Career & Workplace
Worker Shortage Holding Back Full Job Recovery in California’s Major Metros
True to Form: Home Prices in the State’s Legendarily Expensive Housing Markets Surged More Than $100K Above Trend During Pandemic
A mounting shortage of workers is the main culprit behind slower job recovery in California’s major metropolitan regions, according to an analysis released today by Beacon Economics. While the inland areas of the state now have more jobs than they did prior to the COVID-19 recession, none of California’s five large coastal metros have reached their pre-pandemic levels of employment.
But they are close, and while these urban areas continue to inch back towards full recovery, says the analysis, each is struggling with a tight labor supply, limiting the ability of local employers to hire the workers they need.
“Any glance at a major job finding site makes it quickly apparent how intensely California employers are trying to hire,” said Taner Osman, Research Manager at Beacon Economics and one of the report authors. “The demand for workers is high, but we don’t have sufficient labor supply, and that is going to continue constraining near-term job growth.”
From best performing to worst, San Diego County has now recovered 99.5% of all the jobs it lost during the pandemic recession, the South Bay/Silicon Valley has recovered 98.1% of its jobs, Los Angeles and the East Bay/Oakland have both recovered 97.3% of their jobs, and San Francisco trails with a recovery rate of 96.6%. With the exception of San Diego, all are trailing California as a whole (98.9% job recovery) and the nation (99.5%).
As with last edition of this analysis, each metro is forecast to reach or surpass pre-pandemic job levels in the first half of 2023 (San Diego by the end of 2022). The relative sluggishness of their recovery can be better understood in the context of record-low unemployment rates.
With the exception of Los Angeles, the state’s largest coastal metros currently have unemployment rates that are at or close to historic lows: San Francisco 1.6%, South Bay 1.7%, and San Diego and the East Bay 2.4% (unemployment in LA is higher than it was pre-pandemic, due in part to a slower recovery in that region’s all-important Leisure and Hospitality sector).
“Unemployment rates are defined by the number of people actively looking for work who are not currently employed” said Osman. “Those rates are so low in nearly all of California’s largest metro areas, they can’t fall much further, and these conditions are reflected in the inability to hire enough workers.”
The analysis also examines the red-hot housing markets in the state’s coastal metros, forecasting that while home prices will continue rising in the near-term future, at least the rate of price appreciation will cool.
According to the analysis, high demand throughout the pandemic pushed price growth in most of the regions studied above their already steep, upward pre-recession trend. In these metros, prices are estimated to be approximately $127,000 to $169,000 higher than they would have been had it not been for the pandemic and the economic effects it spawned. San Francisco is the one metro where prices did not rise above trend, but that may be a function of the region’s already exceptionally ‘vertical’ price growth.
Career & Workplace
Inland Empire Education and Workforce Summit Connects the Dots Between the Classroom and Careers
The Inland Empire Connection: Merging Academic Paths and Career Journeys
Exclusive Report by Ken Alan, IEBJ freelance writer
A generation ago, parents and school counselors tended to defer talking to students about going to college until the last two years of high school. Today, kindergartners are likely to see their classroom dressed up with college pendants and banners that proclaim “we will go to college.” The line that once separated the classroom from careers has faded as schools now actively seek mentorships, internships and apprenticeships for their students and high schoolers are getting a head-start on earning college credits through concurrent enrollment at a junior college. These were just a few of the insights that highlighted the Third Annual Inland Empire Education and Workforce Summit in Riverside.
“Connecting business with education,” was the overarching goal of sponsoring the summit, said Cathy Paredes, Senior Vice President, Inland Empire Marketing Executive for Bank of America, which employs about 2,000 in the region. Since 2018, the company has sponsored a student leaders program, offering paid internships and work experience for various non-profits. About 100 applications were received last year for four internship opportunities. Next year’s program will start accepting applications in October. (More information can be found at bit.ly/3LtRN5p).
