12/2022 Blog Topic: Year-end review and what to look for in 2023

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December 2022

As 2022 ends, MEF wanted to share our observations of the year’s biggest economic news in Marin County and what to look for in 2023. Make no mistake, 2022 was a tough year economically, especially at the national level. Will we see more positive changes in 2023?

At the top of the news cycle is the continuing effects of the pandemic on local businesses, concentrated in recovery of small businesses and how the local economy fares given the differences in pre and post pandemic dynamics. From MEF’s perspective, one of the most troubling issues is the reduction in the labor force by more than 5% (or about 6,000 workers). Marin already faced a challenge to hire individuals, especially in the lower-wage occupations that many businesses rely on. That problem does not seem to have a solution in the near term, considering other, lower-cost Bay Area counties where Marin could draw workers, also face similar tight labor markets. Whether it be early retirement, potential health issues arising from contracting COVID, relocation out of Marin, or the need to provide child or elder care, Marin employers faced a hiring challenge throughout the year that constrained recovery. Going into 2023, one area of optimism is that some of the workforce will return with an increase in childcare slots, driven in part with new resources from the county for childcare providers.

The other related issue is inflation, which at one point reached a 40-year high, and the Federal Reserve’s attempts to manage it by raising interest rates. The resulting increase in interest rates has adversely affected one of Marin’s most important revenue stream: sales of single family homes were down 22% in November 2022 from one year ago. As the Fed continues pursuit of a 2% target for inflation, those purchases relying on financing could continue to slip, which would affect Marin retailers and public sector coffers that collect sales tax.

The issue of housing continued to be a focus during 2022 as the county and jurisdictions managed the preparation of “housing elements” in response to the “Regional Housing Needs Allocation (RHNA)”, which quantified the number of new units to be built in the period of 2023-2031. Each Marin jurisdiction will need to provide a housing element in 2023, setting the stage for extensive debate across the county, ultimately to plan to build over 14,000 new units in the 8-year period.

Tech layoffs in response to economic slowdowns also made headlines towards the end of the year considering many Marin residents work in that sector. It’s too early to tell what the impact will be locally, especially since highly skilled workers continue to be in strong demand more broadly, but it remains something we are watching going into 2023 where we expect the economy to slow.

These issues dominated the headlines, mostly because of the impacts on residents, both positive and negative. At the MEF-level, we had several successful activities in 2022 that we believe will lead to continued economic vitality in 2023.

In March of 2022, we presented “Forecasting the Future” which highlighted local entrepreneurs who were able to navigate pandemic issues and even leverage the new dynamics for business growth. Whether by launching new ecommerce capabilities, streamlining communications to parents, or helping public entities identify funding opportunities, Marin’s entrepreneurs recognized the moment and the opportunity to build companies right here. MEF continues to follow the nascent start-up ecosystem in Marin while promoting its importance to good job creation. Look for our next “Forecasting the Future” program in March 2023.
MEF partnered with the County of Marin to produce the first ever economic strategy for the county. The strategy is focused on delivering growth in key economic sectors in Marin while creating more middle and high wage jobs, so our residents don’t have to look outside of the county for good employment opportunities. The strategy puts equity upfront with initiatives to improve economic mobility and support greater opportunities for entrepreneurship among Marin’s BIPOC community. In 2023, the County will be reaching out to inform and listen about the key project opportunities to implement in the strategy.

Finally, MEF continued outreach and engagement of the community and the non-profit sector to ensure all stakeholders have access to our economic data and analysis. We hosted web-based “economic briefings” each month with our insights of the economy helping leaders understand the risks and opportunities for their organizations and beneficiaries. In 2023, we hope to increase our audience so spread the word!

While 2022 presented significant economic challenge, the year ahead sets up to be one of resiliency among the local business community and capitalizing on new commitments to more housing and jobs in Marin County.

Mike Blakeley, CEO
Marin Economic Forum

11/2022 Blog Topic: The way supply chains work suggest no easy relief for Marin businesses

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November 2022

The business news headlines in recent weeks have been dominated by stories of tech layoffs, seemingly more and more every week. The numbers of job losses are not only startling but WILL have impact in the tech rich Bay Area; according to research from the Bay Area Council, each Bay Area tech job is responsible for 4 additional jobs (often in the services sector). The business media and policy makers are trying to gauge the fallout and what it might mean for local economies.

It is important to understand that the layoffs are driven by business dynamics and not a single, large, exogenous event (think the subprime meltdown that created the Great Recession). The pandemic created a massive shift to digital that required tech service providers to scale rapidly. For example, Meta/Facebook grew from 58,000 to 72,000 employees between 2021-2022, which puts into perspective their recent layoff of 11,000 employees (2,564 are in the Bay Area). A correction from massive growth had been previewed earlier this year when it became obvious the economy would slow in 2023.

