Last month one of my favorite local bike shops closed its doors. I had noticed changes in the store over its lifetime, from selling bikes to focusing on more profitable merchandise and repairs, but even that wasn’t enough to save the business. Marin residents are watching this story repeat itself with some other beloved merchants. On the flipside, some successful companies like Glassdoor and Straus Creamery, are moving out of Marin because their expansion demands, like talent or space, cannot be satisfied by remaining here. All of this is troubling for a lot of good reasons:
Research shows that over 80% of any U.S. region’s economic growth comes from local businesses – not by attracting new ones. Yet if our local businesses grow – and then leave – there needs to be something to replace them to continue the pipeline of jobs, tax revenues and corporate philanthropy that Marinites depend on;
To that extent, the current environment for starting a business in Marin is not great. Marin has just a few “incubator” spaces where entrepreneurs can access assistance they need to grow their companies and as technology sector experts have noted, we lack the critical mass of venture capital funding that would allow successful start-ups to scale;
The recent “National Citizens Survey” commissioned by the Marin County Board of Supervisors revealed that 98% of Marin resident respondents (over 3,000) purchase goods or services from a business located in Marin County. If those goods and services are not offered because we don’t have those businesses, then residents suffer; and
A significant proportion of our residents leave Marin each day to work in places where there is a higher volume of high-skill jobs (with high salaries); the resulting commute traffic is not only stressing our infrastructure but stressing those individuals who do it every day.
These issues, and the many others I did not share for the sake of brevity, are things that can be addressed and will be addressed through the “Marin County Business Retention & Expansion” project implemented by MEF and community partners. In listening to over 50 businesses (and another 100+ are lined up for focus groups and interviews), we are finding that businesses have solutions but not the time, energy or critical mass of colleagues to take on these issues. For example:
Retailers know they need more foot traffic but that will only occur if cities and towns are on board promoting more visitors (read by some as “traffic”) and have good marketing strategies. Retailers also feel the squeeze of the “Amazon effect” but don’t know best practices to compete.
Marin has never had a strong business attraction spirit but the current resident landscape (more working professionals and higher education attainment relative to the past) as well as the desire of companies to provide quality of life for their employees has resulted in more companies considering Marin as a location. How are we ensuring those kinds of companies can learn about locating in Marin?
These are just two examples of the interest and desires of local businesses that are being communicated through the project. Residents (and policymakers) should be excited that MEF, along with 17 community partners like Chambers of Commerce and other business groups, will use this input to drive evidence-based solutions and programs that can lead to a more vibrant local business community. Those solutions will allow our local businesses to survive and thrive-today and tomorrow.
In May of this year Marin County’s unemployment rate dipped below 2% (1.9%) for the first time in 20 years (also 1.9% in May 1999). If you are an elected official or policymaker the low figure should please you, signaling that almost all your citizens that want a job have a job. Business owners are on the opposite end, fretting over a tight labor market that could mean a raise in wages, prices and potentially lower profits. There is a third category of people that are impacted: residents that rely on local goods and services. Have you noticed an increase in the cost of things lately or has the service at your favorite eatery slumped because they don’t have enough staff?
The Marin Economic Forum has been conducting a “business retention and expansion” (“BRE”) project in Marin County to measure the health of our local businesses. We have already talked with over 40 businesses and without a doubt the #1 issue for all of them is staffing. This is not news for most of you but here is what is newsworthy: the labor shortage bears all the characteristics of another issue we refer to as a “crisis,” housing. Labor, like housing, is a supply and demand issue. Labor, like housing, is tight because there is not enough supply of workers. But here is why I also consider the labor shortage a crisis: Unlike housing, our labor supply is diminishing.
Marin County imports a huge percentage of its workforce (63%) and our population demographics show less than 10% of our residents are aged 18-34. Meanwhile the proportion of older adults, those who will leave the workforce, is growing at an increasing rate. We only have one university and one community college here that graduates an average of 1000 students a year; that is less than 1% of our labor force even if all those graduates got jobs in Marin.
Of concern is that we know the current labor shortage is due in part to lack of housing so one crisis is exacerbating another. Worse, unlike housing, where at least a half-dozen, well-informed advocacy groups are trying to address the issue, there are no leading advocates to address our “labor crisis.” To be fair, the construction industry has acted with new training programs and the Marin County Office of Education is working at the high school level to expedite students into careers should they choose that path. But residents should be aware that we are approaching structural issues with our labor force, including lack of talent and programs to secure a labor pipeline.