While promoting a college education remains their main focus, schools are adapting to the new reality of some students opting for careers that don’t require a degree. Riverside high schools offer 58 career pathways, referred to as CTE (Career Technical Education), where about 85% lead to immediate employment in good-paying jobs, according to Dr. Edward Gomez, Riverside County Superintendent of Schools, County Office of Education. CTE careers include graphic design, residential and commercial construction, financial services, medical assisting, pharmacy clerk, culinary management, cyber security, welding, emergency medical technician and many more. (Download the entire catalog at bit.ly/3JKZa7e).
Students choosing to enroll in college declined from a peak of 70 percent in 2016 to 63 percent by 2020. A study produced by the Hechinger Report attributed the trend to a dip in the population of college-age students, growing skepticism about the value of a college degree, and the cost of higher education now exceeding what many families can afford to pay. Meanwhile, traditionally low-wage fields have been offering starting pay well above the minimum wage.
“We need to focus on more than just college,” said former State Senator Connie Leyva in her keynote address. “There are lots of jobs that pay good wages that don’t need a college degree.” Leyva served on California’s Senate Education Committee for 8 years, 4 of those as chair. Last October she took the helm of San Bernardino public broadcasting stations KVCR TV and KVCR FM.
During the press briefing that preceded the summit, Leyva outlined several initiatives to produce original educational programming: “KVCR is working with the (San Bernardino) County schools on a program called ‘Learn with Me.’ It will be 36 episodes. We write it, we direct it, we produce it, so it’s a very big endeavor. What’s unique about it is the fist portion is in English and the second portion is in Spanish.” The program will debut in June. KVCR also offers student internships in broadcast administration, production and fundraising.
Limited school counseling resources was cited as a key reason the discussion of career and college used to be deferred until late in high school. Now, schools have partnered with non-profits like Think Together, which offer after school programs, tutoring — and counseling.
“Schools have their hands full. So, we’re kind of ‘middleware’ that sits between the school and the workplace,” said Randy Barth, CEO.
Diego Martinez, now a mechanical engineering student at Mt. San Jacinto College, participated in Think Together program while attending West Valley High School in Hemet. “I joined the Vex Robotics group in my freshman year in high school. We designed and programmed robots that would complete certain tasks to complete with other Think Together sites in our region. Throughout my journey with Think Together there’s been a lot of interaction with the staff … I was able to get letters of recommendations for scholarships … Think Together has really supported me, all the way through high school and now in community college. I definitely wouldn’t be as far along as I am today without them,” he said. Martinez hopes to complete a bachelor’s degree at one of the University of California campuses.
Think Together also offers instruction in essential soft skills like public speaking, resume workshops and interview techniques.
“In the Inland Empire we have more apprentices per capita in our region than the rest of the State. We have more IT and cybersecurity apprentices than the Silicon Valley,” said Charles Henkels, Executive Director of Launch Apprenticeship Network. “It is an important economic development tool for our Inland Empire business community. It’s an earn-and-learn model, so it’s a win-win for both the student and employer.”
“If a student doesn’t have a plan to go college then we want to connect them to the industries that are hiring,” said Ted Alejandre, County Superintendent at San Bernardino County Superintendent of Schools. “The carpenter’s (union) has an apprenticeship program where, at age 17-1/2, students can start off at $19/hour but then move very quickly to $25/hour.”
“The pandemic really stifled opportunities for internships and jobs, so we really want to encourage businesses to go out of their way to give our young people these opportunities,” said Dr. Angelo Farooq, Chair at California Workplace Development Board.
“Today’s summit is really more than just discussing the challenges facing our workforce. It’s about exploring innovative and effective strategies to build stronger, more inclusive and more prosperous communities in the Inland Empire and beyond,” said Riverside City Mayor Patricia Lock Dawson who secured $4.4 million in Youth Jobs Corps funding last year. The program, called “CaliforniansForAll,” offers employment for youth ages 16-30 to develop career pathways and interest towards a career in public service in the key areas of education, climate, and food insecurity. The City places Fellows in part-time positions for up to two years in municipal departments such as Parks, Recreation, and Community Services, Public Works Street Trees Division, The Office of Homeless Solutions, and the Fire Department Office of Emergency Services.
