Speaker 1: (00:00)
The OCN variant is also having an economic fallout, creating another speed bump on the road to us economic recovery from thousands of canceled airline flights to shortened restaurant hours, employees, sick or quarantined because of OCN have increased staffing shortages. The latest national jobs data was gathered before the OCN surge, but it too is sending mixed messages about the state of the nation's economy. December job growth came in much lower than expected, but unemployment is down to almost record levels. Meanwhile, the great resignation seems to be continuing as rates of resignations continue at peak level. Joining us for an update on how San Diego is doing is professor Allen gin economist at the university of San Diego. Professor gin. Welcome to the program.
Speaker 2: (00:51)
Thank you. Thanks for having me
Speaker 1: (00:52)
Now, what do these recent reports tell us about the state of the economy?
Speaker 2: (00:57)
Well, I think it shows that, uh, the labor market right now is pretty tight. The economy's doing pretty well, but, uh, what we've seen then is, uh, slower growth in terms of employment now. And I think that the cause for that is not that employers are not wanting to hire people, but it's just simply the, the fact that they're just not enough workers now to go around. So that is a better situation than if employers is, we're just not wanting to hire people. Now, how can
Speaker 1: (01:25)
Job numbers be lower than expected? Yet unemployment is way down.
Speaker 2: (01:30)
So what's happened is that a lot of people have left the workforce. For example, retirements are up, it was projected that over the time period of the pandemic, that about 1.5 million people were gonna retire. It turned out that 3.6 million people retired instead. So that's more than 2 million extra people retiring. So they have left the job market. On top of that, we've lost about another million people at COVID. Uh, some people have died, some workers have died as a result of COVID. And then we have a large number of people who are in, uh, what it called the, the, the COVID long pollers. They have the disease and side effects and they're basically disabled. And so they're gonna be out of the out of the workforce. And then finally, uh, we also have, uh, a lot of women who have left the workforce due to childcare issues. And so if you add all that up, my estimate is that we've have more than 4 million people then who have left the, the labor, uh, labor market, therefore that reduces the, the size of the labor force, which accounts then for the decline and the unemployment rate, while at the same time, job growth is, uh, slow.
Speaker 1: (02:33)
Is this entire picture economic picture brighter here in San Diego than other parts of the country?
Speaker 2: (02:39)
I think we have a mixed, uh, situation here in, in San Diego. We have a lot of industries that were strong, that were resilient. For example, research and development was able to keep on going despite the pandemic cuz people could work remotely. But then on the other hand, we have a big, uh, leisure in hospitality industry that was, that was hit hard, uh, by the pandemic. So restaurants, hotels were hurt by the fact that people were not eating out or traveling, uh, for, for business purposes. And so, because that is such an important part of the local economy, uh, San Diego was suffered then in, in that particular sector. And that's that sector's also having the, uh, the most difficulty in terms of people quitting their, their jobs as well. The highest quit rate is in the restaurant and hospitality industries, almost 7% of people in that industry nationwide quit their jobs in November, but all those people leaving the, the, the labor market that I talked about earlier, just created openings, uh, all through the labor market. And so that gave people the opportunity then to leave their jobs for better, better opportunities.
Speaker 1: (03:43)
How do you expect the OCN surge will affect our economy?
Speaker 2: (03:46)
That's, that's a big unknown at this point. I don't think that we're going to have the closing down of the economy like we had in March and April of, of, uh, 2020. So I think, uh, this may, that may slow thing of people will be more cautious, but I don't think that it's gonna have the big impact that the pandemic had at, at, at its beginning.
Speaker 1: (04:07)
Now, governor Newsom presented his new budget proposal yesterday and apparently California is still a wash in surplus funds. Where is this money coming from?
Speaker 2: (04:18)
Well, I think, uh, we, we've got a couple of things going on here. Uh, number one is that, uh, you know, the stock market's doing pretty well. And so, uh, I think a lot of people had, uh, made some, made a lot of capital gains. A lot of people in the high tech industries for example, were able to keep working throughout the pandemic. So they're continuing to, to earn money and, and pay, uh, pay income taxes. And then finally on top of that, people have been spending money during the pandemic. In 2020, people had to stay home. They couldn't go out, they couldn't travel. And so as a result of that, they ended up saving money. What economists are calling a COVID piggy bank? Uh, it's been estimated that $1.6 trillion was saved, uh, nationwide, uh, during the pandemic. And so now, and people can do do stuff. They're gonna go out and spend some of that money. And that's earning, uh, the, the state, uh, some sales tax revenue.
Speaker 1: (05:08)
What stood out for you in the governor's proposals that could benefit San Diego's economy?
Speaker 2: (05:14)
I think, uh, the emphasis on housing and dealing with the homelessness is, uh, one of the bigger aspect in as far as the, uh, budget is concerned. Uh, we have a serious housing problem in California in terms of affordability. It's just really expensive to live here. Housing prices did not go down, uh, during the pandemic. And, uh, it costs a lot then to buy a house and, and even to rent. So a lot of people are, are in tough spots then in terms of what that was spend on housing. And so I think, uh, the proposals then to boost construction of housing then will help and also think, uh, you know, we have a serious homelessness problem. And so I think the proposals then to deal with homelessness are gonna be significant,
Speaker 1: (05:55)
You know, as you referred to, uh, there were reports that came out at the end of the year about overall individual income in San Diego rising last year, despite the pandemic, yet there seems to be a popular notion that the economy is not doing well. Why do you think there's this disconnect?
Speaker 2: (06:14)
Yeah, that's, that's an interesting question. Uh, you know, I, I think, um, unfortunately that there's just these days that there just a lot of misinformation going on, uh, spread by, by the internet. Uh, and, and as a result of that, uh, people think the situation's actually worse than it is. You know, I saw the, for example, how the media portrayed the job report on Friday and is just almost universally negative. Whereas, you know, my view is that, um, the unemployment rate is thinking below 4% with just a positive development. And, and again, that, that slow job growth is the result of, you know, people leaving the, the labor force voluntarily. And so as a result of that, uh, that's not a, as of not as big of a negative as, uh, it might otherwise be.
Speaker 1: (07:00)
Do you think the pandemic has caused permanent changes in San Diego's
Speaker 2: (07:04)
Economy? I think it has caused some permanent changes. Uh, for example, I, I think the popularity of outdoor eating has made that something that, that is going to continue then in the future, uh, both the public and the, the restaurant, people like that. And, and, uh, you know, we have the weather in San Diego then to, to carry that on. But I think, uh, this big retirement wave that we saw is gonna have lasting impacts at least, uh, for, for several more years down the line. I think the labor market's gonna continue to be tight and, and wages will be continue to rise then for, for the next few years. And then, uh, that will allow, you know, more of this job switching, the great resignation people, quitting their jobs then, and moving on then to, to, to better opportunities.
Speaker 1: (07:49)
I've been speaking with professor Allin economist at the university of San Diego and Alan, thank you so much. Thank
Speaker 2: (07:56)
You.
Speaker 3: (08:06)
I.
