The SLO County labor force is way smaller than it was pre-pandemic — and even during 2020

Editor’s note: This is the second in an ongoing series examining the impacts of the labor shortage in San Luis Obispo County. If you are a business owner or a worker impacted by the shortage who wants to share your experiences, please email reporter Kaytlyn Leslie at kleslie@thetribunenews.com.

Much like the rest of the country, San Luis Obispo County is currently in the grip of a national labor shortage.

The reasons behind the shortage are many — including the omicron surge spurring a large number of COVID sick day callouts, as well as record-high retirements and quittings in recent months — but thanks to the latest data from the California Department of Employment Development released Friday, we have a better idea of just what the San Luis Obispo County labor force looks like right now.

Here are a few charts and insights to illustrate the state of the labor force through 2021, so we can start to get some idea of where this year may lead.

Number of SLO County residents employed up from 2020

First for some good news: In general, employment in San Luis Obispo County was way up in 2021 from where it was in 2020.

In all months except January, February and March, the number of people employed in SLO County was higher than the same month the year before. This shows employment in general was much better in 2021 than it was during the first phase of the pandemic.

It was still noticeably lower than pre-pandemic levels, however.

In the first months of 2021, employment was down roughly 10% from the same months in 2019, though by the end of the year, that difference had shrunk to less than 6%.

For example, the number of people counted as employed in SLO County in April 2021 was 121,300 — more than 11% less than April 2019, when 136,700 people were employed.

In December, that margin had shrunk to 5.72%, with 125,300 people being counted as employed, compared with 132,900 in December 2019.

SLO County unemployment rate drops

Another bit of good news: the local unemployment rate has continued to drop since peaking in April 2020, and the number of people unemployed is back to a level comparable to pre-pandemic.

According to the data, SLO County’s unemployment rate in December was 3.5%, down from 3.6% in November and 6.7% in December 2020. The average unemployment rate for 2021 was 5.2%.

The unemployment rate is the number of people in the labor force who are counted as looking for work. It does not include people who have exited the workforce or are not actively searching for employment.

Given recent trends, December’s rate is, of course, the lowest unemployment rate since the pandemic began, and is actually even lower than the rate in some months throughout 2019.

Data from the California Department of Employment Development further illustrates that a roughly comparable number of unemployment benefits claims have been processed at the start of this year as were in the first months of 2020.

According to the department, an average of about 277 claims have been processed per week so far in January 2022, compared with 255 per week in January 2019.

Before the pandemic, SLO County’s unemployment rate was already at historic lows, with some wondering how much lower it could feasibly drop.

Now, it appears we are returning to that point.

So what does this mean?

Well in general, it shows people who want work, are finding work.

But then what is the deal with so many places being unable to locate workers?

SLO County labor force significantly smaller than pre-pandemic

One of the biggest local labor issues is a shrinking workforce.

In general, SLO County has not seen as many people returning to the workforce following pandemic closures as one might previously have expected.

For seven months in 2021, the SLO County labor workforce was smaller even than the same month in 2020, much less pre-pandemic.

Excluding the months of January and February, before coronavirus hit and sent the local job market spiraling, the county still spent almost half of 2021 with fewer people in the workforce than it did during the height of pandemic-induced closures.

Notably, in November and December that number seemed to be rebounding, with the number of people counted as part of the workforce increasing year-over-year.

Those numbers were still markedly lower than the same months pre-pandemic, however.

For example, 129,800 people were counted as part of the labor force in 2021, roughly 6,900 fewer people than in December 2019.

On average, the California Department of Employment Development estimated 130,600 people were in the labor force in 2021, down from 132,700 in 2020 (it’s important to note the 2020 averages include months at the start of the year before the pandemic when employment and labor force numbers were “normal.”)

According to the data, the San Luis Obispo County workforce appears to have been shrinking since around 2017, but that drop was likely sped up by the pandemic when a number of people chose to retire or quit their jobs.

This issue has been on the radar of economists for a while: Take the comments of Christopher Thornberg, founder of Beacon Economics, during the 2021 Central Coast Economic Forecast in November:

“It’s a very serious issue,” Thornberg said. “We are running out of people.”

This story was originally published January 26, 2022 at 11:00 AM.

Kaytlyn Leslie

The Tribune

805-781-7928 (voicemails only)

Kaytlyn Leslie writes about business and development for The San Luis Obispo Tribune. Hailing from Nipomo, she also covers city governments and happenings in San Luis Obispo. She joined The Tribune in 2013 after graduating from Cal Poly with her journalism degree.