Marin County nears recovery of jobs lost in pandemic recession

Highlights of the California and U.S. economy

• Statewide, jobs growth slowed in September. California’s unemployment rate is flat at 7.5% unchanged from August, and down over 907,000 jobs statewide, compared to the benchmark January 2020 employment level for pre-pandemic, pre-recession conditions.

• Across the U.S., there was 4.8% unemployment for the U.S. economy — even with 235,000 more jobs in August — which is still 4,681,000 workers less than January 2020.

• The size and shape of the federal budget is a key debate in Congress and among economists when it comes to its effect on inflation and how it will impact the nation’s economy now and for the long term.

• The post-COVID business recovery is not living up to early forecasts. Real GDP growth for Q3 2021 is about +2.0%, which is a much lower rate of growth than the 6.8% previously expected, based on the Federal Reserve of Philadelphia’s Forecast, Survey of Professional Forecasters.

• Within California, hotels, restaurants, bars and event centers are putting a drag on the state’s economy (restaurants/bars down -7.1% in terms of lost jobs, and hotel jobs are down -16.6% from January 2020).

• Ports are now operating 24/7 to help clear supply chain bottlenecks that also involves a lack of truck drivers to transport goods to warehouses and retailers.

• Another viewpoint on the rationale for job losses has centered around what some are calling the “Great Resignation” due to the increase in those quitting jobs creating a marked rise in job openings versus hiring, based on the Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics. While the national data is less dramatic, the climb in “quits” is not historic, but it is coming at a time when the nation is still coming out of recession.

Source: Sonoma State University economist Robert Eyler

While it took 58 months for Marin County to recover after the 2007–2009 Great Recession, it in just 18 months regained 96.1% of the jobs lost when a significant portion of commerce was shut down to slow the coronavirus pandemic, according to a snapshot of the local economy presented Monday.

This so-called V-shaped recovery from COVID’s economic impact January 2020 employment benchmark as of September 2021 leaves the county with only 5,300 jobs to be filled at the current 3.9% unemployment rate to have it return to 2020 totals, according to California Employment Development Department data cited during a Marin Economic Forum event.

“Marin County’s current economic recovery, as in other recoveries since 1990, is outperforming the region and state in most categories and is likely to continue to emerge well, according to the latest revenue and job recovery data,” said forum CEO Mike Blakeley, who presented his remarks during a webinar with Sonoma State University economist Robert Eyler.

However even with this comeback, the county still does not have enough workers to fill available jobs. Blakeley added that while hiring totals are generally flat, numbers of those quitting jobs is surging, and the job market continues to be volatile as some people seek other opportunities.

Eyler said his analysis of labor force dynamics data suggests there has been “sustained change” in the number of local and statewide residents available for work.

“Jobs lost are a mix of local residents and workers coming from outside the county,” he said.

Easing COVID-19 regulations, along with a rise in travel levels, is part of the reason for jobs coming back, especially in the leisure and hospitality industry, Elyer said.

Blakeley said an impact analysis shows Marin is recovering, as evidenced by a 10% increase in sales tax revenues in 2020, and the fact that wages have increased and jobs are available, even though many positions remain unfilled.

According to Blakeley, foot traffic is up 102% at Village of Corte Madera shopping center, with a similar 100% rise at the Vintage Oaks mall. He said other retail sectors, such as bicycle sales, are also flourishing

Overall data from the Federal Reserve and the U.S. Census Bureau reveals reveal that small business owners have been especially hard hit in terms of numbers of employees impacted versus relatively larger businesses. Service industries (restaurants, hotels, motels, event centers, etc.) and manufacturing sector firms have been affected more than other industry categories.

“Multi-layers in the supply-chain have to work together to get back to meeting demand. A manufacturing slowdown in Europe or China, for example, carries over to affect the U.S. and firms around the globe, such as the shortage of semiconductor computer chips limiting car sales here,” Eyler noted. “Manufacturing and shipping entities must be as efficient as possible to keep pace with customer preferences in a timely manner.”

Marin’s recovery strategy

Hoping to create a “roadmap” to prosperity, the Marin Economic Forum and the Marin County are partnering with the Economic Development Administration to zero in on COVID’s continuing impact on the area economy, Blakeley said. And more importantly, he said, they plan to work with the community to determine a strategy for the future economy, including what sectors should be supported, where job creation and investment can occur, and how to drive social equity in the economy.

A MEF survey with more than 800 business community responses shows that over 80% of these firms remain in business with the same or an increased staff — or are planning to increase employment opportunities. Only 2% indicated they plan to close their doors. About 57% said they had to adapt their business practices to cope with new realities, and more than 60% think they will make a full recovery within six to 12 months.

“This is good news. Few employers could say this a year ago,” Blakeley said.

At the same time, respondents revealed that they now have higher debt loads, including increased search costs for new employees.

Supply-chain issues are also reducing the flow of goods, leaving some consumers searching the goods they want and businesses forced to sell what’s on hand, Blakeley said. Retailers also face “scale” restraints associated with their ordering potential.