Compare Marin with other regions around the country also facing labor and housing shortages and you see more aggressive action: the hospitality sector in Seattle is investing serious money in “upskilling” employees so employers can do more with less, Colorado Springs is filling jobs in manufacturing, IT and child development by providing accelerated training to underemployed and undereducated people in the community, and in Wisconsin, where the population has been stagnant and getting older, the State has invested over $1 million in a marketing campaign to attract millennials from urban centers like Chicago, selling a high quality of outdoor life. These regions were driven to address their labor shortages and did so. What are we doing in Marin? Not enough
In the field of economics there are a lot of funny terms. Remember just a short while ago we were all talking about “quantitative easing?” There is another funny term, “Location Quotient” or “LQ” that I think Marin residents should know about.
LQ is basically a way to compare a region’s economy to the nation by measuring the concentration of things like occupations, industry presence or even demographics. LQ is measured with a number (a ratio actually) against the benchmark of “1” for the national average. An LQ measurement above 1 suggests a higher concentration of something, say architects, compared to other regions. The assumption is that an LQ measure greater than 1 means that occupation, or industry has a relatively more significant role in a region. Take the city of Detroit; the automobile manufacturing industry has a LQ over 10 (!) demonstrating its huge importance to that city’s economy and its residents relative to other places in the U.S.
The table below shows the LQ for ‘occupations’ in Marin. This means that for the sectors presented, there is either a high concentration or low concentration of those jobs in Marin compared to other regions. I chose “occupations” because it is important to understand the jobs we have here in Marin compared to the nation.
Data Source: EMSI
Here are some of the interesting stories about the LQ measurements above and some related data:
The highest LQ score goes to occupations in the field of Arts, Design, Entertainment, Sports and Media. That would please most residents. However, that occupation also has one of the lowest median hourly wages at $21.81-just above the level of a “livable wage” for Marin.
The lowest LQ score, excluding the military, is in Farming, Fishing and Forestry which also has the second to lowest median hourly income at $14.71. Residents should be concerned that there are so few occupations in the ag sector, and they pay so low; the locally grown produce, meats and dairy we have come to love is at risk in the near future.
While “Personal Care and Service” has a strong LQ (1.64) and has experienced the most job growth of any of the sectors (+21% in 5 years), it has the second to worst median hourly income ($13.36), far below the “livable wage” number.
Two sectors that one would assume to have a high concentration in the tech-rich Bay Area are “Computer and Mathematical” and “Healthcare Practitioners and Technical”. However, both have LQ’s less than 1 in Marin. Unfortunately, these are also two occupations that are among the highest median hourly wages (>$42/hour). That suggests Marin is performing lower than the nation in terms of the concentration of these jobs. To me that means we have unfulfilled potential to increase the number of companies and jobs in those high paying sectors.
Overall, we can observe 11 sectors that have LQ’s greater than 1 but only 6 of them pay higher than a “livable wage” by Marin standards. So as far as occupation LQ’s telling a story about the uniqueness of the Marin economy, one might say we have a higher concentration of lower paying jobs and that occupations in two of the best paying sectors have a lower relative concentration in Marin than the national average. That should be perceived as a problem; the occupations we have aren’t necessarily the occupations we need given the high cost of living and our assets, which includes a highly educated population. Strictly going by occupation LQ, Marin has work to do.
Here at MEF we are always analyzing data to understand our local economy. Recently I reviewed datasets on residential and commercial real estate vacancies in Marin. The trends and what they suggest are concerning for our economy.
According to multiple Marin commercial real estate reports, office, retail and industrial vacancies are increasing. San Rafael and Novato have well over 1 million square feet (sq. ft.) vacant space in all categories combined and both cities experienced a net increase of availability for 2018. While that is not a lot of vacant space, the fact that vacancies have gone up when there has not been any significant commercial developments for the last decade suggests companies may be leaving those cities (and possibly leaving Marin) or downsizing. A well-known leasing agent also confirmed lack of demand with few property showings and noted “it doesn’t seem like we have the startup, job creation, or the person tired of commuting to the City that wants to open up an office here.”
