Economic Snapshot Shows Concerns Over Region’s Economy

In an article written by Susan Wood on The NBLC State of the North Bay Conference, she said, “When it comes to post-pandemic recovery, the North Bay lags behind the nation and the rest of the Bay Area in job growth.

That was one of the viewpoints offered during the Bay Area Economic Institute’s State of the North Bay virtual presentation on Oct. 23. The institute is a business advocacy organization representing the nine-county Bay Area. The counties include Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano and Sonoma. The report, which highlighted data analyses in the Bay Area and separately for the North Bay, was sponsored by the North Bay Leadership Council.

According to the keynote speaker, the institute’s Executive Director Jeff Bellisario, North Bay job growth between February 2020 and September 2024 stood at 1% in contrast to the nation’s 4.5%. California’s economic barometer came in as 2.49%, while the rest of the Bay Area was 1.2%.

“We’ve seen in the Bay Area an overall slowdown, and the North Bay has a slower recovery (since the COVID-19 outbreak) than the San Francisco metro and San Jose markets,” Bellisario said. “In the last four years, we’re still trying to catch up with the rest of the nation.”

Meanwhile, unemployment rates had dropped across the six-county North Bay region in September, while California’s 5.3% rate remained the same, according to the state Employment Development Department on Oct. 18.

What this says to Sonoma State University Economics Professor Robert Eyler is that the two factors are colliding because of employers’ actions.

“It could be that more employers are simply cutting back on the number of workers they’re demanding,” Eyler told the Business Journal on Nov. 4. “Certainly, it’s a way of dealing with rising expenses.”

And year-over-year studies may pose a completely different result than an evaluation of a lengthy time period like that of the report the institute came out with on Oct. 23.

For example, Eyler noted September’s jobless rates as reported in the Business Journal present a snapshot.

“Sonoma County’s unemployment has been flat, but it’s up by a half percent since May. It’s been rising,” he said, adding seasonal adjustments must also be considered when making a long-term analysis.

The economic sputtering of employment contrasts with the heyday in which Bellisario said the Bay Area was at “the top of the heap” in terms of job creation.

Bellasario spelled out trends to recognize the “unique character” of the North Bay’s counties and how they might use that information to map out a rebuilding and redevelopment period.

Santa Rosa City Manager Maraskeshia Smith, joined by the city’s Chief Economic Development Officer Scott Adair, was on hand at the event, alongside San Rafael City Manager Christine Alilovich and Napa Economic Development Manager Neal Harrison to discuss the status of their local city economies.

Three North Bay counties saw education and health services leading in terms of industries and employment — Sonoma with 36,045 jobs in those sectors and Marin with 21,300 in those employment divisions. Napa County had 10,224 jobs in education and health services. The county had 14,446 manufacturing jobs and 12,491 jobs in leisure/hospitality in 2024, according to the U.S. Bureau of Labor Statistics.

In the same four-year period of employment recovery, the construction industry saw little overall change. Job sectors including information; wholesale, transportation and utilities; financial; retail trade and government showed overall job losses. Collectively, trade/transportation (down 6.9%, 2019-2024), financial, leisure/hospitality, manufacturing and construction lost 9,678 jobs in the North Bay, the report indicated.

An aging population represents a trend to watch in terms of workforce retention, according to experts. Seniors are closing in on retirement and leaving the workforce.

The North Bay’s median age rose 3.6 years from 2010 to 2023. In Sonoma County, the median age is 43.5 years; Napa’s is 43.4 and Marin’s is 48 years.

Bellasario said he has also noticed a trend of millennials leaving the area. The region’s population stood at 830,000 in 2010, referring to the North Bay’s Sonoma, Napa and Marin counties. It peaked six years later at about 910,000, but it dropped to 869,054 last year. The U.S. Census Bureau reported that number as 869,435.

Moreover, the data coincides with a drop in net birth rates. The North Bay saw more than 6,000 people move out of the area last year and a “near zero” net birth rate.

“These population trends are not good. More people are leaving than coming in. We’re very much in a negative migration. If you’re not growing your population, you’re not growing your workforce,” Bellasario said. Along with the pandemic playing a role in shifting population, natural disasters including wildfires, housing affordability and the overall cost of living were contributing factors in people leaving.

“This is key, the most important part of this picture,” he said.

“This was one of our biggest takeaways,” North Bay Leadership Council President and CEO Joanne Webster told the Business Journal on Oct. 31. “We need to invest in our workforce. The population decline is very concerning. We need to do something to get families here.”

Webster mentioned the need for employers to train a younger workforce.

“This is really important, and we do see employers doing that,” she said.

Through all the challenges, the institute did present a promising aspect of life in the North Bay. The Charles M. Schulz—Sonoma County Airport in Santa Rosa touted a 62% increase in passenger boardings from June 2019 to June 2024, per the U.S. Bureau of Transportation Statistics analyzed by the institute.

The institute also evaluated passenger boardings among major airports, which were down in numbers as international travel dropped during the pandemic.

Its closest competitor was Nashville, with a 41% five-year growth.

According to the institute’s analysis, hotel occupancy in the third quarter of 2019 in Sonoma and Napa counties was 83% and 79%, respectively. The analysis shows a drop to 70% and 64% by 2024.

Still, findings reported during Sonoma County Tourism’s annual meeting on Sept. 23 show year to date, hotel occupancy in Sonoma County is up 2.7%, though the average daily rate has decreased by 1.8%.

In August alone, hotel occupancy in Sonoma County from the county-specific study was 68.3%, up 2.6% from a year earlier, according to analytics firm STR. The average daily rate was $235.45, up 8.9% from August 2023. Total hotel revenue through August 2024 is $250 million, up 0.9% from the year prior, according to STR’s figures.

And in neighboring Napa County, tourism officials recently reported that visitors to Napa Valley last year collectively spent more money than ever before.

Moreover, tourism spending in 2023 hit an all-time high of $2.5 billion, as reported at Visit Napa Valley’s destination symposium on Sept. 26.

Eyler noted hotel occupancy is up year over year for the region’s primary jurisdictions. However, the Sonoma and Napa findings are “relative” when examining year-over-year figures with those dating back to pre-pandemic days.

“If you look at pre-pandemic, what this means is we’re trying to find a post-pandemic normal,” the economist said.

In other words, in the short term, hoteliers are doing better and they’re “cautiously optimistic about the future,” but there’s more competition and inflation is pinching consumer spending habits, Eyler said.

“They would say we’re still under the shadow of the pandemic,” he said.

Housing is a regional issue

Tackling the housing issue is critical for the city. Smith refers to “housing” and “economic development” as equals in that quest.

In San Rafael, Alilovich places emphasis on the Northgate Mall development to accomplish that city’s housing goal, managing $1 billion in development. The efforts are intended to produce 1,300 housing units over the next 20 years.

“We have a lot of interest in senior living facilities,” Alilovich said, reiterating the need to address an aging population.

To that, Harrison, in speaking of Napa, agreed with the assessment the North Bay must deal with a population leaning toward retirement.

Harrison pointed to the city’s “unemployment ticking up slightly” to 4.1%. Napa wants to focus on supporting its small businesses to assist workers who decide to either launch their own business or work for a new company or owner. The support includes a streamlined permitting process.

“Small businesses are the lifeblood of this economy,” Harrison said”


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