Despite a hiring surge in health care and gains in hospitality, job growth in San Diego County will slow next year as the area’s high cost of living limits the inflow of job-seekers, according to a new report by Los Angeles-based Beacon Economics LLC.
The firm’s December regional outlook predicted the county’s labor market, having expanded 2.2 percent between October 2015 and October 2016, will add jobs at a somewhat slower pace in 2017, likely in the range of 1.7 percent to 2.1 percent.
“The result will be a tighter labor market, which is expected to trigger wage increases ranging between 2 percent and 3 percent over the next year,” wrote Beacon, which is led by prominent California economist Christopher Thornberg.
The report said the county is closing in on full employment after joblessness recently fell to 4.7 percent, driven by openings in lower-wage occupations.
Beacon also pointed to job growth in the categories of education and health care (up 3.3 percent year over year); leisure and hospitality (up 3 percent) and professional, science and technology jobs (up 2.7 percent).
The region’s health care industry is doing well largely because of baby boomers’ demand for outpatient services, the report said. It further noted the sector has attracted a growing share of the area’s overall venture capital investments.
Biotechnology went from 50 percent of the area’s total VC funding in the first half of 2015 to 59 percent during the like period 2016, Beacon reported, while investment in medical devices and equipment accounted for 16.8 percent of the county’s VC total, up from 4.9 percent in 2015’s first half.
Focusing also on residential development and its relation to housing affordability and regional economic growth in general, Beacon noted a 2.1 percent year-to-date slowdown in single-family homes sales through the third quarter. It said multifamily housing permits were up 24.1 percent over 2015 levels through the third quarter, as local rental prices climbed 4.4 percent.