That is a bad trend for Marin’s economy and for residents that depend on local businesses for goods or public services funded by the taxes those businesses pay. From a local resident employment perspective, it is even worse. If you consider a ratio of 200 sq. ft./office worker, there is a lost opportunity for local jobs that would reduce residents need to commute out of Marin and pump extra cash into the local economy. So, any way you look at it the increasing vacancy rate of commercial office space is hurting our local economy.
On the residential side we are seeing the opposite; vacancies continue to go down. According to MarinApartments.com, the apartment vacancy rate in the 4th quarter of 2018 was 3.2%, almost a full point lower than the same period in 2017 (4.1%). A decline in vacancy rates suggests that rents are likely to continue rising. According to CoStar Group, Marin’s average apartment rents at $2,463 per month. Since landlords typically require an income of 4X rent, a family would need an income of $100,000 to secure adequate housing. According to the 2017 Census, only 52% of Marin households had incomes of $100,000 or more confirming many Marin residents cannot afford to pay the average rent of an apartment.
You don’t have to be a data geek like me to understand how the two opposing trends pose deeper threats to our economy. Residents will feel the impact of local businesses closing or diminished job openings, especially of higher wage service jobs, because companies can’t suitably locate here. Meanwhile, as housing costs continue to increase there is less disposable income that goes towards eating out, shopping and buying new vehicles-all major contributors to Marin’s economy. I see this as a concern, and I hope you do too.
Recently the Marin County Board of Supervisors accepted survey results produced through a “National Citizens Survey” (“the Survey”). The Survey is designed to capture a snapshot of a community’s opinions on a common set of themes such as “governance” (like how our public sector functions) and characteristics like “safety” and the “economy.” There are over 120 questions including qualitative and open-ended questions. Over 3,700 responses were received through both written and electronic form. The Survey also benchmark’s responses against other like communities (there were between 25-40).
On January 29th the Marin Economic Forum in association with the San Rafael Chamber of Commerce, hosted “Forecasting the Future: A Spotlight on Workforce Challenges and the Future of Work.” The conference was intended to share our thoughts on the national and local economy in 2019 and to dive into the topic of workforce development considering the challenges employers in Marin face in attracting and retaining workers. MEF CEO Mike Blakeley set the stage by noting the low unemployment rate in Marin (2.2%) is both a positive (people have jobs) and a negative (employers struggle to fill jobs) and doesn’t capture the fact many of our highest skilled workers are employed outside of the County. How we manage our future workforce will be critical to our economy.
MEF Chief Economist, Dr. Rob Eyler, provided an excellent overview of key economic indicators to be considered when looking at the national economy. Dr. Eyler acknowledged that the equity markets (where many people hold stocks and retirement plans) are going to continue to be volatile based on the uncertainty of things like our national political environment, a current trade dispute between China and the U.S. and even some geopolitical issues such as the “Brexit” (Great Britain’s potential withdrawal from the European Union). Dr. Eyler encouraged all of us to refrain from watching our portfolio’s every day least we stress ourselves out.
The big question was whether the U.S. economy was headed for a recession, as has been suggested by some economic pundits. In his view Dr. Eyler, of course supported by excellent data, confirmed signs of a slow-down but commented that the effect of any slow-down and how significant it will be is really unknown. As to the dreaded “R” word, Dr. Eyler felt that it would take a major event to trigger an actual recession despite indicators that demonstrate some likelihood.
We then hosted a panel on the topic of workforce development with Elizabeth Pratt from the College of Marin (COM) and Bruce Wilson from the Workforce Alliance of the North Bay (WANB). This panel dove into the issue of how Marin’s workforce is being trained for the jobs of the future, pointing out specific programs such as “CareerPoint” in Marin that provides training programs for job seekers and COM’s Career Technical Education programs.
Findings from a report conducted by the Marin Economic Forum that captured employer concerns regarding hiring needs and strategies in the hospitality and “applied business technology” sectors were shared with the audience. The report confirmed that employers are facing challenges finding talent with the right experience and skills, including “soft skills” like communication or conflict resolution. Both sectors are expected to increase the number of employees by 2023 so it was clear that COM and WANB have a future role to play with Marin’s workforce. Both organizations stated their need for employer input to assure relevant training.