Another key factor is timing, specifically that many publicly traded companies release their earnings reports a couple weeks after a quarter, so the layoff news that started trickling in October reflected lower-than-expected earnings for the quarter ending in September for several brand name companies. Also related to timing is the annual planning most companies go through before the next fiscal year; those companies who run Jan-Dec fiscal years submitted budgets and annual operating plans that would have enacted layoffs before the holidays.

There are likely positive and negative impacts to the Marin economy. Firstly, there are limited and lagging data sources that track what sector our residents work but, anecdotally, we know a lot of our neighbors are in tech. We also know from an earlier report from the San Francisco Business Times that the new residents to Marin in 2020-2021 had higher adjusted gross incomes (AGI) than those that moved out of Marin, likely some of those being tech workers leaving the city for the suburbs. 

The most obvious negative impact would be a drop in consumption driven by lower discretionary income to spend on non-essential goods and services. Many Marin businesses are built to serve the more affluent consumer, with services like cosmetology and fine dining and goods, including clothing and cars. A drop in consumption among these businesses will not only impact the revenues of the businesses themselves but the funds that are generated for public entities through sales and other taxes. According to the Silicon Valley Business Journal, Bay Area tech salaries averaged $174,000 in 2022, which seems like a lot until you factor in the high cost of living across the Bay Area and Marin, where housing alone tends to gobble up well over the generally accepted ratio of 30% of income. That doesn’t leave a lot left over for a new TV, especially if that tech salary isn’t coming in.

Lower consumption could set off a bit of a chain reaction among the small business sector which is just coming up for air following the pandemic. A survey of business owners by MEF in 2021 showed that business loans, credit card debt, and personal finances were increasingly keeping businesses afloat. The prospect of lower revenues or higher debt to sustain in a slow economy suggests more pain on the horizon, not only jeopardizing jobs but potentially lowering business investment and local consumption of everything from office furniture to website design.
Policymakers have limited response mechanisms to business slowdowns as we saw during the pandemic, where the only response was either temporary regulatory relief or, in extreme cases, cash via grants. Neither is a likely option going forward. So where might there actually be positive effects from these layoffs?

For starters, professionals in the tech sector will be demanded in other sectors, whether they be non-profits or newly emerging segments like food tech or climate tech, which happen to be popular subjects here in the nascent Marin start-up community. Further, there are already stories of laid-off employees starting new companies, and Marin is a great place for some of our resident tech experts to launch their company. The small tech community that is in Marin might potentially see some easing of their hiring challenge through a new crop of available talent – recall not all tech companies are laying off employees – mostly the large ones that grew so rapidly over the past couple years.

MEF is projecting some slowdown and ‚ headwinds for the local economy going into 2023 and an uptick in unemployment among our high-income tech professionals could further exacerbate small business challenges. However, local leaders can seek the silver lining by continuing to find ways to support the local entrepreneurship ecosystem, especially for new generation start-ups, or by supporting the types of networking and conferences that connect professionals and create linkages to employment.

Mike Blakeley, CEO
Marin Economic Forum

10/2022 Blog Topic: The way supply chains work suggest no easy relief for Marin businesses

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October 2022

Early in the pandemic, I suggested to a KTVU news reporter that economic recovery in Marin would depend on a “resumption of consumption.” That is, once all businesses were allowed to be open and consumers felt safe to leave homes and spend money, they would, ushering back the robust, pre-pandemic, consumer-driven economy in Marin. Little did we know at the time, even with money to spend and stores to frequent, supply of goods, and not demand, would influence recovery. This fact was recently confirmed with the 2.0% GDP growth rate reported for Q3 2021 against an expectation of 6.8%; supply chain issues were the chief culprit of the slower rate of growth according to economists. That slow down in economic activity is also being felt in Marin, where all kinds of businesses cannot get the products they need or their customers want.

To understand the supply chain issue, you must first look beyond the narrative that it has mainly to do with COVID-induced worker shortages. The production and movement of a good across the globe is a complicated feat. That water bottle or those shoes you purchased are the result of materials, production, energy, transportation and, yes, labor. A fault in any one of these factors of production can result in a temporary delay or price increase as we recently saw with lumber, which was a materials issue.

However, in a recent congressional hearing convened by the House of Representatives Committee on Small Business, supply chain experts declared the early shutdowns from COVID set manufacturing and transportation behind, resulting in a higher-than-ever demand, exacerbated by long standing infrastructure issues. What is constraining supply chains goes beyond a shortage of workers they stated.
What is driving demand? It really comes down to two main factors. First, spending habits have changed because of the pandemic. More money is flowing into goods, like home furnishings, than services, including travel or entertainment. Second, for multiple reasons, from government stimulus to increased asset values, people have more money to spend (household savings rates have never been higher) and borrowing costs for big purchases like cars and homes are extremely low.  

