Inland Empire Wage Gains Despite Slow Employment Growth

Jul 17, 2019

Employment growth in the Inland Empire has slowed, but wage gains continue to rise -- that's according to a study released last week by UC Riverside's School of Business Center for Economic Forecasting and Development. KVCR's Benjamin Purper spoke with the study's author and filed this report.

Robert Kleinhenz, PhD - Economist and Executive Director of Research - UCR Center for Economic Forecasting
Credit UCR.edu

Robert Kleinhenz is the Executive Director of Research at the Center for Economic Forecasting. He says the slowing of employment growth in the Inland Empire mirrors that of the state as a whole.

Kleinhenz: “So like the state as a whole, the labor force in the Inland Empire has been growing more slowly than was the case in the last several years. And this has really become apparent over these past twelve months, so what's happening is we have continued large numbers of job openings but we don't have enough people to fill those positions. And it's not just true in the Inland Empire, it's also true in and around the entire Southern California region, so employers in the I.E. are increasingly having to compete for workers with employers in Orange County, L.A. County, and San Diego County. And so we're just seeing the job growth is slowing.”

However, despite the slow employment growth, wages in the I.E. have increased. Kleinhenz says that’s a product of economic growth.

Kleinhenz: “It's a product of growth which is driving the demand for labor and in this tight labor market we're seeing wages on the rise. Now to be sure, the wage gains that we're seeing in the Inland Empire are welcome, but when you compare them to the state as a whole they're a little bit lower, the state as a whole has seen wage gains from 2017 to 2018 closer to 4 percent. Mainly because of the mix of industries and jobs throughout the state that is somewhat different from those in the Inland Empire.”

Kleinhenz says the Inland Empire was seeing massive job gains until very recently. He says it’s only in the last few months that it’s slowed down.

Kleinhenz: “The main reason that we're seeing slower wage growth and so on compared to the state is the mix of industries that make up the local economy. We're very heavy on transportation/logistics, but we're heavier on administrative services as compared to professional scientific and technical services which are IT-related. And the pay scales that go with those different industries are quite different. So we tend to have a lot of jobs in some of these industries like logistics and administrative services that pay a decent wage but they don't pay as much as the IT workers get in some of these industries that are growing elsewhere in the state as a whole.”

Kleinhenz addressed concerns that the weakening pace of growth in the national economy and its implications for the local economy.

Kleinhenz: “Quite frankly we're now in the longest expansion on record at the national level as of July the 1st. That's working in our favor in the Inland Empire, it's continuing to grow as well and there really are no signs of any kind of imminent contraction in the national economy. We really expect to see continued growth with a low-inflation environment and wage gains as we go through the rest of 2019 and enter into 2020. So quite frankly as we look at the overall picture, national, state, as well as local, things appear to be moving in the same direction as they have for the last several years, just at a little bit slower pace than it was in the past.”

You can read the full report at ucreconomicforecast.org.

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