In a Key Note speech Craig Nelson, Chairman of Nelson companies, which includes Nelson Staffing, shared with the audience the tactics employers can adopt to attract and retain workers. Besides the obvious measures such as increasing wages, employers are focusing on a solid brand reputation to attract employees as well as strengthening their benefits programs, including perks like subsidizing transportation, to offset the high cost of living in Marin that is a dominant theme in the challenge of hiring.
The program was closed by Joanne Webster, CEO of the San Rafael Chamber of Commerce who shared a poignant story about the work-life balance: “We work 8 hours a day, we sleep 8 hours a day, and if we have to commute an hour each way to work that only leaves so many hours in the day for family or exercise or other things.”
In the end, as noted by Dr. Eyler, “if I knew the future I wouldn’t be here right now” suggesting that try as we might, we don’t know what our future economy will be. We do know that a big part of our economy depends on the workforce we have here in Marin to support our businesses that want to grow and keep our economic vitality strong. Its our job at MEF to make sure Marin residents are aware of these issues and to give them a platform to solve them. Forecasting the Future was a great demonstration of that.
As we all flip the calendar to 2019 MEF is excited about conducting a range of activities around two critical issues affecting Marin County’s economy: workforce development and business retention & expansion. Let me explain why we are focusing on these areas:
The data shows that 60-80% of a region’s economic growth results from existing businesses, not attraction of new businesses. This is important because Marin’s economy does not rely on, or encourage, major manufacturing or other industries that are characterized by large-scale companies (1000 employees or more). In fact, we have an inverse situation here in Marin County; over 85% of our businesses are 10 people or fewer. For smaller employers, expanding a business carries risk but that risk can be mitigated with an efficient and responsive business environment. So MEF is going to work on a County-wide level with public and private sector stakeholders to address issues that affect businesses ability to compete and sustain.
Part of the ability to compete is having a secure workforce. Employers in Marin are facing difficulty in retaining and attracting employees. Fortunately, there are a number of good organizations in Marin providing skills training and tools to link job seekers with employers to help ease this challenge. However, MEF is thinking about Marin’s future workforce-not only our younger job seekers but also the needs (and emerging needs) of our employers in important industries like biotech, healthcare and the creative industries to name just a few. Marin (and the Bay Area) is the envy of a lot of regions for having these industries locate here but if we don’t ensure companies have a talent pipeline or a good business environment we could just as easily lose them to other regions. MEF has an important role to play here by helping to understand the future trends of these industries and what that means from a workforce perspective-including linking industry demand back to job seekers, training entities and the education sector.
To kick things off in 2019 we are hosting “Forecasting the Future: Workforce Challenges and the Future of Work” on January 29th in association with the San Rafael Chamber of Commerce. This important event will feature discussions on the challenges employers face with hiring and keeping employees as well as a preview of Marin’s economy in the year ahead. You can register for this event below.
So MEF is excited about what’s ahead in 2019 because we know our work in these areas will have value to all of Marin’s residents while keeping our economy in focus. Make sure to be on the lookout for more public events and important studies that represent our effort to secure Marin’s economic future-in 2019 and beyond!
-Mike Blakeley, CEO, Marin Economic Forum
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On Thursday November 29 I had the chance to attend my first event since joining MEF, the “North Bay Business Journal 2018 CEO Roundtable” in Santa Rosa. The event featured a panel of CEO’s from the North Bay’s most recognizable companies: Marin’s Ghilotti Bros., Inc and Hospice by the Bay, as well as Clover Sonoma, Jackson Family Wines, Traditional Medicinals, Nelson Companies (which has an office here in Marin) and Torn Ranch (which had their first storefront in San Rafael). The excellent discussion on various business topics provided me three big takeaways to share:
1. A lot of North Bay businesses exist here because of a strong connection to the land
Some of the most successful companies in Marin and beyond are multigenerational family owned businesses. These companies aren’t still here today because the factors of production suggest they will be most competitive by manufacturing here; they rely on inputs which are unique to Marin and the Bay Area and have a deep connection to Marin. However, these companies need to be supported if they are going to stay in the North Bay and grow. That is why the work of the MEF to ensure a competitive Marin economy so important to our community; we need and want those companies to stay here and flourish.
