San Diego employment declined on a year-over-year basis in May, according to the latest estimates from the California Employment Development Department. This is only the second time in 15 years that annual employment has shrunk, the first time being in March of this year.
The loss of jobs continues to be centered in the industries that became unsustainably bloated as a result of the housing bubble. From May of 2007, construction employment fell by 8,900 jobs or 10.0 percent, finance and real estate employment by 5,400 jobs or 6.6 percent, and retail employment by 1,900 jobs or 1.3 percent.
Things looked a lot brighter outside of the three housing boom industries. Employment in other sectors grew by 13,000 jobs or 1.3 percent, and the green line on the accompanying graph shows that the growth trend in the non-housing economy has remained pretty steady.
However, the increasing burden supplied by the housing-related sectors was heavy enough to drag overall employment down by 3,200 jobs or .2 percent. The orange line on the graph shows total San Diego job growth in a fairly steady downtrend.
There continues to be some controversy about the birth-death model, which posited a increase in construction, finance, and retail employment from hypothetical new business formation even as the known, existing businesses continued to shed jobs. For more information on this topic see the Bureau of Labor Statistics’ monthly birth-death figures or my previous articles (first here, then some vindication here) questioning the accuracy of the birth-death model at job growth inflection points.
— RICH TOSCANO