July employment update

Plus, zooming in on employment in the real estate sector

Updates elsewhere: In the local papers, Jonathan Lansner reports on the overvalued real estate market in much of California. Kevin Smith reported on a communications workers strike last Thursday – workers are concerned about subcontracting Frontier is doing to outsource work for lower cost, which is a violation of their collective bargaining agreement with the union. The company cites labor shortages as the reason for hiring subcontractors. Also last Thursday, Jeff Collins reported that the recent decisions of Amazon to halt warehouse projects in the region will likely do little to affect the landscape of commercial rents, which continue to rise rapidly. That article contains a lot of useful insight into current trends in e-commerce, commercial real estate, and other issues in logistics in the region – I highly recommend it (feel free to contact me if you can’t get a copy and would like to read it).

The establishment numbers for state and metro areas were released last Friday. They showed that nonfarm employment in the Inland Empire in July 2022 was at 1,651.4 thousand workers, which is a 5.4% change from a year earlier. The region’s employment growth compared favorably to Los Angeles, where jobs grew by 4.0% year-over-year.

Overall, jobs growth was a bit slower than expected. Notable year-over-year increases were in leisure and hospitality (9.8%) and Trade, Transportation, and Utilities (7.9%). Reflecting on last Friday’s article on real estate, employment in that sector was up 3.8% in July 2022 from July 2021, and up 1,200 jobs from June 2022. While a slowdown in the real estate market is certainly here, it does not yet seem to be causing employers to shed jobs. See the chart below.

The establishment data also provides information on pay and hours for area workers. Average hourly earnings in the private sector were up from $27.99 in July 2021 to $28.56 in July 2022. Weekly hours were down year-over-year by 0.4 hour, to 35.3 hours in July. While the increase in wages is an improvement over recent months when wages have been declining, the 2% increase for the area’s private sector workers pales in comparison to the 9.2% increase in cost of living (inflation) over the same time period.  Thus, in what economists call “real” terms, worker income declined over the year.