To bring this down to the local level, demand for goods has remained high because many Marin residents’ income was not affected by the pandemic with easy shifts to remote work. Second, many small businesses were able to pivot to online selling, food delivery, or curbside pick-up which enabled consumers to consume, thus reinforcing the notion that goods were available when desired, despite a pandemic. In fact, county-wide sales tax revenues (including online purchases out of the County) increased during 2020 by over 10%. The high demand certainly enabled Marin businesses to sustain — they now need additional supplies.

This is where the problem lies in Marin’s economic recovery. At the national level, spending on goods dropped by 9.2% between June and September, a direct result of lower inventories to sell. This was the first decline in spending since early in the pandemic when stores closed. So economic recovery is now less a factor of demand, which many of us considered the key to recovery, and more a factor of supply to feed demand.
This dynamic is also problematic for Marin businesses who, simply put, are the furthest downstream in the global supply chain (as they sell to the final customer). That means these businesses yield little influence on production or delivery of goods they need, relative to larger operators, like national retailers or direct wholesalers/importers. Further, the relatively small market and business size in Marin means retailers that rely on global branded products may be lower priority for distributors, again, constraining retailers’ ability for throughput sales that would increase revenues.

When will this end? In a recent Wall Street Journal survey of 67 economists, 33% predicted supply chain issues to be resolved by Q2 of 2022 (June) while an additional 47% predicted them to persist into Q3 and Q4. Even the world’s largest furniture maker, IKEA, announced it expects supply chain delays “well into 2022.”

Is there an opportunity here? Perhaps. A recent study on manufacturing by the Bay Area Council Economic Institute evaluated opportunities for near shoring, reshoring (bringing manufacturing back stateside), and other manufacturing in the Bay Area region. There was some indication that the North Bay could do so with food and beverage, but not much else.

Likely businesses and consumers will have to wait this one out. There are few, if any, policy tools to influence global supply chains (demanding opening a port 24/7 might be one but that remains to be seen). In the meantime, shop local, even if it’s a different color jacket or chair, because that is what is available and what our businesses need.

Mike Blakeley, CEO
Marin Economic Forum

06/22 Blog Topic: “NextGen” Marin companies are growing in numbers and that is a good thing

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June 2022

When COVID first hit and the Marin economy was shut down, stories of business closures started to trickle in. Some of the businesses had been serving the local community for 20, 30, even 40 years and now they met a premature end. In economic terms, we observed that businesses were not “resilient” – they didn’t have resources to withstand the economic shock. In human terms, we knew it simply seemed unfair.

As this story played itself out across the country, another story was emerging, though not as visible: business license applications were soaring, averaging almost 400,000 per month nationally during 2021, an increase of over 25% from pre-pandemic times. Here in Marin County, applications were up almost 10% in 2020 vs. 2019 with a total of 3,025 licenses issued. Among these thousands of new businesses were those with a specific characteristic: a Marin-based founder looking well beyond Marin’s borders for customers.

This is what I refer to as the “nextgen” Marin company: created by entrepreneurs who live in Marin but with the intent of selling goods and services outside of Marin, and often globally, relying on a distributed workforce with little to no office footprint. These companies are also geared to grow very fast, all while placing core values that most of us follow in Marin, such as sustainability and equity, at the front of their business models.
One example is NewRetirement in Mill Valley, founded by Steve Chen who is also a Mill Valley resident. NewRetirement is a technology company that is making financial planning more understandable and effective for a growing number of Americans. In a short period of time, NewRetirement has attracted over 200,000 people to its free platform and signed-up over 7,000 paying customers, with a goal of getting to millions one day. In an interview with Marin Sonoma Impact Ventures, a venture fund and social enterprise supporting Marin start-ups, Chen talks about how excited he is about the entrepreneurial community in Marin and the “huge amount of intelligent, successful innovators who are community-minded.”

The importance of the proliferation of these kinds of businesses cannot be overstated. Let’s go back to the resiliency issue. Businesses that rely on single markets (in this case the Marin market) will always be susceptible to localized economic shocks. Here in the North Bay, we have seen an increase in the number of natural disasters and power shutoffs that constrain business operations. There is little reason to think that will end, so businesses need to not only be prepared for disasters but think about what they can do to keep revenue streams flowing when their customer base cannot or will not consume their goods and services. The answer is having alternative markets and many entrepreneurs are figuring that out as they define their business models, even if they started their companies by selling locally.
Second, from an economic perspective, every region needs to have a certain percentage of revenue derived from outside the region, so called “tradable goods and services.” The tradable sector, composed of companies like NewRetirement, produces goods and services that are “traded” to residents in other cities or countries and provides major opportunities for growth in revenues and incomes. In contrast, the non-tradable sector services the local population including Marin’s restaurants, yoga studios, and real estate agencies. The most successful regions are those that have a good balance of businesses providing tradable and non-tradable goods. A review of the 5 largest industry employers in Marin shows a disproportionate number in the non-tradable categories of: restaurants, outpatient health care, non-profit and human services, government and professional services. Retail trade and construction alone are responsible for approximately 13% of Marin’s $20+ billion gross domestic product.

