Economic look at Sonoma County predicts job losses, long recovery
Negative economic impacts of COVID-19 on Sonoma County are projected to linger into 2023, perhaps to 2024, as the ongoing recession moves slowly toward recovery, based on a study commissioned by the Sonoma County Economic Development Board (EDB).
A major issue is how to quantify this impact, both annually and cumulatively, over this period. The study offers given a trio of forecast models looking at better, median and worse estimates for Sonoma County while also finding ways for local companies to stay in business. Those scenarios outline any where from 20,000 to more than 40,000 in job losses.
Economist Robert Eyler, president of Economic Forensics and Analytics, said lost jobs and income leading to falling home prices and large numbers of businesses closing are the largest threats to local economic recovery in the wake of COVID-19 social policies.
In a presentation to the Board of Supervisors on Tuesday, Eyler gave his assessment of the County’s future over the next four years.
His analysis shows that in 2020, the median economic impact estimate will result in a loss of approximately 30,135 jobs, with $2.4 billion in lost business income and $614 billion in lost state and local tax revenue.
This information comes as local government county officials are developing budget strategies for the year ahead, including forecasting future revenue such a big source of revenue, property taxes.
Looking forward to 2023, the estimated cumulative impacts in 2020 dollars for the median recovery scenario are predicted to result in lower job losses (19,880 jobs below the December 2019 level) but with a higher total Gross Regional Product loss totaling $6.157 billion, along with a $1.685 billion loss in total tax revenue.
Another indicator to watch nearing the end of this 4-to-5-year period, is the number of employers that could be lost, which the study estimates at -6.9% for the “median” scenario, with a range between -1.5% and -15.6% for the “better” or “worse” scenarios respectively.
“We need a mix of things to happen to minimize future risks, including an effective vaccine to clear impediments acting as a drag on spending. Without this, there is always the possibility of another tumble downhill with a new COVID resurgence and more SIP lockdowns in fall or winter coupled with additional job losses and business closures.”
California has experienced unprecedented speed of jobs losses across all industries. While jobs are slowly returning, the depth and breadth of the recession makes recovery a matter of years – not months, Eyler observed.
Industries heavily affected include retail stores (not groceries) decreasing sales tax revenues. Hotel and motels also have been hit hard, cuting Transient Occupancy Tax (TOT) revenues. Bars and restaurant income has dramatically declined, and salons, fitness centers and non-profits not associated with healthcare have been adversely impacted.
There are some indications that the recovery may – in fact -- be slowing. For example, jobless claims have been on the rise for four weeks in a row, as reported by the Mercury News. Initial unemployment claims during the week that ended on Sept. 5 totaled 237,500 in California, up about 18,000 from the approximately 219,500 that filed unemployment claims in the week ending on Aug. 29.
California accounted for 27% of the unemployment claims filed in the U.S. during the week that ended on Sept. 5, even though the state has only 11% of the nation’s workforce.
The state now lags far behind the United States in its recovery from wide-ranging business shutdowns. The recent surge was attributed to in part by a rise in claims from gig workers and the self-employed.
Between March and July 2020, certain industries remained at risk, along with some cities and unincorporated areas of Sonoma County that have experienced job losses to, or more than 20% from the previous year.
In addition, health care employers – even with front-line first responders standing by -- saw job cuts because many procedures and on-site visits were not possible due to physical distancing concerns.
“Another key concern is can we support -- from a regulatory standpoint -- policies that do not allow businesses to operate indoors when days get shorter and the weather changes?,” he stated.