San Diego took a beating in the Great Recession, but a new study reveals just how bad it was.
The massive cuts hit every sector but took a particularly heavy toll on middle-wage paying positions, so much so that it’s had a stratifying effect on the area’s overall economic make-up, according to a report done by National University System Institute for Policy Research.
The study found that at the depths of the recession in February 2010, the region lost a net of 103,300 jobs from the peak employment in 2007.
Since then, the San Diego region added about 49,000 jobs. Not only do the numbers come up short, there’s a disparity in the kinds of jobs created that is troubling, says the report.
“It becomes clear from this examination of occupations and wages that middle-wage jobs are disappearing and San Diego’s employment base is increasingly stratified towards technically skilled, high-wage jobs on one side and relatively low skilled, low paid positions on the other,” said Kelly Cunningham, NUSIPR economist and the author of the report.
While the San Diego area is creating jobs in the higher-wage categories, such as telecommunications and biotech, and jobs in the lower paying categories declined somewhat, the impact on middle-wage jobs during the five years has been devastating.
Middle Wages Fall
Those jobs paying middle-income wages (defined as 25 percent plus and minus to the area’s average annual income of $50,350) fell by 15 percent in San Diego over the five-year period, the study found. Higher paying jobs (those paying at least 25 percent above the region’s annual wage) increased 3 percent. Lower paying jobs (those paying less than 25 percent of the average) declined by 5 percent.
The hit that middle income paying jobs have taken was also felt nationally and statewide, but was felt far more in San Diego, the study found.
These jobs fell by 8 percent nationally, and by 13 percent in California.
Even worse, the wages these middle-income jobs pay declined by nearly 17 percent in San Diego, compared with falling by about 8 percent nationally, and 12 percent in California, the study found.
Cunningham said many of the middle-wage jobs have disappeared and won’t be returning because of advances in technology, and because some firms have left California because of the higher cost of doing business here, particularly when it comes to labor costs.
Santa Barbara’s Bad Example
Taking this employment shift to another level, the region is gradually turning into one which is losing its middle class, Cunningham said. The result could be a community that looks like Santa Barbara.
“San Diego is becoming Santa Barbara,” he said. “You’re either wealthy or you’re working to serve the wealthy.”
The study used employment and wage data from the U.S. Bureau of Labor Statistics.
Among the key sectors that took heavy losses here during the recession are construction, sales, administrative support, and education.
In construction, the area lost more than 40,000 jobs as building of practically anything except for public infrastructure came to a screeching halt.
“What we’ve seen is waves and waves of trimmings in personnel,” said Borre Winckel, president of the Building Industry Association. “At one point most construction companies had laid off about 80 percent of their employees to survive this recession over four to six rounds. Companies were reduced to a shell just to survive.”
Education was another key middle-income sector that saw heavy job losses, decreasing by 7,640 jobs from 2007 to 2011, the study found.
At San Diego Unified School District, the reduction in teachers wasn’t so great because the teachers union agreed to take pay cuts that saved some 700 jobs, said district spokesman Jack Brandais.
Yet, the pay cuts didn’t save about 2,000 classified staffers such as instructional aides, custodians, electricians, mechanics, secretaries, accountants, and bus drivers, who were either laid off or weren’t replaced during the downturn, Brandais said.
A Wage Increase
Using data covering all occupations, San Diego’s average wage increased 11 percent from 2007 to 2011, from $45,210 to $50,350. However, adjusting the figures for inflation, the region’s average annual wage really increased by 2.7 percent, the study found.
That average wage number was skewed by the hefty increases in six of 22 occupational groups. These included health care/ technical; computers/ mathematical; architecture/ engineering; life sciences; business and financial; and construction. The latter group average wage rose 12 percent over that period from about $46,000 to $52,000, the study found.