It’s not that firms operating in the non-tradable goods and service sector present a problem for Marin; they are necessary and loved by our community. However, there is an important need to grow the number of companies providing tradable goods and services. Economic literature confirms that wages in the tradable sector are typically higher than those of the non-tradable sector, due to higher skills demands to perform those jobs. With a rising cost of living and the need to attract and retain local talent, Marin can greatly benefit from an increased number of good paying jobs in the tradable sector. Growth of these higher wage jobs is also critical if we want to create pathways to economic mobility in Marin, securing better wage opportunities for our lower income residents with appropriate job training.

Growth of tradable goods and services firms in Marin is not only the responsibility of private sector. Public sector has a role to play through traditional economic development approaches, including business attraction, workforce development or policy measures that allow companies to grow. To this latter point, the City of Novato deserves great credit for its recent approval of an ordinance to allow larger scale buildings for life sciences companies located in the Bel Marin Keys Industrial Park. Life sciences companies are the epitome of the “nextgen” Marin company; serving global markets with incredible innovation and creating good high wage jobs for our residents.

Mike Blakeley, CEO
Marin Economic Forum

05/2022 Blog Topic: “NextGen” Marin companies are growing in numbers and that is a good thing

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June 2022

When COVID first hit and the Marin economy was shut down, stories of business closures started to trickle in. Some of the businesses had been serving the local community for 20, 30, even 40 years and now they met a premature end. In economic terms, we observed that businesses were not “resilient” – they didn’t have resources to withstand the economic shock. In human terms, we knew it simply seemed unfair.

As this story played itself out across the country, another story was emerging, though not as visible: business license applications were soaring, averaging almost 400,000 per month nationally during 2021, an increase of over 25% from pre-pandemic times. Here in Marin County, applications were up almost 10% in 2020 vs. 2019 with a total of 3,025 licenses issued. Among these thousands of new businesses were those with a specific characteristic: a Marin-based founder looking well beyond Marin’s borders for customers.

This is what I refer to as the “nextgen” Marin company: created by entrepreneurs who live in Marin but with the intent of selling goods and services outside of Marin, and often globally, relying on a distributed workforce with little to no office footprint. These companies are also geared to grow very fast, all while placing core values that most of us follow in Marin, such as sustainability and equity, at the front of their business models.
One example is NewRetirement in Mill Valley, founded by Steve Chen who is also a Mill Valley resident. NewRetirement is a technology company that is making financial planning more understandable and effective for a growing number of Americans. In a short period of time, NewRetirement has attracted over 200,000 people to its free platform and signed-up over 7,000 paying customers, with a goal of getting to millions one day. In an interview with Marin Sonoma Impact Ventures, a venture fund and social enterprise supporting Marin start-ups, Chen talks about how excited he is about the entrepreneurial community in Marin and the “huge amount of intelligent, successful innovators who are community-minded.”

The importance of the proliferation of these kinds of businesses cannot be overstated. Let’s go back to the resiliency issue. Businesses that rely on single markets (in this case the Marin market) will always be susceptible to localized economic shocks. Here in the North Bay, we have seen an increase in the number of natural disasters and power shutoffs that constrain business operations. There is little reason to think that will end, so businesses need to not only be prepared for disasters but think about what they can do to keep revenue streams flowing when their customer base cannot or will not consume their goods and services. The answer is having alternative markets and many entrepreneurs are figuring that out as they define their business models, even if they started their companies by selling locally.
Second, from an economic perspective, every region needs to have a certain percentage of revenue derived from outside the region, so called “tradable goods and services.” The tradable sector, composed of companies like NewRetirement, produces goods and services that are “traded” to residents in other cities or countries and provides major opportunities for growth in revenues and incomes. In contrast, the non-tradable sector services the local population including Marin’s restaurants, yoga studios, and real estate agencies. The most successful regions are those that have a good balance of businesses providing tradable and non-tradable goods. A review of the 5 largest industry employers in Marin shows a disproportionate number in the non-tradable categories of: restaurants, outpatient health care, non-profit and human services, government and professional services. Retail trade and construction alone are responsible for approximately 13% of Marin’s $20+ billion gross domestic product.

It’s not that firms operating in the non-tradable goods and service sector present a problem for Marin; they are necessary and loved by our community. However, there is an important need to grow the number of companies providing tradable goods and services. Economic literature confirms that wages in the tradable sector are typically higher than those of the non-tradable sector, due to higher skills demands to perform those jobs. With a rising cost of living and the need to attract and retain local talent, Marin can greatly benefit from an increased number of good paying jobs in the tradable sector. Growth of these higher wage jobs is also critical if we want to create pathways to economic mobility in Marin, securing better wage opportunities for our lower income residents with appropriate job training.