He gave this example: A firm ordering 30 units a month can be up against another company ordering 5,000 units, meaning small retailers are not a priority for big distributors and brands that have clients taking larger volumes.

Retailers also face “scale” restraints associated with their ordering potential.

Joanne Webster, CEO, San Rafael Chamber of Commerce.
Joanne Webster, CEO, San Rafael Chamber of Commerce.

Marin merchants reel

Cautiously optimistic about a full recovery, San Rafael Chamber President and CEO Joanne Webster told the Business Journal she is also concerned about supply chain issues, worker hesitancy for full-time employment leading to labor shortages and whether or not consumers will increase holiday spending locally.

“Small shop owners cannot compete on prices and wages against offers by larger retail chains and online merchants, so it is important that they have consistent sales. I’ve heard from some San Rafael retailers who have seen customers spending more — up to $1,000 — during recent single shop visits, but then that is followed by days with zero sales. Another said she recently had the best Sunday sales results since the shelter-in-place orders — so there is hope out there.”

Webster said personal shopping in local stores is an experiential event versus a transactional event for those who can’t wait to get out after months of confinement.

“It’s about being with other people, shopping with family and friends, trying on new clothes, snapping photos of meals and taking selfies at restaurants and now not having to wear masks. People feel more comfortable shopping at familiar stores they frequent and among business owners and staff they know and trust.”

Danielle O'Leary, director of economic development and innovation with the City of San Rafael.
Danielle O'Leary, director of economic development and innovation with the City of San Rafael.

Nimble amid economic shocks

Danielle O’Leary, director of economic development and innovation for the city of San Rafael, told the Business Journal that the trend toward just-in-time inventory and manufacturing that gained popularity in recent years evolved to have new meaning during the pandemic. Businesses wanted to only order what they absolutely needed to survive in the short term. This also including making every attempt to diversify supply sources to offset delays.

O’Leary said the business sector has had to become resilient and accustomed to change, moving from COVID-19 shock to supply-chain shock, labor shortage shock and demand shock.

“Today’s reality involves seeing major shifts in how businesses procure materials, create new product lines, rebuild inventories and cope with changing public policies, rules and standards — while also striving to add new employees to help sustain the process during what has become the new normal,” she added.

Rick Wells, CEO of the Marin Builders Association
Rick Wells, CEO of the Marin Builders Association

Local construction activity remains high

In construction, Rick Wells, CEO of the Marin Builders Association, told the Business Journal that the industry has not slowed down or tapered off throughout the pandemic. Demand for both residential and commercial projects remains strong, with a focus on change management and hope for greater stability.

“From our perspective, and based on calls from contractors, building permit activity and new starts remain high as they continue to adapt to new health and safety rules, cope with material supply chain issues and rising prices for lumber spiking as much as 300% higher — increasing the need for inflation clauses in contracts to cover unforeseen cost increases,” Wells said during the Marin Economic Forum webinar.

He said the association produced a webinar for its members exploring ways to assist them in adjusting to supply chain delays, spiraling costs and related lead time issues so work schedules and projects would not be stalled or compromised.

Labor shortages present before the pandemic were only exacerbated by the pandemic. It’s an ongoing concern.

“Most of our members have only 20 to 30 employee, so everyone is critical,” Wells said. “We are actively engaged in training programs to increase the pool of available construction workers through programs co-sponsored by the Canal Alliance, the College of Marin and the county office of education.”

He observed that with more people working from home, interest in making home improvements and remodeling has also been a stimulus driving the need for trained construction workers.

“With demand high today, some contractors can’t take on new projects,” Wells said.

Highlights of the California and U.S. economy

• Statewide, jobs growth slowed in September. California’s unemployment rate is flat at 7.5% unchanged from August, and down over 907,000 jobs statewide, compared to the benchmark January 2020 employment level for pre-pandemic, pre-recession conditions.

• Across the U.S., there was 4.8% unemployment for the U.S. economy — even with 235,000 more jobs in August — which is still 4,681,000 workers less than January 2020.

• The size and shape of the federal budget is a key debate in Congress and among economists when it comes to its effect on inflation and how it will impact the nation’s economy now and for the long term.

• The post-COVID business recovery is not living up to early forecasts. Real GDP growth for Q3 2021 is about +2.0%, which is a much lower rate of growth than the 6.8% previously expected, based on the Federal Reserve of Philadelphia’s Forecast, Survey of Professional Forecasters.

• Within California, hotels, restaurants, bars and event centers are putting a drag on the state’s economy (restaurants/bars down -7.1% in terms of lost jobs, and hotel jobs are down -16.6% from January 2020).

• Ports are now operating 24/7 to help clear supply chain bottlenecks that also involves a lack of truck drivers to transport goods to warehouses and retailers.

• Another viewpoint on the rationale for job losses has centered around what some are calling the “Great Resignation” due to the increase in those quitting jobs creating a marked rise in job openings versus hiring, based on the Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics. While the national data is less dramatic, the climb in “quits” is not historic, but it is coming at a time when the nation is still coming out of recession.

Source: Sonoma State University economist Robert Eyler

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