Madison Aument
With 91.9 KVCR News, I'm Madison Aument. This is Economics IE, where we talk to economists from the Inland Empire to help take the temperature of the region's economic situation. Today I'm speaking to Dr. Manfred Keil, who's an associate director with the Lowe Institute at Claremont McKenna College. Thanks for being here, Manfred.
Manfred Keil
It's a pleasure to be here, Madison.
Madison Aument
Well, a report from the LA Times last month painted a bleak picture of the logistics industry from job losses to shuttered warehouses. You disagree with this assessment? Why?
Manfred Keil
I was a bit surprised by it, because the picture I had painted was a very bleak one. It basically said the logistics industry is losing jobs, it's on its way down. And then they did some interviews with people who worked in the logistics industry who painted sort of a bleak picture of low income, high working rates. We know it's not an easy job to work in a warehouse. So I'm not trying to dispute that. It is true that the logistics industry peaked in employment in the summer of 2022. Since then, we have lost jobs in the logistics industry, there is no doubt and that is what the article in the LA Times focused on. What they didn't point out correctly was that if you go back to February 2020, which was the last month before the pandemic, if you go back to that we are still 19%, above the employment level in the logistics industry compared to that higher than California and the United States was still doing better in terms of logistics from the pre pandemic period. But I think what we really objected to was to paint the Inland Empire as a picture of just depending on the logistics industry.If you look at the employment gains, since just before the Coronavirus outbreak, let's say October of 2019. The two areas that have gained the most jobs since then it's Stockton-Lodi, and we're in second place. The employment in the Inland Empire is 1.9% higher than a year ago. That's substantial.
Madison Aument
Your research shows that the region's seeing a decrease in employment in the logistics industry, but an increase in jobs that correct?
Manfred Keil
It sees a decrease in employment since the summer of 2022. But running up to it, that increase is still higher than where we end up now. So again, think of I don't know, let's let's make an example. You go from 100, you climb up to 130. And then you fall back 222. Right. So that means yes, you have come down from 130 to under 22. But you're still way above where you were at when you were at 100, which is where we were in February 2020.
Madison Aument
In terms of economics, what does the future of warehousing and logistics look like in the IE?
Manfred Keil
That's an interesting question. Right? So consumers used to spend much more on goods than on leisure, and both our consumption expenditures, right. So as we're starting to go out more often into restaurants as we are going more to hotels, as we go more to amusement parks, our patterns of expenditures have shifted. And the ones that benefited the logistics industry was really expenditures on goods like ordering stuff and having it delivered. Logistics is here to stay. Now, here comes the problem. And basically the big elephant in the room is environmental problems. And the second problem is potential automation. Either one of them will result in once they take a hold in the discussion of potential quite large losses in employment in the logistics industry. The problem of the Inland Empire has always been that for some reason or another, we were too concentrated on one type of industry. So in the 1990s there was the military and aeronautics in the high desert. And so when the peace dividend of the 1990s came in, and we shut Air Force bases, unemployment in the Inland Empire was really high. So it's now again that we're just focused on one industry. We have to get away from that. And we have to sort of get a more general increase in employment in other sectors.
Madison Aument
Thanks for joining me today, Manfred.
Manfred Keil
You're welcome as a pleasure as always.
Madison Aument
Join us again next Monday for Economics IE. You can find this segment on our website at kvcrnews.org/econie. Support for this segment comes from the Nowak Family. For KVCR News, I'm Madison Aument.