Growth of tradable goods and services firms in Marin is not only the responsibility of private sector. Public sector has a role to play through traditional economic development approaches, including business attraction, workforce development or policy measures that allow companies to grow. To this latter point, the City of Novato deserves great credit for its recent approval of an ordinance to allow larger scale buildings for life sciences companies located in the Bel Marin Keys Industrial Park. Life sciences companies are the epitome of the “nextgen” Marin company; serving global markets with incredible innovation and creating good high wage jobs for our residents.

Mike Blakeley, CEO
Marin Economic Forum

03/2022 Blog Topic: The economy is good, but finances are not

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March 2022

Early in the pandemic, former Treasury Secretary Larry Summers said, “In a sense, economic time has been stopped, but financial time has not been stopped.” What Mr. Summers was describing was those elements of the economy, including businesses, customers, and transport of goods that had simply stopped, whereas financial demands, like rent, and car payments did not. That put huge burdens on citizens that policymakers were challenged to handle with any expediency. As the world unceremoniously marks two years since the onset of the pandemic, the macro-level data is starting to look a lot rosier notwithstanding inflation and the war in Ukraine.
But the data, while very positive, may not sufficiently capture the more human situation on the ground. Today, most in Marin know someone dealing with the fallout of “financial time” brought on by some facet of the pandemic — they may have lost a job, lost wages, increased debt, or been evicted. This stands in stark contrast to some of Marin’s traditional economic data.
Let’s start with Marin’s low unemployment rate, which at 3.1% as of March 14, is lowest in the state and just about 1% higher than pre- pandemic levels. “Unemployment” measures individuals looking for work, so a low number is desirable. However, anyone who knows a business owner will be aware of how difficult it is to fill jobs. Businesses inability to hire staff is slowing Marin’s economic recovery and causing a headache for owners and managers. Meanwhile, our labor force is down by 3% (4,100 individuals) some of whom may have permanently left the workforce. So, business owners (and indirectly their employees) are still constrained by financial demands like rent or taxes even though the economy is “open”, and unemployment is not a policy problem.
Another important indicator is sales tax revenues. Marin County reported a 10% increase in sales tax revenues for fiscal year 2020-2021 and recently the San Rafael Town Council approved spending of a projected $5 million surplus, composed mainly of increased sales tax revenues ($4.7 million). However, many downtowns have empty storefronts and a survey of businesses in Marin last year showed that 35% of respondents reported revenues were down over 50% from pre-pandemic rates. From an economic perspective, the fiscal health of public entities looks to have recovered from any early revenue drops due to COVID but from a financial perspective, many business owners have taken on more debt. And if you’re wondering how sales tax revenues can increase while businesses appear to be suffering, note that your online purchase via Amazon, from a vendor in Michigan, will still require you to pay local sales tax on the transaction.
Residential real estate is a huge part of the Marin County economy. In 2019, real estate contributed approximately 20% to the county’s $20+ billion economy. Over the past 24 months the median house price in Marin County has increased by a staggering 28%. That’s great for property taxes and homeowners’ equity, but it’s not great for buyers whose mortgages are that much more expensive or to attract the middle- income workers Marin is already short of. Meanwhile, the financial cost to maintain a home, including increasing energy costs and services (construction, landscaping, etc.) continues to strain many Marin homeowners, including our seniors living on fixed incomes.
It’s often said the numbers don’t lie. As data analysts, we would be the first to endorse that statement. However, sometimes the numbers don’t tell the whole story either.

Mike Blakeley, CEO
Marin Economic Forum

6/21 Blog Topic: The future Marin County economy is on the horizon

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June, 2021

More than one year ago, when we were facing great uncertainty and anxiety about the economic impacts of COVID-19, I publicly called for our elected leaders to create a countywide economic strategy. The strategy would not only manage the previewed economic impacts from COVID-19 but chart a path forward for the county economy that could ensure economic vitality. That strategy and the future Marin economy is now underway, thanks to a federal grant obtained by MEF with the backing of the County of Marin. The “Marin County Economic Vitality Strategic Plan” is previewed for completion in early 2022.

What is the importance of such a plan, now that life, and commerce, as we knew it, is slowly returning to something we recognize? For starters, all successful economies (cities, counties, states, etc.) are a result of some sort of planning, even if those regions serendipitously had assets (like minerals, or coastlines that drew tourists, or great universities producing talent, etc.). Second, during COVID-19 we learned a few things about our economy, and the people who compose it, that need to be addressed to secure an economy that works for all residents.
Early in the pandemic, public and private sector leaders met regularly to support economic recovery, yet without an existing economic plan, that group, which included MEF, had to start from scratch. On the one hand, that left Marin behind other Bay Area counties that knew where and how to intervene to support businesses. On the other, leaders in Marin benefitted from lessons learned in other regions while cities collaborated through platforms like the Marin County Council of Mayors and Councilmembers to ensure approaches for supporting the economy could be shared (think how towns rapidly accommodated outdoor dining). These actions were undertaken organically in response to the pandemic but, going forward, everyone agrees we need a plan for our economy and the time is now.