The summit was hosted by the Inland Empire Regional Chamber of Commerce together with partner Think Together and sponsor Bank of America.
Career & Workplace
Annual Employment Revision Changes Our Understanding of California’s Recovery From the Pandemic
State Recovery Has NOT Lagged The Nation; California Recovered More And Faster Than Originally Estimated
The annual benchmark revision released today by the California EDD has significantly changed our understanding of California’s recovery from the pandemic, according to an analysis by Beacon Economics. While employment figures from 2022 were revised downwards, 2021’s figures were revised upwards, and in total, the state added far more jobs than originally estimated.
“The revisions have painted a rosier picture of California’s labor market recovery than previous estimates suggested,” said Taner Osman, Research Manager at Beacon Economics. “Importantly, given the contraction in the state’s labor force since the start of the pandemic, the job growth that has occurred is partly due to an expansion in labor force participation.”
Overall, employment growth in the state from December 2021 to December 2022 was revised from 3.6% down to 3.1%, while growth from December 2020 to December 2021 was revised from 6.5% up to 7.7%.
Previous estimates suggested that California had only added 70,000 jobs compared to its pre-pandemic level, while the revisions reveal the state has actually added 197,000 jobs. This means that payrolls as of December 2022 are 1.1% above their pre-pandemic peak, compared to the 0.4% originally estimated. While previous estimates showed the recovery in California as lagging the nation overall, today’s revisions reveal that the state has recovered at roughly the same pace.
The revisions also mean that California recovered the nearly 2.8 million jobs it lost due to the pandemic in June 2022, rather than October 2022, as originally estimated.
Growth in the state’s 2022 labor force was also revised downwards significantly. From December 2021 to December 2022, only 128,700 workers joined the labor force in California, far fewer than the 276,800 originally estimated. This translates into a 2022 labor force growth rate of 0.7% rather than the original estimate of 1.5%. However, at the same time, 2021’s labor force growth rate (from December 2020 to December 2021) was revised from 1.5% up to 2.2%.
At the industry level, the annual benchmark revision was mixed, with growth rates in some sectors were revised upwards, while others were revised downwards. The biggest upward revisions to year-over-year growth rates (December 2021 to December 2022) were in Mining and Logging (revised from 0% to 3.6%), Real Estate (revised from 2.8% to 3.2%), Health Care (revised from 4.7% to 5.0%), and Professional, Scientific, and Technical Services (revised from 4.1% to 4.2%).
The biggest downward revisions in year-over-year growth rates were in Finance and Insurance (revised from 1.0% to -0.9%), Construction (revised from 4.6% to 2.7%), Government (revised from 1.8% to 0.4%), Transportation, Warehousing, and Utilities (revised from 3.8% to 2.9%), Wholesale Trade (revised from 2.2% to 1.3%), Education (revised from 7.0% to 6.4%), Retail Trade (revised from 0.8% to 0.2%), and Leisure and Hospitality (revised from 7.7% to 7.2%).
California’s annual benchmark revision was also mixed at the regional level, with growth rates revised up in some areas and down in others. The largest upward revisions in year-over-year growth rates were in Yuba (revised from -0.6% to 4.1%), Napa (revised from 1.8% to 5.8%), El Centro (revised from 1.8% to 4.9%), Madera (revised from 2.4 to 4.6%), San Rafael (MD) (revised from -1.0% to 1.1%), and Modesto (revised from 0.9% to 3.1%). Downward revisions occurred in Santa Barbara (revised from 4.0% to 1.0%), the Inland Empire (revised from 4.9% to 2.7%), Ventura (revised from 4.1% to 1.9%), Merced (revised from 3.3% to 1.7%), San Francisco (MD) (revised from 5.3% to 3.8%), and Chico (revised from 2.6% to 1.6%).
California’s labor market expanded in January, with total nonfarm employment in the state growing by 96,700 positions over the month. “Despite all the headline gloom about the state of the economy at present, California’s economy added more jobs in January than it has in any month since February 2021,” said Osman.
