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KPBS Midday Edition

San Diego County's Unemployment Rate Dips To Nearly 8-Year Low

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San Diego County's Unemployment Rate Dips To Nearly 8-Year Low
San Diego County's Unemployment Rate Dips To Nearly 8-Year Low
San Diego County's Unemployment Rate Lowest In 8 Years GUEST: Alan Gin, professor of economics, University of San Diego

I'm Tom Fudge. You are listening to Midday Edition. We will spend most of the show talking about subjects that touch on Memorial Day which is today but the top story on Midday Edition -- last week the California economic development department delivered the news that in April San Diego County had an on employment rate of 4.8%. The lowest rate in nearly 8 years. The evidence of economic recovery is consistent and long running. You have to go back to August 2012 to see a slight monthly downturn in the US index of leading and anomic indicators for CN date -- San Diego. This is tabulated by Alan Gin -- he joins me this wanted to talk about the economy. Allen, think you for coming in. Good afternoon. I know you have a cautionary note about the positive numbers for April. Let's with that. Is it typical for jobs to be plentiful this time of year? In terms of the unemployment rate, April is the second lowest month of the year. There is a lot of seasonal factors second only to December in terms of the unemployment rate. When you adjust the number instead of 4.8% I get that it is 5.1%. A little bit higher. A little bit higher but a lot better than where we had been and is only going in the right direction. Having said that, what do you think of the April job numbers? I think it is solid. Again, the unemployment rate didn't dip when you looked at seasonal adjustments but Gin we've had good job growth in San Diego. What I like to do is compare year-over-year numbers because that takes the seasonality out. If you compare April 2015 to April 2014 we're up and that is a great number. 40,000 jobs up. Just put this into perspective, during April the unemployment rate in California was 6.3%. In the US as a whole it was 5.4% and San Diego is 4.8%. This suggests that San Diego is doing better than normal. For a while we were lacking the national economy. We are always ahead of the state. Now we are ahead of both. So things are going pretty well. We could get better, though. I've always been curious about why San Diego seems to do better than the state. Is that because the state has a lot of unemployment that is related to the agriculture industry? Is definitely the case. We have a lot of inland counties with the unemployment rate is high. A lot of that has to do with employment and agriculture. The fact that a lot of the development, particularly in the high-tech industry occurs along the coast. People sometimes talk about splitting California North and South. There is an East and West divide in terms of the economy. 40,000 more jobs compared to last April in San Diego. What have been the sectors that of seen the biggest growth? The biggest growth is an important area called professional scientific and technical services encompassing a wide variety of jobs. It includes things like lawyers, protects and for San Diego a lot of the R&D jobs are in that category. We are up over 1000 jobs compared to last year. That's good news. Those tend to be the highest paying jobs that will support other jobs in the economy. I'm a little surprised to to hear that because often we have job growth it happens in the hospitality industry. It doesn't pay high ranges. How is that industry doing prep? We have a broad based growth so that is doing well, too. Particularly employment in restaurants. Restaurants as opposed to do accommodations have been with a gross has been in leisure and hospitality. I think that's because with the unemployment rate coming down and people getting more money I think the initial place that people might spend more money -- they are going out to eat more. When you look at these different sectors going up does rising tide lift all boats? I think so in this case. Again, in the past a lot of the growth has been in lower wage areas but now that we are seeing some growth in every sectors that means more money and pick up people's pockets to spend and that creates jobs in the other support sectors as well. My guest is Alan Gin, a professor of economics and he is talking about the low unemployment rate in San Diego County of 4.8%. One thing that people complain about even when they look at the economic recovery -- we just don't seem to be rising very good. Compared to the number of jobs. How low does unemployment have to be to create a labor shortage that is going to push up the wages? The lack of wage growth definitely is a problem. Right now what we need is the on employment rate to get about 4.5% locally. In terms of seasonally adjusted rates. So, we are close but we've still got about 0.5-3/4 percentage points to go. Once we get into the low 4 the labor market will be tight and employers will have to start raising wages to attract good workers. What happens? To people moved to San Diego to get jobs despite the high cost of living? I think what you'll see is -- you probably see some in migration but more importantly a lack of out migration. One of the problems that we had with people leaving San Diego and once the on employment rate gets relatively low and wages start to rise and think we will see more people staying in San Diego. When I looked at the index I noticed an area that is not been consistently positive and that is building permits. That affects the cost of living, of course, since we may have a housing shortage as a result of that but what can you say to comment on that? During the great recession the housing market was hit hard in building permits trying not. We had a rebound that we had a setback last year in the sense that building permits were down in 2014 compared to 2013. Part of the problem is related to the labor market. During the downturn a lot of construction workers left the city and affirms one out of business. Right now there is a bottleneck in terms of skilled construction workers available. Definitely there is demand out there in the market in terms of people wanting a family homes. When you look at the 40,000 jobs we've gained since last year how many those of construction jobs if you know the answer? The answer is in the 3000-4000 range. This is good. We've been gaining jobs the last couple of years and that is coming back but we lost over 40% of our construction jobs during the great recession so we got a long way to go. Let me ask you a question about the Federal Reserve. Job growth nationwide -- are we going to see a hike in the interest rates anytime soon? I think we will eventually see this but it keeps being pushed off into the future because while the use has been generally good every once in a while we get a pickup in terms of the data -- we had a slow GDP growth report recently and we've had -- we had one month of week job growth and that gave some have it -- hesitation to the general reserve. I think the economy is strong enough to take it. Are we hearing that from the Fed or is that just guesswork from people like you? The combination of that -- there have been some indications -- [indiscernible] tends to be [indiscernible] on interest rate and has she has indicated some concern about the economy. When they raised the interest rates for the person that doesn't follow economics all that much, what does it mean? Does that mean when you buy a house you might have to pay a hires -- higher interest rate? What does that mean for your average person? That is where the primary intent impact is going to be. It will translate into higher mortgage rates. There will be other rate increases as well but the average person will feel more in terms of the mortgage rate. On the other hand if you are a favor it could be positive news. You might be getting a higher return. I see. Government bonds might be a better investment? That would be correct. Finally, Alan Gin -- how to use on this up? We're going in the right direction. Solid job growth year-over-year. This will be another good year for job growth in San Diego. I think people out over 30,000 jobs and we could approach to thousand jobs. That is a big number to help drive the unemployment rate into the mid-4% range by the end of the year. My guest has been Alan Gin, an economist at the University of San Diego. They give very much. Thanks area -- Thanks.

San Diego County's unemployment rate hit a near eight-year low of 4.8 percent, according to the California Economic Development Department.

The county's rate is less than the state's unemployment rate, which is 6.1 percent. The government statistics don't count the individuals who have stopped looking for work, but only those actively seeking a job.

Alan Gin, professor of economics at the University of San Diego and author of USD's Index of Leading Economic Indicators, discusses the job market on Monday's KPBS Midday Edition. He'll explain what the latest unemployment figures really mean for San Diego's economy.