So, what will be in the plan and how do we know what we want in the future? Most economic strategies are formulaic, identifying a regions assets and determining an approach to leveraging those assets in pursuit of specific objectives. Those objectives (and economics more broadly) are about much more than businesses selling a lot of goods or services. Common economic development objectives focus on “quality of life” issues like education, jobs, and the environment and other attributes a community relies on.

Good economic planning examples can be found in activities already underway, like the county’s effort to develop a broadband strategy that will enhance resident access to the internet and all the benefits that accrue. Drawdown Marin, the county’s effort to reduce greenhouse gases, is another good example of initiatives that will improve the economy, by focusing on public transportation, among others. What the economic plan will do is link these programs to higher level goals, like increasing resident incomes through middle and high-skill job creation, assuring that resource mobilization is done with as much purpose as possible.
The other benefit to this plan is the opportunity for the community to express their desires for what kinds of sectors we want to compose our economy. For example, most Marin residents agree that the life sciences sector is one they want to see flourish but how to enlarge and support that sector is currently unknown. And what are the sectors of Marin’s future? In the 2004 “Marin County Targeted Industries Study” biotech wasn’t even mentioned yet today those businesses are among our largest employers, along with other newer sectors like gaming and wellness. Conversely, some of our sectors are not flourishing, like agriculture and brick and mortar retail. How will we treat those sectors going forward?

The thing about the plan that encourages me the most is the acknowledgement from leaders that our economy is worth planning. Marin County’s perception as a “bedroom community” (where people live but commute out of for work) is not the desired goal from the people that I talk to, which includes youth, BIPOC business owners and entrepreneurs. There is a growing sense that our economy can be better by unleashing its creativity and capital, creating and building a workforce for more skilled jobs, and assuring that kids that grow up here can have a future here without too many zeros attached to their paychecks. It is all achievable, but more so with a plan.

Mike Blakeley, CEO
Marin Economic Forum

5/21 Blog Topic: To achieve economic vitality in Marin County, incomes must rise

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May, 2021

In 2008, the Marin County Community Development Agency commissioned a report to consider creating an “economic sustainability organization.” The report proposed a structure and budget for such an organization and that served as the foundation for what would become MEF. That is a great story in and of itself, but not the point of this article.

Also included in the report, limited to just a paragraph, was a discussion of a metric called the “Self Sufficiency Standard” (SSS) which measures how much income is needed for a family of a certain composition, in a given county, to adequately meet their basic needs. According to the metric, in 2008 a single parent, two-child household in Marin would have needed an income of $68,880 to meet self-sufficiency. At the time, at least 27% of the population was living below that income line. Using additional socio-economic data, the authors stated there were “two Marins” and warned that by focusing on the unemployment rate or prioritizing high real estate values would have negative effects on the economy in terms of productivity, wages, even traffic (because so many residents commuted outside the county for their high paying jobs). At the time, we were entering what would be the Great Recession, so the economy was in focus.

Fast forward to 2021 and as Marin County is easing out of a global pandemic that witnessed disparities between rich and poor, the notion of “two Marins” is back in the discussion, this time in the form of the uneven “K-shaped” recovery (see graphic). Like in 2008, as Marin County pursues economic vitality, where all residents have access to goods and services, education, jobs and wealth, policy measures will have to consider some of the underlying socio-economic conditions. The one that jumps to the top for MEF is incomes, especially considering the high cost of living in Marin County.
 

 
To understand our concern, let us return to the SSS metric. Using the same family composition as was used in the 2008 report, we find the current income requirement (2021) to achieve self-sufficiency in Marin County would be $160,957. If you use two adults and two children, the level is estimated at $164,763. Both figures are more than double the 2008 figure. According to the Insight Center in Oakland, who publishes “The Cost of Being Californian 2021” based on the “Family Needs Calculator”, 37% of households in Marin do not make enough income to make ends meet. If true, that would be a 10% increase since the 2008 report, confirming by some measures, incomes are not rising at the same pace as costs.

Addressing incomes and income inequality is hard, especially at a local level. Most policy solutions involve federal or state level changes, such as tax codes, minimum wage, and education. However, there are programs in Marin that would be considered as helping citizens secure higher incomes (from MEF’s perspective). Some of the most visible efforts are happening in the education sector. Quite simply, improving education and skills has been found to be the best way to secure economic mobility. Improving income prospects for Marin residents starts with their ability to obtain the skills and experience to secure good jobs.
 
At the K-12 level, the Marin County Office of Education has developedseveral programs aiming to provide career opportunities to youth. College of Marin has 40 career certificates and degrees and 10 Skill Certificates to advance one’s career to the next level. While there is consensus on the ability of education to positively affect incomes, the issue for Marin residents (and others) is how to ensure access, namely that cost does not become a barrier. Several policies at the state and federal level are currently being discussed, including making community college tuition free.

