Economic Summit Held in San Luis Obispo
Economically, “things feel pretty darned good,” declared Economist Chris Thornberg, but problems we’re avoiding will come back to bite us, if we don’t talk about how to fix them.
Much useful data could be gleaned from leading economists who took a shot at foretelling the economic future of both America and San Luis Obispo County, but their crystal ball became muddied by advocacy that at times took a pointed partisan tone.
Economic health was clearly important to more than 500 business leaders and elected officials who willingly ponied up $135 each to attend the November 3 summit at Madonna Convention Center in San Luis Obispo, the largest turnout the economic summit has ever drawn.
Keynote speakers, Beacon Economists Robert Kleinhenz and Chris Thornberg observed that San Luis Obispo had not just reached 4% unemployment — a figure economists consider full employment — the regional economy surpassed our neighboring counties and blitzed ahead of the state of California’s overall jobless number of 4.8%.
Still, job growth remains sluggish, at 1% over 2016, Kleinhenz revealed. A Beacon study shows that most if not all employers on the Central Coast are having trouble finding and keeping employees, with jobs going begging.
Steady economic growth for the past five years is credited for the strong economy, but both Kleinhenz and Thornberg both predict slower growth and they blame a lack of housing. That lack of housing means a lack of employees, ultimately slowing business growth.
“California is running out of workers; 240,000 to 300,000 new homes are needed, but only 100,000 are being built,” Thornberg warned that a shrinking employee pool will slow business growth and development. “Job growth is at the limit,” because of a lack of employees, warned Kleinhenz, and while the current economic outlook for the county remains strong, things could soon stagnate if leaders fail to address the lack of workforce housing.
Thornberg pulled no punches when he put the blame squarely on local leaders who choose to pursue affordable housing, instead of building homes the market demands.
Affordable housing programs don’t work, because of the affects of “filtering” i.e, where new home buyers vacate older homes, which become available to lower income buyers.
At the moment, they told attendees, the percentage of people who can afford homes in San Luis Obispo County is in the low teens.
“I want to help you connect the dots:” Kleinhenz explained, “Low labor supply and slow home building are connected; there is no labor market if people can’t find places to live.”
He buttressed his view by noting that Paso Robles’ residential rental vacancy rate has dropped from 2.1% a year ago, to just over 1% in 2017.
Thornberg laid blame on both political parties but leveled his biggest volley against President Donald Trump, whom he said had, “done nothing”.
Thornberg criticized attempts to repeal Obamacare, saying politicians should be trying to reform the cost of medical care: “Americans pay $9,200 apiece for health care, when Japan pays less than half of that, in spite of having an older population,” said Thornberg, repeating the same theme, politicians who should be asking the right questions, instead of beating the same political themes.
California is doing its job to attract new workers to meet the growing shortage, according to Caroline Beteta. The head of Visit California, the state’s tourism marketing arm, played marketing videos with actor Rob Lowe and retired basketball star Magic Johnson extolling the virtues of the Golden State.
Beteta revealed other travel marketing projects, including a new tourism website with custom versions in 14 other countries, and a web channel with original video programs featuring high-achieving Californians and culinary tours of the state, already seen by more than 25 million viewers.
Beteta also says Visit California also wants a bigger share of the ‘bleisure’ market: business conference visitors increasingly choose to spend vacation time after conferences end. The focus brought a Forbes Magazine economic conference to Salinas, and with it, considerable regional revenue.
Distilled, the main advice? Leaders should address housing needs, develop industries to replace Diablo Canyon, and get politicians to focus on long term economic issues instead of partisan memes. That last irony wasn’t lost on attendees.