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The region has recovered 83 percent of jobs it lost as a result of COVID-19, well ahead of California, and it should have all of them back by the end of the year, according to a recent forecast.
Two years after it began, the Inland Empire economy appears to have rebounded well from the pandemic.
Riverside and San Bernardino counties have recovered 185,600 jobs, 83 percent of the jobs it lost since the start of the pandemic in the late winter of 2020, according to the UC Riverside School of Business Center for Economic Forecasting and Development.
By comparison, California has recovered only 72 percent of the jobs it lost during that time.
Despite some possible setbacks – the threat of inflation, an increase in interest rates – the Inland Empire should have recovered all off the jobs it lost to COVID by the end of this year, the forecasting center predicted recently.
That recovery will be helped by an anticipated three to six percent increase in overall activity during the first half of the year.
Despite having taken a huge hit when the pandemic began in March 2020, the two-county region’s economy today is clearly headed in the right direction, said Manfred Keil, chief economist with the Inland Empire Economic Partnership, a non-profit charged with retaining jobs, and attracting businesses, to the Inland region.
“As far as recovering jobs is concerned, the Inland Empire is doing well and it will continue to do well,” Keil said. “We have more people in the labor force, and the [unemployment] numbers are better than they are in a lot of places.”
In one area, the Inland Empire has been helped by the pandemic, which caused an explosion in online shopping. That led to a demand for more warehouse space, something the region was able to provide.
That pattern should continue through 2022, Keil said.
“Go out and look at the UPS facility at Ontario International [Airport].” Keil said. “It’s amazing how much material it handles every day. Logistics is one reason Los Angeles County had a 20 percent unemployment rate [during the height of the pandemic], but the Inland Empire only had 14 percent.”
Another reason the Inland Empire’s jobs recovery has outperformed California’s jobs recovery has to do with the travel and hospitality sector, said Robert Kleinhenz, a Long Beach-based economic consultant whose practice includes the Inland region.
Travel and hospitality, a large part of the Inland economy, suffered major job losses at the start of the pandemic, but it is currently in the middle of a strong recovery, Kleinhenz said.
“It had a bigger hole to dig out of than some other sectors, but now it’s coming back, and that’s where a lot of the [Inland] jobs recovery is coming from,” Kleinhenz said.
At the same time, California’s strict health protocols – which are only starting to be lifted now – have helped keep the state’s jobs recovery in check, particularly in travel and hospitality.
Fewer businesses are expected to close this year, with the fallout from the two-year old pandemic expected to be “muted,” the forecasting center predicts.
This despite the rate of economic growth having slowed last year in Riverside and San Bernardino counties, from eight percent in the second quarter and seven percent in the first quarter.
But that drop in growth could have been predicted after the the pandemic began to ease somewhat, according to one of the report’s co-authors.
“The slowdown is to be expected as we move closer to pre-pandemic conditions with respect to economic output,” said Taner Osman, research manager at the forecasting center, in a statement. “The bigger issue for the coming year is likely to be the labor market, which still has some way to go before reaching pre-COVID levels and is going to continue to struggle with an adequate supply of workers.”
A shortage of labor is an issue everywhere, and in the Inland Empire that problem is being caused largely by housing prices, which are expected to remain high through the end of the year. Higher housing costs can lead to what economists call “misallocated labor,” which means workers are prevented from remaining in, or moving to, communities where jobs that pay well are available.
Also, a lot of people who worked out of their house for the first time because of the pandemic aren’t going to want to return to the office anytime soon, if at all, said Jay Prag, professor of economics at the Drucker School of Management at Claremont Graduate University.
“People have discovered the benefits of working out of the house, starting with not having commute every day, and they want to keep those benefits,” Prag said. “Not every job can be done from home, but a lot of them can, and this will just have to be worked out.
“I call it the great rearranging, and it will probably go on for about a year.”
The Inland Empire’s job numbers likely will be back to pre-pandemic levels, but that will be only part of the story, according to Prag.
“We’ll get the jobs back, but they won’t be the same jobs,” Prag said. “A lot of people left certain sectors, like restaurants, and they went on to something else, or they left the labor force altogether. It’s a gig economy now, and a lot of the jobs we get back will be different jobs.”