Another approach, worth noting because it is being tried in Marin, is “universal basic income” (UBI). UBI essentially provides direct cash payments to individuals that are unconditional. In March of this year, Marin County agreed to provide funding to a UBI pilot implemented by the Marin Community Foundation. Results won’t be known for some time, but the approach is gaining momentum around the country based on positive outcomes.

At the other end of the spectrum is employment. The pandemic had a major impact on employment in Marin, especially for workers in lower wage occupations, and getting those residents back to work is a key task for recovery. But for the sake of this discussion, we suggest that for employment to have an impact on incomes, Marin County will need to create better paying jobs, specifically more middle and high skill jobs. According to the MIT Living Wage Calculator, a family of 2 adults and two children would need for each adult to average $36.35/hour to meet basic needs. A single parent with just 1 child would need to make a whopping $55.92/hour. For contrast, a review of the hourly rates for occupations in the San Francisco Metro Area (which includes Marin County) by the Bureau for Labor Statistics shows that the mean hourly wage is just $29.71. Further scrolling through the thousands of occupations shows that many, including those that are prevalent in Marin County, make even less than $25/hour (Supervisor of Retail Sales-$22/hour, Dental Laboratory Technician-$20/hour, Janitors $18.70/hour, Foodservers $16.50/hour, etc.).

We’ve long known that Marin’s future economic prosperity depends greatly on the ability to have a dependable workforce and a big part of that is ensuring the workforce can live here. At the other end of the spectrum, we’ve also known that having good career opportunities (jobs) for our residents at all income levels is the key to their economic mobility and ability to stay here in Marin. Increased incomes via good education and well-paying job opportunities will go a long way towards achieving economic vitality in Marin County. 

Mike Blakeley, CEO
Marin Economic Forum

4/21 Blog Topic: Vaccinated and ready for “action”

Written on . Posted in Blog, Recent News

April, 2021

As you have no doubt heard, the US economy is back to its booming self. The most recent report of 6.4% gross domestic product (GDP) growth for the first quarter exceeded economists predictions and on an annualized basis would represent the fastest rate of growth since 1984. We know that vaccines, reopenings, huge federal stimulus, and pent-up spending are fueling the recovery at this faster rate. It is yet another example of how consumers drive the U.S. economy, and why I stated on KTVU news that Marin County’s recovery would be highly dependent on a “resumption of consumption.” So here we are . . . and this is where we think the action for Marin businesses will be.

GDP growth is being led by spending in durable goods, and while many categories experienced an uptick 
during the pandemic, recent increases in consumption are due to federal stimulus and re-employment for many individuals. Goods categories with the most demand include, but are not limited to: cars (+15% over 2019 peaks), household goods (+17%), and recreational goods (+26%). Cities in Marin that are home to these types of retailers, especially San Rafael, Corte Madera, and Novato, have been experiencing an uptick in action. It’s important to note that customers of these goods don’t just reside in Marin, many are from surrounding Bay Area counties, or even other states purchasing online (more on this later).  


Besides retailers, much of the Marin economy is composed of in-person services companies, which were hardest hit by government shut-downs, and responsible for most of the job losses that occurred. MEF researched the in-person services categories nationally to identify trends or predictions. Some of the most useful data comes from a recent report by Cardify, which surveyed credit card holders on future spending in services categories. The charts below are a great barometer of where consumers are planning to spend money on services.




All tables produced by Cardify AI (www.cardify.ai)
Given the high rate of vaccination in Marin County, MEF expects spending in these categories to be robust, giving further confidence in an expedited recovery. But the restoration of spending at local businesses is only part of the “action” we are talking about here. The other action we hope to see is our policymakers and business leaders learning from the pandemic and purposefully planning the Marin economy in way that allows us to be less dependent on our local consumers and better oriented towards future growth sectors that not only proved resilient through the pandemic in terms of growth and job gains/retention, but also will shape future consumption patterns (think about the proliferation of grocery and food delivery in Marin). Trends like remote/distributed workforces, digitally shifting services like banking and healthcare, and more direct-to-consumer business models are both and opportunity and a threat to the Marin economy.

“Action” from the MEF perspective doesn’t just mean more shopping, which our local businesses do need us to do and we will. Action also means proactively developing an approach towards strategic growth, more middle and high skill job opportunities, and a resilient economy that can potentially insulate from future economic shocks.

Mike Blakeley, CEO
Marin Economic Forum

3/21 Blog Topic: Little difference in Marin business challenges pre vs. post COVID

Written on . Posted in Blog, Recent News

March, 2021

COVID’s impacts to businesses are well known. The slowing of the economy due to shutdowns caused great financial stress and the need to adapt business models. The future is unknown with the rise of remote work and uncertainty on how consumers will spend or travel in a post-COVID environment. Here in Marin, the future may not be so opaque because our economy is largely oriented towards serving the local market. As we reopen and people get vaccinated, we anticipate demand to mostly return without major changes, though we do not know how long that will take.