As of January 2023, California has recovered all of the jobs that were lost in March and April 2020, and there are now 293,900 more people employed in the state compared to February 2020. Total nonfarm employment has grown 1.7% over this time compared to a 1.8% increase nationally. California also increased payrolls by 3.5% from January 2022 to January 2023, outpacing the 3.3% increase nationally over the same period.
California’s unemployment rate increased by 0.1 percentage point, to 4.2% in January 2023. While this rate is near historic lows, it remains elevated relative to the 3.4% unemployment rate in the United States overall. California is continuing to struggle with its lack of labor supply, although the workforce did grow by 44,700 in January. Since February 2020, the state’s labor force has fallen by 283,600 workers, a 1.4% decline.
- While employment levels in nearly half of the sectors in California now exceed their pre-pandemic peaks, employment levels in the hardest hit sectors remain below their pre-pandemic levels.
- The Government sector led gains in January, with payrolls expanding by 46,000. However, Government payrolls are still 2.3% below their pre-pandemic peak.
- Other sectors posting strong gains during the month were Leisure and Hospitality (20,800), Retail Trade (10,200), Health Care (9,600), Professional, Scientific, and Technical Services (9,400), Transportation, Warehousing, and Utilities (6,700), and Wholesale Trade (3,000).
- Payrolls decreased in a handful of sectors in January. Construction posted the largest decline, where payrolls fell by 7,300. However, the decline in Construction payrolls was largely weather related. Other sectors with significant job losses were Information (-5,000), Real Estate (-4,600), and Administrative Support (-700).
- Regionally, job gains were led by Southern California. Los Angeles (MD) experienced the largest increase, where payrolls grew by 37,300 (0.8%) during the month. San Diego (8,700 or 0.6%), Orange County (5,300 or 0.3%), and the Inland Empire (5,300 or 0.3%) also saw their payrolls jump during the month. Over the past year, El Centro (4.4%) saw the fastest job growth in the region, followed by San Diego (4.2%), Orange County (3.5%), Los Angeles (MD) (3.4%), the Inland Empire (2.8%), and Ventura (1.6%).
- In the Bay Area, the San Francisco (MD) experienced the largest increase, with payrolls expanding by 8,900 (0.7%) positions in January. The East Bay (7,900 or 0.7%), San Jose (5,100 or 0.4%), Santa Rosa (1,100 or 0.5%), Napa (300 or 0.4%), and Vallejo (100 or 0.1%) also saw payrolls expand during the month. Over the past 12 months, Napa (5.5%) saw the fastest job growth in the region, followed by San Francisco (MD) (4.3%), San Jose (4.2%), Santa Rosa (3.6%), Vallejo (2.5%), and the East Bay (2.1%).
- In the Central Valley, Sacramento experienced the largest monthly increase as payrolls expanded by 3,900 (0.4%) positions in January. Payrolls in Merced (1,000 or 1.4%), Chico (500 or 0.6%), Fresno (500 or 0.1%), Modesto (500 or 0.3%), Stockton (400 or 0.1%), and Madera (200 or 0.5%) increased as well. Over the past year, Madera (4.5%) saw the fastest growth, followed by Yuba (4.3%), Hanford (4.2%), Fresno (4.0%), Visalia (3.6%), Stockton (3.4%), and Sacramento (3.0%).
- On California’s Central Coast, Santa Barbara added the largest number of jobs, with payrolls increasing by 2,200 (1.1%) during the month. Salinas (900 or 0.6%) and Santa Cruz (600 or 0.6%) saw payrolls decline during the month. From January 2022 to January 2023, San Luis Obispo (3.1%) added jobs at the fastest rate, followed by Santa Cruz (2.9%), Salinas (2.5%), and Santa Barbara (2.3%).
