REPORT: PANDEMIC WILL ERASE 2 YEARS OF GAINS
Estimated 176,000 local workers lost jobs in first 6 months of lockdowns, SANDAG says
San Diego County has lost so much business activity from the pandemic that it is expected to wipe out two years of economic gains.
The region will lose an estimated $12.4 billion in gross regional product this year, said an economic analysis released today by the San Diego Association of Governments, or SANDAG.
It said $4.8 billion in wages had been lost in the first six months of the COVID-19 pandemic.
Around 176,000 San Diego County workers lost jobs related to state-mandated lockdowns, with the majority coming from the hard-hit tourism sector.
Ray Major, chief economist at SANDAG, said the analysis is a ref lection of ongoing business restrictions in California with no guaranteed end in sight, despite hopes for a vaccine. He expects the losses will erase most economic gains of 2018 and 2019.
“When we look at the first six months of the pandemic,” he said, “we had a such a large contraction, that by the time we forecasted out what a year might look like, we are looking at losing two years of previous gains in the economy.”
SANDAG calculated its analysis by looking at local job losses and economic data, and then factoring in national forecasts from organizations including Oxford Economics, Moody’s, Goldman Sachs and Deloitte.
The report covered the first six months of the pandemic, starting with Gov. Gavin Newsom’s shutdown
orders in mid-March, as well as predicting losses related to the state’s tiered reopening system and changing consumer behavior.
Major predicted big hits to the already-struggling tourism and retail industries, even with a vaccine. He said many organizations have learned how to make conferences virtual and they may be hesitant to invest in in-person gatherings in San Diego. He said that would have a ripple effect on restaurants and hotels.
Also, he said brick-andmortar retail could suffer from the pandemic-era shift to online shopping, which Major said has accelerated among customers who did it rarely or not at all.
“I’m not sure if we will ever get back to the normal we had pre-COVID,” he said.
San Diego County is not alone in economic contraction, but it is unclear how it compares to other regions. Major said the economic effects of COVID are similar throughout communities in California because they are all under the state’s tiered reopening system. While some are in more, or less, restrictive tiers for business activity, he said the economic woes for each region are not that far apart.
The report comes as the White House and members of Congress continue to negotiate over a new stimulus bill. The White House has proposed a $1.8 trillion package that would include another round of stimulus checks, but many details are still murky as negotiators debate specifics. Democratic leaders have said the bill falls short of what is needed and it has led to a stalemate.
Some local efforts to ease financial woes have been enacted. The city of San Diego this week added an extra $5 million, using federal funds, to its rent relief program designed to help the city’s poorest residents affected by COVID-19.
Uneven strain
Low-wage workers were the hardest hit in San Diego County by job losses following stay-at-home orders, said the SANDAG report. Higher-paid workers, who generally had jobs that could be done remotely, came out much better.
The hardest hit local sectors — tourism, retail and education — made up 80 percent of the job losses, including $3 billion in lost wages.
Because of the industries affected, certain groups ended up feeling the brunt of the economic impact. Those who identified as Latino were more likely to work in tourism and women were more likely to work in education.
Workers who made less than $27,000 a year were the most likely in San Diego County to lose work, with roughly 23.3 percent fewer employed in that category compared to right before stay-at-home orders. Workers who earned between $27,000 and $60,000 were down 8.5 percent; and workers who made more than $60,000 had a less than 1 percent decrease.
Job postings also illustrate the economic disparity between low-income and high-income workers. Positions requiring extensive education were down 15 percent since mid-March, while jobs requiring minimal education were down roughly 30 percent, said the Opportunity Insights Economic Tracker.
It might be useful for lowincome workers to use time off work to upgrade skills, at least based on the data. Alan Gin, economist at the University of San Diego, said cost of education could prohibit everyone rushing out to get a degree and, practically speaking, poor high school grades could prevent some unemployed workers from quickly changing focus to a college education.
“It’s easier said than done,” he said.
Despite some groups being hit harder, the whole region is experiencing the loss in gross regional product. The measurement, used by SANDAG and popular among economists for regional analysis, shows the market value of all final goods and services produced in the region. Estimates before COVID showed it growing 2 percent this year, instead of down 4.7 percent as is now predicted by SANDAG.
The gross regional product for San Diego County was $265 billion last year, but is now estimated to contract by $12.4 billion.
There have been some job gains in government hiring with 1,800 new positions. New job categories, such as temperature checkers, have been created during the pandemic. Companies allowed to stay open, such as Home Depot, have added staff. The additions come nowhere near offsetting the 176,000 jobs lost.
Hardest-hit industries
Tourism: It made up 13 percent of regional employment before COVID-19 with 202,500 jobs. After six months of COVID, 77,700 jobs have been lost. Latinos made up 32,300 of the lost positions, meaning about 1 in 2 Latinos who lost work were employed in this sector.
Retail: It made up 15 percent of regional employment before the pandemic with 245,500 jobs. In the first six months of the pandemic, 36,100 jobs were lost. An estimated 1 in 5 unemployed workers had retail jobs.
Education: It made up 9 percent of regional employment before the coronavirus with 144,000 jobs. There have been 27,500 jobs lost with most — 18,800 — belonging to women.