That sentiment prompted me to revisit a major project MEF was implementing in late 2019/early 2020, which was disrupted by the pandemic, but not before a major phase of the project was complete. The “Marin County Business Retention & Expansion Project” was designed by MEF and funded by the County of Marin. The project’s objective was to identify the challenges and opportunities for businesses to grow and then initiate programs in the county to address those challenges. Following dozens of interviews, surveys, and economic analysis by MEF, a reportsharing the findings was published in March, just days before the COVID-19 crisis went into full effect. Now one-year later, it seemed an appropriate time to compare the challenges and opportunities businesses had pre vs. the anticipated post-COVID environment.

The number one priority/challenge for Marin businesses in 2019/20 was hiring. At the time, Marin County’s unemployment rate hovered between 2.5-2.9%, representing close to “full employment” in economic terms (when everyone who wants a job has a job). The hiring challenge was most acute at the lower skilled occupations, such as restaurant workers and retail store merchants, but also in some of the higher skilled jobs like architects and software engineers. MEF concluded our resident workforce was not aligned to job demand, but that wasn’t simply an issue of lack of housing, often blamed for our lack of workforce. In fact, for as diverse as the Marin economy is, with 20+ sectors contributing to our Gross Regional Product, the economy is also quite “shallow”, meaning not enough companies in those sectors to attract a large enough workforce to ensure a pipeline of workers. For example, software engineers are not abundant in Marin because there are few local employers and not everyone wants a commute.
Let’s contrast the hiring challenge with the current situation. As of this writing, unemployment in Marin County stood at 5%, almost double pre-COVID-19 levels, but lowest in the state of California. That is down from a high of over 11% in April 2020. According to a recent business survey(1200 respondents), almost 50% of businesses have remained in business with the same number of staff compared to 16% that reduced staff. Another 6% have increased staff while 8% plan to downsize operations. So, some growth, mostly status quo, and some decrease. However, as Marin County moves into less restrictive tiers and businesses open at greater capacity, there is an expectation that demand for goods and services will spike (also the narrative at the national level). This fact, along with historical consumption patterns in Marin suggests our businesses will soon find themselves in the situation of competing for employees, especially in the services sector.

The next biggest challenge was securing sales and customers, which could be understood more generally as “competition.” Among the project sector focus group meetings, the retail sector cited sales equally with hiring. Already under pressure from online retailers, Marin’s retail sector had been integrating “experiential” retail formats as well as new delivery options while successfully catering to the community’s desire to shop local and “shop small.” One hardware store was expanding despite the presence of Home Depot, Lowes, and Costco.

It would be an understatement to say that during COVID-19 consumers shifted a major portion of purchasing to online; online retail sales increased by 44% in 2020. This consumption was not limited to durable goods as services, including exercise, training, banking, and entertainment, made a significant “digital shift” over the past year. Certainly Marin businesses were able to adapt to an online format and participate in the shift. Going forward, businesses will continue to be concerned about their ability to secure customers, especially those with brick-and-mortar operations that depend on a physical visit to make a sale.

The third concern was “transportation” and very specifically last-mile transportation that would allow employees or customers to reach final destinations without the use of a private vehicle (Uber and Lyft notwithstanding). Pre-pandemic, MEF was already sharing this information with the Transportation Authority of Marin, who had in place ride-share programs and was preparing to launch a bike-share pilot. As we mostly know, public transportation almost ceased completely, dropping 87% in the Bay Area in the early pandemic days. How quickly demand returns and how routing can accommodate the needs of employees and employers remains a bigger unknown then how Marin was going to address the last-mile issue in the first place.
Finally, businesses were concerned pre-pandemic with their ability to secure sufficient commercial real estate for their business operations, given a relatively small office footprint in Marin, especially of the coveted “class A” properties that typically house professional services firms. Contrary to many other areas of the country, which have experienced a flight from commercial space, the Marin market did not experience a “dip” in lease prices due to the pandemic. Further, new designs for large commercials spaces in Northgate and Novato have trended towards mixed-use, accommodating much needed housing. Just as before, businesses seeking growth in Marin County could be faced with limitations.

Comparing the challenges and priorities of Marin businesses pre and post COVID shows very little difference, which can be both positive and negative. On the one hand, despite a major, once-in-a lifetime economic shock our economy is mostly on a path to recovery. On the other, returning to the status quo will present old problems, which were already difficult to deal with and have not been changed due to the pandemic (such as how other cities are reimagining commercial real estate footprints and streetscapes or preparing for a remote work economy). Now more than ever, dealing with the challenges our businesses face needs to be a priority-not just because we want recovery but because we have deeper competitiveness issues that need addressing if we want a competitive and resilient economy in the future.

Mike Blakeley, CEO
Marin Economic Forum