Career & Workplace
270 Business Owners and Human Resource Experts Convene for Inaugural Inland Empire HR Summit
Human Resource Conference Prepares Employers for Future Pay Equity Audits
By Ken Alan, Freelance Writer for IEBJ
“Pay transparency will transform how companies manage their compensation program,” observed Juan P. Garcia, principal at Blue Whale Compensation, LLC. New pay scale disclosure and data reporting requirements were the main topics at the 2023 Inland Empire Human Resources Conference. On Tuesday, February 7th, Garcia and other presenters urged the sold-out crowd of over 250 HR professionals to ramp up for these new regulations well in advance of future state compliance audits.
As of January 1, 2023, employers with at least 15 workers must include pay ranges in job postings. While that would seem to let smaller employers off the hook, conference speakers felt they would be at a competitive disadvantage if they failed to disclose pay.
It’s been 65 years since the Automobile Information Disclosure Act, more commonly known as the Monroney window sticker, required car dealers to reveal equipment and pricing information on new automobiles. Over the years, similar disclosures and protections were put in place for home buyers. Still, it wasn’t until 2019 when Colorado became the first state to put wages in the spotlight — arguably our most significant personal finance decision. California now follows Colorado, New York City, and Washington State in mandating pay transparency disclosures.
The law requires companies to post “the salary or hourly wage range that the employer reasonably expects to pay for the position.” Still, recruiting experts SB Sheryl Moore, COO and Vilma Brager, senior partner at Insight HR Consulting LLC, cautioned employers against posting narrow ranges as a means to discourage candidates from asking for the top salary.
Garcia said, “Companies are basing compensation on market conditions rather than the ‘similar work rule,’ which makes them uncompetitive.”
Once a pay range has been published, employers will need a good reason to extend pay beyond those boundaries, according to Allyson K. Thompson, partner and attorney at Kaufman Dolowhich Voluck. Employers encountering these conundrums should consult with legal counsel.
Recruitment and retention challenges were also highlights of the presentations. Brager & Moore urged employers to think beyond the traditional job posting websites and to leverage strategies like employee referral bonuses. They advocated using behavioral interviewing and leadership assessment testing, such as the Myers-Briggs “personality inventory.”
The COVID-19 pandemic gave workers a chance to experience the benefits of remote work, and now getting them to return to the office remains a critical recruitment and retention challenges. “The workforce was able to work and get things accomplished in 2020 and now that employers are pulling them back into the (office,) they’re saying, ‘why do I need to do that?’ said Moore. “There’s so much stress in (commuting), and they’re saying, ‘I got so much more work done with a flexible schedule.’”
Moore confirmed that many employers make the mistake of posting a job as “remote,” when they really mean, “hybrid.” “When I see ‘remote,’ I think it means working from home 100 percent of the time,” she said.
Brager & Moore offered several ideas for employee retention, including onboarding with on-the-job training and a 30- and 60-day check-in with the manager. They suggested employers consider mid-year performance reviews rather than just annual reviews. Town Hall meetings with the CEO were also recommended to enhance employee engagement.
Respecting employee privacy was another recurring theme. Speakers broadly advocated keeping interviews focused on the skills and responsibilities required for the job while avoiding questions that intrude into off-work activities. New California labor laws protect reproductive health decisions and off-the-job use of cannabis. Employers cannot ask for specifics about personal health issues when employees ask to take sick leave, but they can ask for a doctor’s note. Expanded bereavement leave limits what personal information employers can request.
Conference attendees were particularly interested in the rapidly evolving changes in coronavirus-related labor laws. “Cal/OSHA, not the California Department of Health, is your reference point for health & safety data,” said Thompson, who offered a roadmap to COVID compliance information starting at www.dir.ca.gov/dosh/coronavirus. “From there, visit your city, county and state health department websites, then go to the CDC,” she said, adding that California supplemental paid leave concluded on December 31, 2022.
Copies of the PowerPoint slide decks are available to attendees by contacting the Inland Empire Regional Chamber of Commerce at email@example.com. The 2023 Inland Empire Human Resources Conference was organized and produced by the Inland Empire Regional Chamber of Commerce and sponsored by San Bernardino County, Insight HR Consulting, Maniaci Insurance Services, Inc., Paycor, Vestwell, Now CFO, and Strategic Retirement Partners.
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