skilled positions usually requiring significant technical expertise in specialized fields of computers, engineering, healthcare, legal, business and finance. In total, higher-wage occupations accounted for 23 percent of all San Diego jobs in 2007, as of 2013 they now account for more than 26 percent.

Most jobs lost in San Diego during the recession were, by far, mid-wage occupations. These positions are mostly in construction, sales, office and administrative support and education. Altogether mid-wage employment dropped 11.3 percent between 2007 and 2011. Since that point, only 1.9 percent of these jobs have recovered and remain 9.7 percent lower than before the recession began.

The recession hastened changes already ongoing in San Diego. Blue collar or mid-level work has been disappearing in San Diego since at least the early 1990s when aerospace and other manufacturing jobs departed from the region. The 2008-09 housing recession resulted in further losses of mid-wage jobs most prominently in construction, followed by sales, office and administrative positions.

San Diego’s employment landscape thus becomes ever more hour-glass shaped with higher-wage jobs accumulating on the one end, low-wage jobs maintaining relative proportions, and middle-wage jobs clearly losing the most.

With San Diego businesses and industry shifting towards more industries requiring greater skills and technical abilities, it becomes critically important for the local labor force to be well educated, trained and prepared for this work. High school education is not enough for most higher-wage jobs and students must be prepared to advance learning with additional levels of instruction and training.

As John Mace, of Mace Instruction and Design, says, “Adult education must be academic and professional in order to be effective in preparing students for a 21st century working environment…In America products and services are expected to be of the best quality possible. The same should be true in American higher education instruction, instructing and instructors.”

Ladders to higher-wage professions are critical for the local labor force to fill these positions. Otherwise San Diego residents risk being left behind in their own communities.

Kelly Cunningham is an economist and senior fellow at the National University System Institute for Policy Research.