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Service—Service industry expects to stay on an even keel



Service: Legal Firms Do Well With IPOs; Worker Shortage Hikes Salaries

The economic outlook for the service and professional industry in 2001 calls for things to remain about the same as in years past.

Seventy-five service industry leaders responded to the 11th Annual San Diego Business Journal/Deloitte & Touche Economic Outlook Survey. Of those, 47 percent, or 35 respondents, said they expected the economic condition of the industry to remain about the same. Forty-two percent, or 31 respondents, said it would be better.

Last year, 51 percent of the 75 respondents said things would remain about the same in 2000 as in 1999. Thirty-five percent of those expected things to be better.

The national economy is expected to slow down some compared to last year.

Of those surveyed, only 12, or 16 percent, said they expected the national economy in 2001 to be worse than 2000. The 58 percent of the respondents (43) said they expected the national economy to remain about the same, while 19 respondents, or 26 percent, said they expected it to be better.

San Diego’s economy is expected to be just fine because of the influx of high-technology and telecommunications firms.

“I think we’re going to see a moderate cooling off,” said Phil Blair, executive officer with Manpower Staffing Services. “An economy can’t chug along this fast and this hard endlessly; it gets tired.

“We’re going to be just fine. Our industry is the new hot stuff.”

Legal Field Doing Well

Because of the number of companies in San Diego County that went public in 2000, one area in particular in the legal field fared well.

According to Chris McGrath, hiring partner for Brobeck, Phleger & Harrison LLP, as the economy grows so does their practice.

“Our firm has grown quite a bit in the last year,” McGrath said.

McGrath said Brobeck’s San Diego office has grown from just over 60 lawyers last year to more than 100. The growth was primarily in the firm’s intellectual property practice, he said, because of the demand.

“In the past several years, the market has been so hot and so many companies went public,” McGrath said. “It kept our business and technology group booming.”

Even if the economy slows down, the legal field has ways to combat it, McGrath said.

He said as recent signs have shown declines in the stock market over the last few months, there will be demands for services in other areas of the legal field.

“Certain practice areas are not so sensitive to the ups and downs of the economy,” he said. “During the downturn in the economy, we have an increase in litigation and debt services.”

Low Unemployment To Continue

San Diego County is expected to continue witnessing an historic low unemployment rate and a continual demand for service employees from lawyers to janitors.

But that’s not necessarily a good thing, according to some.

The vast portion of the demand is expected to be for relatively low-paying jobs in the hotel, tourism and retail industries that will not offer livable wages or health benefits for most employees.

“I think we will continue to see workers fighting for more,” said Mary Grillo, executive director of the Service Employees International Union (SEIU Local 2028). “Because of the high cost of living in San Diego County and the low vacancy rates, we will continue to see workers fighting for more.”

Grillo said the employment demand is obvious, given the county has an unemployment rate of 2.6 percent. But, she said there is a large disparity in the social structure in place, meaning there’s a major separation from employees at the bottom of the employment chain to those at the top.

“We’re looking at having a work force of people who can’t live off one job, have no health insurance and can’t afford rental property,” Grillo said. “We have to look at the long term and determine what that will mean for our economy.”

Of those surveyed, 50 percent, or 37 respondents, said they had some difficulty recruiting qualified employees in 2000, with 19 percent, or 14 respondents, having no difficulty.

Starting Pay Increases

Blair, of Manpower, said in order for companies to find and keep qualified employees they will have to carefully monitor their pay rates.

In some cases, Blair said, companies have increased their starting pay from 15 to 20 percent, with one manufacturing company increasing its starting pay from $6.25 to $7.50 and hour.

“Recruiting will continue to be a challenge,” Blair said. “Companies need to be aggressive, have fair compensation packages and be family friendly.”

Blair said his company encourages employers to refocus their expectations for starting employees.

But, Blair concluded, San Diego has the highest number of people working in the county’s history. Since there are no major contract-based employers here, he said, there should be no worries that the unemployment rate will change any time soon.

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