More on San Diego Job Creation

Last week we looked at job creation in San Diego over the last five years and attempted to draw some conclusions about the role that the housing boom has played in the number and types of jobs being created in the southern most part of Southern California.

In fact, after having looked at the data last week, it was concluded that based on recent increases in construction payrolls, there is a bubble in "housing jobs" in San Diego.

While the construction category was, by far, the largest gainer on a percentage increase basis, the leisure and hospitality category was the leader in absolute terms over the same period. Since last week, the focus was on jobs directly related to housing, this interesting tidbit was noted, but not further explored.

Today we dig into it.

Below is a chart of changes to private payrolls in San Diego, in absolute terms, since January 2001. Note that there was a net increase of about 70,000 jobs, with leisure and hospitality along with construction leading the way, and manufacturing in its expected position.


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The rightmost bar was what caught our attention last week.

Leisure and hospitality? This category consists of hotels, restaurants, amusement, recreation, and gambling. We all know about Sea World, the San Diego Zoo, and the convention center, but that's a lot of new jobs.

Is it unusual for this category to be leading the way in job creation? Let's look at the above data in the context of the last 15 years, in five year segments - 1991-1995 (including the early 1990s recession), 1996-2000 (the stock market boom), and the above data for 2001-2005.


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Well, it is a bit unusual.

In all of the 1990s, leisure and hospitality was no better than fourth or fifth in job creation, always behind categories like business services, trade and transportation, and education and health services. It is clear that this country has evolved into more of a service economy, but it is these sorts of services where we expect to see the highest job growth - not in leisure and hospitality services.

Are that many people now retired and living a more "leisurely" lifestyle, or has San Diego turned into a vacation hotspot for the rest of the world?

Let's look at a breakdown of the leisure and hospitality category.


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So, that explains it. The restaurant business is booming!

Over 15,000 new restaurant jobs have been created in the last four and a half years - that's about 300 new cooks, waiters, hosts, and busboys every month. That's a lot of people eating out. That's a lot of new jobs.

The amusement, gambling, and recreation category also seems to be doing fairly well with over 7000 new jobs there. This presumably includes jobs at Sea World, the zoo, golf courses, etc. Lots of people are obviously spending lots of money to amuse themselves.

But who are these people?

Well, they're not from out of town - otherwise there would be a commensurate rise in the number of hotel jobs. There are only 800 new jobs in accommodation - that pales in comparison to the restaurant and recreation totals. It must be the locals.

Where's the money coming from?

Personal income in San Diego is little different than the rest of the country - rising slowly, trying to keep pace with the benign inflation we keep hearing about. Where do San Diegans get all this extra money to spend on dining out and amusing themselves?

It seems clear that this is nothing other than the effects of a housing boom and easy home equity extraction - ordinary home owners improving their standard of living by eating better and amusing themselves as their mortgage balance goes up, but at a rate much slower than their home value rises.

The 2005 American dream in San Diego.