California economy in for bumpy ride in 2019, but North Bay likely to fare better
It will be the best of times; it will be the worst of times (apologies to Charles Dickens).
In 2019, we can expect a worsening housing crisis as construction fails to keep up with demand, shrinking labor pool, lengthening commutes, economic slowdown and accelerating climate change. But we can also expect our new governor and state legislature to make progress on providing more children with preschool, enacting new laws that make building housing less onerous bringing back some form of redevelopment, and doing more to fight climate change and disaster preparedness.
Also on the plus side, the baby boomers are finally moving out of the way of the millennials’ taking over the leadership roles, and Gen Z is rising, which should lead to more diversity in the workforce, an increase in working remotely and greater practice of corporate social responsibility.
The North Bay economy will likely feel less of a slowdown than other areas due to several factors. The economic boost from fire recovery funding being spent will help. There will be significant new construction as homeowners continue to rebuild the homes lost in the fires of 2017.
Changes in permitting at the city of Santa Rosa and county of Sonoma will also help keep the builders moving forward with new construction as the improvements in timing and costs become more manageable. While interest-rate increases are expected to occur, the pent-up demand for homes should still have a significant number of buyers who qualify to purchase, especially if wages increase due to the tight labor market.
Employers are also stepping up to provide more housing benefits to their employees. The purchase of a new apartment building by Sonoma State University bodes well for modelling what other employers need to do: invest in housing for their employees. With top talent in short supply, the best way to attract and retain the workforce is to remove the high cost of housing from being a barrier to employment.
Many other major employers are looking at building or purchasing housing for their employees which could be a very positive trend for 2019.
In the North Bay, the growing problem with attracting and retaining workers in several industries, is exacerbated by the lack of affordable housing for lower wage employees. Hard hit is the hospitality industry, with restaurants like the Shed in Healdsburg closing and others on the bubble in 2019.
We also haven’t solved the need for more skilled workers in advanced manufacturing, but efforts are being made to boost interest in the field. An example is MFG Day for high school students who tour advanced manufacturing companies and hear from people who are employed by these companies. This is a collaboration of the Sonoma County Economic Development Board, CTE Foundation, Sonoma County Office of Education, Santa Rosa Junior College, North Bay Leadership Council and the manufacturers.
Employers will look for other ways to keep their employees happy as they try to retain top talent and attract new skilled workers. We can expect salary increases in competitive positions, a faster hiring process, and more programs to make the younger, diverse employees feel appreciated and part of the community.
And research from Indeed shows that the skills mismatch between job opportunities and job seekers has stayed level since 2017, perhaps helped by a rapidly changing mix of jobs.