San Diego County hit a near record-low unemployment rate of 3 percent in April. More than 20,000 jobs were created in a year. Several employers are reporting having difficulties filling positions. There is some speculation this will lead to wage gains.
Question: Will San Diego County’s low jobless rate mean noticeable wage gains?
Phil Blair, Manpower
YES: Supply and demand drive prices. At Manpower, we have seen increased productivity, more overtime hours and more job hopping for more money. When you are making $14 an hour, an offer of $1 an hour more is very meaningful. When you are an analytical engineer and can demand your own salary, then throwing out there a $15 an hour increase, just to see who is really desperate for your talent, is meaningful. While salary is No. 4 or 5 on the list of why employees leave for new opportunities it is a motivator for sure. The demand is still at the lower production levels and the highest skill levels. Companies are continuing to thin their middle management layers, other than sales people.
Kelly Cunningham, San Diego Institute for Economic Research
YES: Higher demand with limited supply causes prices (wages) to rise. Unemployment below 4 percent indicates a labor shortage to fill jobs. It may take some time to attract qualified workers to specific positions, particularly those requiring specialized training and skills. Rising wages are necessary to motivate those to acquire the right skills or transition over in particular fields of labor. Higher wages will squeeze business profits and challenge operations tending to lead to prices rising.
David Ely, San Diego State University
YES: Labor markets are tight across much of the country, not just in San Diego. This condition will continue to pressure local firms to increase wages to attract and retain employees. Local firms are under even greater pressure to pay competitive wages because of high housing costs in San Diego. Also, not all of the impact will be reflected in wages since firms can recruit and retain employees by offering more generous benefits.
Gina Champion-Cain, American National Investments
YES: The local labor supply is woefully insufficient to meet demand across all industries, categories and skill levels. The delayed relationship between low unemployment and wage growth has come to an end. Employers are searching well beyond San Diego County, converting part-time workers into full-time positions and up-training others is an all-out effort to meet demand. This will translate into significant real wage gains in the coming months.
Alan Gin, University of San Diego
Not participating this week.
James Hamilton, UC San Diego
YES: We have been in a long period when workers did not have much bargaining power. But employers who do not understand that those days are now behind us are making a mistake and will find themselves losing their best workers. I do not anticipate that wages will suddenly take off. But I expect to see stronger wage growth than we have in some time.
Gary London, London Moeder Advisors
YES: Sure, wages are and will inevitably increase. But I want to caution the reader that wage increases will not in and of itself suffice to cure a festering problem for many San Diego companies: their inability to grow locally, which is an economic red flag for our region! Our economic prosperity is way more about cost of living, which means recognizing the need to focus on building more housing as top priority.
Norm Miller, University of San Diego
YES: Difficulty finding employees generally leads to wage gains, bonuses and more turnover as people move to higher paying jobs. Work opportunity ads increase, although the degree of wage gains depends on how much global competition exists for the industry, which tends to constrain prices. As to whether the gains are “noticeable” is subjective. I consider anything above the rate of inflation significant and this should be the case in 2019.
Jamie Moraga, IntelliSolutions
YES: It should, as it’s a job seekers market. There are more jobs available than people who are actively looking. To attract and retain high quality talent, San Diego employers may have to increase wages and benefits. In the military/defense industry, companies are not only competing for talent amongst themselves, but they are also competing against the commercial marketspace. In many ways the commercial marketspace can offer higher wages and benefits than can be offered by companies within the defense industry.
Austin Neudecker, Rev
YES: We should see wage increases if the regional economy continues to grow the number of jobs faster than population. For wage increases to be noticeable (real), they must significantly outpace inflation. Our local government has some influence on job creation by making San Diego attractive for businesses to start, relocate, and grow. Inflation is more likely to be caused by federal actions (like persistent tariffs). My hope is that any increases benefit all income brackets.
Bob Rauch, R.A. Rauch & Associates
NO: It is likely that the jobless rate is at or near the bottom. Wages have been increasing from minimum wage on up through the ranks over the past eight years. According to Moody’s Analytics, San Diego is at risk for having increased unemployment rates between now and 2023, more than most other major U.S. markets. This is based on their algorithm that includes gross metro product, housing, population growth, employment and personal income growth.
Lynn Reaser, Point Loma Nazarene University
YES: Just as the national drop in the jobless rate has finally begun to spark an acceleration in wages, San Diego’s 3 percent unemployment rate should lead to somewhat larger raises. Continued low inflation will keep a lid on wage hikes, but employees should see gains in their real earnings. Many firms are already boosting wages to attract new workers or retain their current employees. For California as a whole, wages are already up about 5 percent so far this year.
Chris Van Gorder, Scripps Health
YES: However, I don’t know how noticeable any wage gains will be. Supply and demand clearly affects wages. So does revenue. The trade embargo will impact costs and ultimately sales prices. That, on top of other economic factors — such as government reimbursement in the case of hospitals — means employers may be too stressed to give noticeable wage increases. But if worker supply is a factor, wages will increase or services will be eliminated.
Michele Vives, Douglas Wilson Co.
No: While it is reasonable to deduce that with a fewer supply of eligible employees to fill positions comes a natural increase and competitiveness in wages, that doesn’t consider other factors at play. Perceptions that there are still overall market growth concerns, concerns with potential tariff issues between the U.S. and China, all contribute to businesses holding their purse strings tight to their chest and offering little, if any, wage growth to employees.
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