Labor: Economists Expect Moderate 1 Percent Job Growth in Local Region
An overwhelming majority of local businesses are projecting such financial success in 2001 that more, higher-priced employees will be needed.
They indicated increased sales and net income would accompany new hires, according to the 11th Annual San Diego Business Journal/Deloitte & Touche Economic Outlook Survey.
Of the more than 200 firms queried, 59 percent expected to hire more employees and 96 percent of all firms said average employee compensation would increase.
Firms across the board were interviewed. Industries ranged from retail stores to biotechnology firms.
However, San Diego economists believe new job growth in the local economy will maintain a slight, but steady increase of 1 percent per quarter through 2001.
“We’re looking at consistent growth, but not as strong as 2000,” said Anthony Bolanos, a research analyst with the San Diego Regional Chamber of Commerce.
Level Job Growth
Bolanos believes the 1 percent job growth will cushion the unemployment rates of 2001 from dipping below the rates of 2000.
November 2000’s unemployment rate slid to 2.6 percent unadjusted, according to the California Employment Development Department. It was well below the national average of 4.6 percent and less than the state mark of 3.8 percent.
If San Diego companies can hire available employees they will have to move fast, said Louis Song, the San Diego business unit vice president for kforce.com Professional Staffing. The Florida-based firm is full service, but specializes in staffing for information technology and accounting positions in San Diego.
“Because of the dot-com crash here the amount of quality candidates has increased. Although the number of positions available hasn’t decreased, the amount of time the positions are typically open has,” Song said.
Now companies “don’t have to search as long or as hard as they had to four or five months ago,” he added.
Song expects his firm will hire more employees as the slowdown in the national economy stretches into San Diego and firms that normally hire permanent employees instead reach out to independent contractors and temporary staffing services.
Last year, 75 percent to 85 percent of total business at kforce.com’s San Diego office focused on permanent placement. In 2001, Song expects that number to drop to 60 percent.
Positive Outlook
A majority of the respondents to the Economic Outlook Survey said the local economy would remain about the same in 2001 (54 percent) with sales and net income improving (81 and 80 percent, respectively).
They were also optimistic on business growth for the next three to five years, with 76 percent predicting good and excellent conditions.
However, 85 percent admitted difficulty in recruiting qualified employees last year.
Should companies need to import employees the shortage of affordable housing, and not the energy crisis, will create the biggest burden for employers, said Dr. Alan Gin, a USD economics professor and author of the Index of Leading Economic Indicators.
“People making relatively good wages , $50,000 to $60,000 a year , are beginning to have a difficult time buying homes,” he said.
In November 2000, the average San Diego County single family home sold for $393,021 with townhouses and condos averaging $218,168, according to the San Diego Association of Realtors.
Rental Rates Up
As a result, an increased demand for rental units has applied upward pressure on monthly rents. Gin’s own Economic Indicators show that building permits for residential units issued in San Diego fell almost a full percent in October.
Although nobody is advocating rent control , and probably won’t , Gin said, it is being discussed in economic circles.
“The mere fact that people are even mentioning it here in San Diego indicates how serious the problem has become,” he said.