2. The industries that exist here in the North Bay are innovative and poised to lead in the future
If you survey the sectors of Marin’s economy you will find the sectors of the future: biotech, cleantech, non-profits, healthcare and even agriculture. We are fortunate that these sectors exist, but we need to ensure they stay here and grow and to do so we need a sound public-private dialogue between elected officials and companies in these sectors.
3. All 7 CEO’s said their future success depends on making the business environment friendlier
For those of you who own or have owned a business in Marin I bet you would say the same thing. We all know that there are regulatory burdens and processes that can make doing business difficult; it could be said of most places. However, we need to be aware and have ways to address those policy issues rather than force companies to deal with them.
As a first event to attend I couldn’t have hoped for a more relevant and rich discussion. The experience confirmed that the MEF can be a critical partner to both private and public sector as it relates to securing a strong economy of the future. What a great start!
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Lest readers think this blog space is a rant about some of the not-so-good things in Marin, this week we offer this.
Two Marin cities – San Rafael and Novato, were recently named among the Best Places to Live in the U.S. by Livability.com. The online community research publication ranked San Rafael 26th and Novato 77th among 100 cities across the country. Ann Arbor, Michigan, took the top spot.
San Rafael was recognized for having an economy strong in education, technology and tourism, as well as an array of cultural, arts, shopping and dining options. The report also highlighted China Camp State Park, Dominican University of California, Kaiser Permanente and attractions such as the California Film Center and Rafael Film Center.
Novato’s 3,600 acres of open space was highlighted, particularly Stafford Lake Park and 1,558-foot-high Mount Burdell. The city was given high marks for high-achieving Novato Unified School District, as well as having a strong local economy of biotech and small technology companies along with a variety of retail centers. The report also highlighted Novato Community Hospital, Novato Healthcare Center and the city’s Old Town district.
Livability.com ranked nearly 2,300 cities on more than 40 data points measuring economics, housing, amenities, infrastructure, demographics, social and civic capital, education and health care.
Click here to see the top 100 best places to live.
The Marin IJ’s “ Rail Spur Takes Shape” story reveals the so-called “train to nowhere” is about to go somewhere, with work occurring daily at the future Larkspur stop on the south side of Cal Park Tunnel. That stop, of course, is the link to the SMART train in downtown San Rafael and equally important, to the Golden Gate ferry system at the Larkspur Landing ferry terminal. The 2.1 mile extension has a budget of $55.3 million. The Metropolitan Transportation Commission has provided some of the funds for the extension, while a federal grant and local sales tax dollars are covering the rest of the cost for the extension.
Two days later, another page 1A story appeared, “Commute in Marin Worst in the Bay Area.” Cringe! We knew it was bad, but the worst?
Overall, Marin residents take 32.3 minutes to get to work, while Bay Area-wide average time is 31.6 minutes, according to the Metropolitan Transportation Commission’s Vital Signs program (http://www.vitalsigns.mtc.ca.gov/), which is designed to give Bay Area residents a snapshot of key transportation, land use, environmental and economic policy trends. Belvedere (40.6 minutes) and San Anselmo (35.5 minutes) had the longest average commutes while San Rafael averaged the shortest commute time (28.4 minutes). It’s worth a look at the story to learn more about Marin residents’ commute patterns. For example, 12.4% of us commute 60-89 minutes to get to work daily.
We’ve said it before and we’ll say it again, creating more affordable housing, developing a local and highly competent workforce, improving our transportation systems and options and addressing inequality are all related, connected and inseparable, in good times and bad. Our mission is to address them individually and holistically so Marin can become a better version of itself.
-Robin
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On January 29th the Marin Economic Forum in association with the San Rafael Chamber of Commerce, hosted “Forecasting the Future: A Spotlight on Workforce Challenges and the Future of Work.” The conference was intended to share our thoughts on the national and local economy in 2019 and to dive into the topic of workforce development considering the challenges employers in Marin face in attracting and retaining workers. MEF CEO Mike Blakeley set the stage by noting the low unemployment rate in Marin (2.2%) is both a positive (people have jobs) and a negative (employers struggle to fill jobs) and doesn’t capture the fact many of our highest skilled workers are employed outside of the County. How we manage our future workforce will be critical to our economy.
