Did the ‘great resignation’ and ‘great reorganization’ affect the Inland Empire?

By Manfred Keil and Suchen Hou | Inland Empire Economic Partnership

The Inland Empire, like other metropolitan statistical areas, was greatly affected by the coronavirus pandemic, both health-wise and its economy. Policymakers had a choice to accept higher death rates versus lower growth and employment due to policy austerity. In California, the choice was made in favor of keeping the death rate lower, placing more restrictions on the economy.

The decline of COVID-19 had the most reduced employment effects in five industries: Leisure and Hospitality, Health (and Private Education), Retail, Other Services, and Professional and Business Services, in that order.

The healthcare industry, perhaps surprisingly, was negatively impacted as a result of people avoiding hospital and doctor visits, in addition to the coronavirus-related issues. Many of them did not go to the dentist for two years and did not schedule regular check-ups and blood tests. Other services, which include spas, hairdressing and nail salons, were actually the most affected, but the industry simply doesn’t have enough people working in it to have a stronger overall impact. You can explain much of the change in the growth of regional unemployment rates from February to May 2020 by focusing on labor market developments in these sectors.

In the Inland Empire, the unemployment rate rose 11.8 percentage points from 3.4% in February 2020 to 15.2% in May 2020. By comparison, Los Angeles County experienced a 14 percentage point jump from 4.9% to 18.9%, while the Golden State overall, there was a change of 12.5 percentage points from 3.3% to 15.8%.

Due to the growth of the logistics industry during the downturn and subsequent recovery, the Riverside-San Bernardino-Ontario MSA performed relatively well. As a result of unemployment rising over such a short period of time, many decided to leave the workforce altogether, hence the “great resignation”. Note that if you were born in 1950 (a boomer), you turned 65 in 2015, and by 2020, many young people had reached or were close to retirement age. This would result in lower participation rates (the share of the labor force in the population), and indeed, this is what we observed.

Here we are interested in analyzing changes in employment within the Inland Empire for major industries and cities in the area. The 12th most populous U.S. SAA added 106,500 jobs over the five-year period as of May 2020. That doesn’t count additional employment created by commuters.

The three sectors that contributed the most to job creation were Healthcare (42,300), Logistics (41,600) and Government (8,900). These three sectors were the three largest employers in the Inland Empire before the pandemic. Note that between the three industries, 88% of all new jobs were created as of February 2020. There are three sectors in the Inland Empire where employment has not returned to pre-pandemic levels: Manufacturing (-4,700), Financial Activities ( -1,600) and Information (-1,100). All three sectors saw their employment rates fall slightly from 10% to 9%. These sectors do not play a significant role in the Inland Empire, although, and perhaps unfortunately, the average wage in these industries is relatively high. Major reorganization? Yes, if it means more concentration among the already most important sectors and away from the remaining sectors, then the term is correct.

We then want to see how these changes are reflected in employment shifts within the major cities of the Inland Empire. Employment data by city and by establishment is not easy to obtain. To find these numbers, we purchased access to the National Institute Time Series Database. This database contains historical data since 1990 (9.7 million observations for California alone) for establishments. Here we will focus on the five most populous cities in Riverside County (Riverside, Moreno Valley, Corona, Menifee, Murrieta) and San Bernardino County (San Bernardino, Fontana, Ontario, Rancho Cucamonga, Victorville). If employment in the city was already dominated by the health and logistics industry, or government employment, then there shouldn’t be much change at the top.

Next we’ll focus on off-farm employment for these 10 cities and the top 10 employers of 2019 and 2022 to see the changes. There are some caveats to our analysis: first, we are looking at enterprises, not firms; a firm may have more than one establishment. This may explain why Amazon does not appear as the largest employer. Second, for almost all cities, the local school district was the largest employer. The school district is classified as Government (Local). We will exclude local school district employment from the following analysis.

For starters, we find that 2022 employment levels of major firms had not generally returned to 2019 levels with a few exceptions. Healthcare Sector employers appearing in the top 10 have generally risen in rank within the three years for which data is available, making them the most important employers in the region. The structure of the healthcare industry has diversified following the pandemic, as we see the growth of medical care and support industries. Despite the increase in the ranking, the health sector industries on the list have not significantly increased the number of employees, and many of them have even faced small declines compared to the levels of 2019. The growth should come from the newly established health care institutions that are smaller in scale, while larger existing companies are closer to capacity limits. Logistics industries have become more important employers by expanding. Although the short-term boom was followed by a contraction in logistics employment after mid-2022, the data shows that logistics is still well above its pre-pandemic level. Whether it is the strengthening and long-term trends of the Healthcare and Logistics industries, or the continued outflow of previously weaker industries, there is no phenomenon of Reorganization evident in the Inland Empire.

Here are some interesting numbers:

Riverside County

Both the US Air Force and Riverside University Health System are no longer in the top employers category, replaced by UC Riverside and the city of Riverside.

Access Information Management, an information sector company, has moved to a second location in Moreno Valley.

Two medical firms, UHS and Kaiser, have replaced a financial company, VSM, and a retailer, Walmart, as the top employers in Corona.

There were few changes in Menifee, and a health sector company, My Kids, a pediatric dentist, replaced the city of Murrieta in the top three.

San Bernardino County

Loma Linda University Health has replaced Caltrans in the top three for the city of San Bernardino.

The US Postal Service and Kaiser are now at the helm in Fontana, replacing warehouse operator World Class Distribution.

Damao Luggage still has the most employees in Ontario, but UPS has now been replaced by Ontario City in the top three.

A leisure and hospitality company, SAS Restaurants, remains the leading employer in Rancho Cucamonga.

Boeing and Walmart have replaced UPS and the city of Victorville as the top employers in the desert’s largest city.

While there has been much talk of the “great resignation” and “great reorganization” in labor markets from the pandemic, in the Inland Empire we have not observed anything significant in this regard. Unlike the state economy along with LA County and Orange County, the workforce and employment in the Inland Empire have actually increased compared to February 2020.