San Diego is a services economy

The classic description of a city living off personal services, and bringing in too little outside money through activities such as manufacturing, is “a bunch of people doing each other’s laundry.” Increasingly, that describes San Diego.

Indeed, in the past ten years, the number of San Diegans working in laundry services has risen 8.4 percent to 14,200, according to data from the California Employment Development Department.

That’s not good because according to a 2008 report by the Bureau of Labor Statistics, the average annual pay of San Diego laundry and dry cleaning workers is a puny $20,100 a year. That’s not even half the pay of the average local worker: $47,250. And according to a 2008 report by the San Diego Workforce Partnership, a single person in San Diego has to earn $33,734 a year just to make ends meet, and 37.2 percent of local workers don’t make that much. And remember, that’s for a single person. A family of five (two adults, three children) needs almost $111,000.

To find out how many San Diego jobs are dependent on other San Diegans, and not on money flowing in from elsewhere, I counted job gains or losses over the past ten years. I also looked at ten-year employment patterns at a number of local companies.

The decline of manufacturing and construction jobs is alarming, particularly since the population continued to grow, although not at rates the county experienced in the 1980s (sometimes 3 percent or more a year). In ten years alone, manufacturing employment has plunged 24.2 percent in the county. Now only 7.4 percent of county jobs are in manufacturing, down from 27 percent half a century ago. Why is that important? Local tool and die makers make $49,510 a year. Electronics engineers make $98,770 and mechanical engineers $81,370.

Construction jobs have dropped 6.6 percent in the past decade. Had the real estate bubble not popped, they would have risen significantly. The average construction job pays $47,780. Brick masons make $62,500 and glaziers $55,330.

While manufacturing and construction jobs have been falling, jobs in services have been rising sharply. The number of service jobs over the past ten years has soared 11 percent to more than one million. But look at the compensation in these fields. Retail jobs have gone up 4.2 percent. But retail salespersons make $25,770 a year. Cashiers make $22,390 a year.

Quintessential service jobs are in the restaurant business. In the past ten years, jobs in food services and drinking places have shot up 23 percent. With two people often working, families dine out more these days. But the business is not remunerative for those providing the service. Waiters and waitresses make $20,200 (almost the same as laundry workers), although those serving meals do get tips. Fast-food cooks make $18,600, short-order cooks $23,490, and dishwashers $18,890.

One service industry that does bring in money from the outside is tourism. The establishment wants taxpayers to pay for another expansion of the convention center, for example, and a whopping subsidy for a new Chargers stadium (although pro sports teams do not bring in significant amounts of money from the outside, contrary to the propaganda). Tourism jobs have gone up 14 percent in the past ten years. But pay is dismal. Maids and housekeepers make $20,490 a year. Hotel desk clerks make $22,040.

Jobs in amusement, gambling, and recreation have soared 33.6 percent in the past decade. But recreation attendants make $20,710 a year. Ushers and ticket takers gross $20,270.

Information jobs have risen by 4.2 percent, but one subset has plunged: newspaper, periodical, and book jobs, down 36.6 percent, to no one’s surprise. Reporters make $42,770 — those that are working, anyway. Health-care jobs have risen 17.3 percent. There is good money there: physicians and surgeons make more than $200,000 on average while physical therapists make $78,180 and dental hygienists $83,810.

Government has provided a cushion — at a price. Total government jobs have risen 10.9 percent to more than 225,000. College physics and law professors gross more than $100,000. Elementary schoolteachers make $67,020. But controversy abounds: overly generous pension benefits and very early retirements of fire and police employees may very well break the City of San Diego financially.

Although some in the service industries make good money, it is clear that a metro area in which people do one another’s laundry lacks economic oomph, or money coming in from outside.

But there are a plethora of variables holding down manufacturing employment. The biggest problem, of course, is the shipping of jobs overseas. That has been the rage since the 1980s and has wounded the U.S. economy. But there are other factors: companies increasingly use part-time and temporary employees. Through use of sophisticated electronics methods, firms have learned to make do with fewer workers. That is why productivity has been soaring: output per worker-hour is rising.

A look at some San Diego companies is instructive. In ten years, revenues at digital wireless superstar Qualcomm have gone up more than two and a half times, from $3.94 billion to $10.4 billion. But the number of full-time, part-time, and temporary employees has only gone up 66 percent. At Cymer, a maker of semiconductor equipment, sales have shot up two and a half times while employment has risen 41.4 percent. At Callaway Golf, which makes golf equipment, sales have gone up 58 percent while employment has gone up 20 percent.

At WD-40, maker of lubricants and household cleansers, sales have doubled while employment has gone up 76.3 percent. Two local manufacturers have kept employment rising with sales: revenue at Cubic, maker of defense electronic and fare collection systems, has doubled along with employment. At Cohu, maker of semiconductor equipment, employment has gone up at a slightly higher rate than sales.

Biotechs have varying patterns. At Isis Pharmaceuticals, sales have gone up 2.7 times but employment has gone down 13.3 percent. Sales at Amylin have gone up 52 times while employment has risen 28.6 times. At Quidel, revenues have tripled while employment inched up 4 percent.

Low-paid cooks and order-takers are well-nigh ubiquitous at fast-food chain Jack in the Box. In ten years, the company’s sales have risen from $1.46 billion to $2.47 billion. But employment has gone down 5.5 percent. That is deceiving. Increasingly, the company is franchising more outlets and owning fewer. In four years, Jack has gone from 25 percent franchised to 46 percent franchised. The employees of franchisees are not recorded on the books of Jack. So there are more people working in Jack outlets but fewer on the company’s payroll.

Bottom line: employers hold the cards, especially as manufacturing recedes and services rise. High unemployment in the United States and San Diego could be around for quite a while.