(Editor's note: A commentary on the North Bay by Forbes.com, Newgeography author Joel Kotkin is at newgeography.com/content/001204-boomer-economy-stunting-growth-northern-california and is also linked at NorthBayBusinessJournal.com.)NORTH BAY -- Billed as a “fiscal wake-up call” for California, Forbes.com columnist Joel Kotkin told business and community leaders recently that the state has lost the linkages between what really drives the economy and prosperity.An international authority on economics, politics and social and global trends, Mr. Kotkin brought his perspectives to the Sheraton in Petaluma on Nov. 6 in a talk entitled: “After the Bubble: Who Killed the California Economy and How to Bring it Back?”More than 200 business and community leaders attended the event sponsored by the North Bay Leadership Council, the Sonoma County Alliance, the Marin Builders Association, the North Coast Builders Exchange and the Northern California Engineering Contractors Association.According to Mr. Kotkin, the unreality in Sacramento can be traced to a loss of a productive economy, overemphasis on financial and real estate bubbles as well as a lack of focus on the expanding middle class and high-wage job growth. He believes that these are indications that leaders across the board have lost the connection between what really drives the economy. “The state’s economy is in crisis,” Mr. Kotkin said, “and the business community shares some of the blame for the current situation because it has failed to make its case and be heard.”Major indicators of economic growth and progress show that California is lagging behind neighboring states and the nation, he said.Manufacturing job growth is negative and plunging, as well as job growth rates in the trade, transportation and utilities sectors. For example, while manufacturing employment increased 18.8 percent from 1983 to 2002 for high-skill jobs on the West Coast, there was an 18.6 percent decline in mid-skill jobs and a drop of 17.1 percent among low-skill jobs in this industry.Total non-farm employment keeps falling at a rate that exceeds the U.S. average. Since 2005, California has been on a steep 9 percent decline in financial, real estate and construction job growth. At the same time, median family income growth for Californians has dropped sharply since March 2007 and by March 2009 entered negative territory.Today California’s double-digit unemployment rate has risen above 12 percent, while the nation as a whole is experiencing 10 percent unemployment. Forecasters say the state’s unemployment rate could spike as high as 14.4 percent in 2010 and only decrease to around 13 percent by 2011.The state’s economic woes have not slowed immigration, but migration out of California has been increasing since 2004 and now exceeds the number of those entering the state. Three years of economic decline have resulted in the state’s real gross domestic product growth since the turn of the century going from 5.2 percent in 2004 to a projected decline of 6.2 percent in 2009, with only a modest improvement to negative 3.8 percent predicted for 2010.The impact of these changes has produced a series of problems in the North Bay, including higher commercial vacancy rates, too much distance between homes and high-wage jobs, a lack of focus on economic growth and a narrow definition of sustainability.Looking beyond the current crisis, Mr. Kotkin sees emerging opportunities for smaller communities. “De-clustering is the new demography," he said.“People want housing options that reflect this new reality. Eighty-three percent of those polled nationwide want to live in smaller dwellings in suburban/rural areas (86 percent in California). Some 70 percent or more of downshifting boomers are retiring in place or staying suburban. An equal number of empty nesters are heading to the countryside as are heading to cities. Most immigrants are now located in the suburbs. The focus today is on suburbs, exurbs with emphasis on safe neighborhoods in attractive areas closer to home.”The National Survey on Communities conducted for Smart Growth America and the National Association of Realtors found that 53 percent of respondents would choose to live in a rural community or in suburbs farther out from the city, while only 13 would prefer city life, and 33 percent would choose suburbs close to a city. Since the 1980s, suburban populations have been growing faster than those in cities.Redefining sustainability is vital to determining what will work for everyone. In recent years, this term has applied chiefly to the environment and carbon counting. However, Mr. Kotkin believes that economic sustainability is the crucial element that both drives and supports social and environmental growth.“We’re not going to get where we want to be by de-development or we risk losing our quality of life. The environment is important, but we must also focus on economic and social issues. One hundred people can maintain all of the wind turbines in the state, so there is no need to train thousands of workers in wind technology while thinking that green technology alone can foster a return to prosperity.”He said telecommuting is an answer.“Technology could telescope the distance between communities. It holds tremendous potential to provide an environmental, social and economic boost for real broad-based sustainability. With it, younger workers can choose affordable lifestyles and stay in less dense areas. Huge energy savings can result from a shift to home-based work.”By 2030, as many as one-in-four jobs will be at least partially conducted at home, compared with only 10 percent today. A 2006 American Community Survey found that the number of people working at home increased steadily from 2.1 million in 1980 to 5.4 million in 2006. “Virtuality” is the main byproduct of telecommuting, allowing workers to maintain close contact with offices, co-workers and management while at home.In 2001, the Newhall Land Co. conducted a survey in Valencia asking residents if they would take a pay cut to work in the immediate area where they lived. About 50 percent of workers said they would take a 20 percent pay cut to take such a local job.Mr. Kotkin sees an emerging trend toward “smart sprawl” characterized by an archipelago of villages. “People want to spend more time in their communities. If they live and work there, they become more involved.”Low- to mid-density villages using proper design and landscaping may use less water and energy. Heat islands in over-dense developments in mega cities like Los Angeles and London can lead to urban centers being warmer than outlying areas. “I’m not saying that cities are bad, but the whole climate-change debate needs to be challenged.”The Institute of Public Affairs found that annual greenhouse gas emissions, in terms of ton of CO2 per person per year, are higher in high-rise, mid-rise and detached homes than in low-rise, townhouses and smaller villas. In addition, the history of high-density housing has not been good. Such areas tend to produce an environment that breeds gangs – meaning that high-density housing is not socially sustainable, he said.“To get there," he said, "we must deal with the challenging issue of class. High drop-out rates in high schools can guarantee the rise of an underclass. The growth of poorly educated newcomers and youngsters poses a unique problem, particularly with the end of the property boom. Economic development needs to focus on upward mobility, not luring the middle class, but creating one.” California is becoming less educated than other states. The state ranks second in the nation for those age 64 and above with A.A. or higher degrees and fifth for B.A. degrees or higher. However, for those age 25 to 34, California ranks 30th for those with A.A. degrees or higher and 23rd for those with bachelor’s degrees or higher. “The political challenge for California is to get beyond the partisan agenda," Mr. Kotkin said. "As former New York Mayor Fiorello LaGuardia once said, ‘There is no Republican or Democratic way to clean streets.’ Ultimately, solving our problems depends not on ideology but on a sense of community,” Mr. Kotkin said.
