SLO County’s economy barely survived COVID pandemic. Here’s what needs to happen next
The Central Coast economy was devastated by the coronavirus pandemic in 2020.
When local businesses were ordered to shut down to prevent the spread of COVID-19, revenues across the region dropped to less than half of what they usually would be. Jobs were cut and workers forced to go on unemployment.
Though some businesses survived being closed for months, others had to shutter their doors for good.
More than a year later after the pandemic hit, San Luis Obispo County’s economy is in a slightly better place — and it’s the perfect time to look at ways to move the economy forward, experts say.
A recent study commissioned by economic development group REACH and the San Luis Obispo and Santa Barbara county Workforce Development Boards examined the local impacts of the pandemic on the Central Coast economy, and outlined a road to its recovery.
“This last year, as we are all keenly aware has brought incredible upheaval, to nearly all aspects of our lives or communities in our economy,” REACH CEO Melissa James said in a virtual presentation Wednesday. “It’s been a time of intense volatility and uncertainty with rapidly changing conditions and highly uneven effects, a combination that often made it difficult to gain perspective on the situation.”
In the presentation, James said the organizations worked with BW Research on the study with the goal “of providing the means to make data-driven decision to implement target programs and direct funding toward initiatives that can fuel a widespread rebound across the Central Coast communities, businesses and workforce.”
Here are some of the study’s findings.
Businesses struggled during COVID-19, and recovery is slow
Immediately after California Gov. Gavin Newsom issued a statewide stay-at-home order in March 2020, local business revenues fell faster than a ton of bricks.
According to the study, business revenues along the Central Coast were down 58% by April 2020 — and they’ve not yet fully rebounded to pre-pandemic levels. As of February 2021, revenue across the region was still down about 31%, according to the study.
Conversely, county consumer spending is back up to normal levels, meaning locals are potentially not spending their money locally, but instead taking more advantage of online shopping and other out-of-the-area alternatives, according to the study.
Researchers found that the loss in revenues likely “led many local businesses to close their doors and remain closed.”
The longer the temporary closures remained in place, the more likely it was for a business’s closure to become permanent, according to the study.
According to the study, there were 40% fewer businesses open in the Central Coast region as of February 2021 than in early March 2020.
As more businesses closed, that made way for a slew of new businesses to take their place.
“Entrepreneurial-ship is really coming back,” Williams said. “That’s a really good sign.”
Pandemic hit lowest-earning Central Coast workers hardest
Though all local business sectors were impacted by the pandemic, some industries in particular were hit harder.
High-wage sectors in general only experienced “a minor recession,” according to Josh Williams, founder and president of BW Research.
That wasn’t the case for larger, lower-wage industries such retail, tourism and hospitality and salons and personal services, all of which experienced significant drops in revenue throughout the pandemic, Williams said during Wednesday’s presentation.
These industries also saw the most significant job losses in the past year.
Of all the jobs lost due to coronavirus in the Central Coast, about 66% were the lowest-paying and lowest-skill jobs in the region, the study said.
That means about 37,000 workers lost their jobs, according to the study.
In contrast, less than 7,000 of the region’s highest-earning and highest-skilled jobs were lost during the pandemic.
County officials need regional federal stimulus spending plan
According to the study, a record $722 million of venture capital was invested into regional startups in 2020 — but even more is likely needed for mid-stage startups and existing small businesses as the Central Coast looks to recover from the pandemic.
One major opportunity for the region is how it could best utilize American Rescue Plan (ARP) resources and funding to move the Central Coast economy forward.
The ARP is a sweeping $1.9 trillion federal program that provides funding to cities, jurisdictions, schools, families and even individuals for pandemic recovery.
Bruce Katz is the director of Nowak Metro Finance Lab at Drexel University, which specializes in ways communities can capitalize on times of social, economic and environmental change.
Katz said now is the time for San Luis Obispo and Santa Barbara county officials to come together to create a regional plan for using the ARP funding.
Katz recommended the region should figure out what makes the area special and unique and come up with a specific action plan to best support those priorities.
“Choose one thing, I mean just one, that basically cuts across all your municipalities in the two counties — could be small business could be workforce — and collaborate on that,” he said. “You’re special, right? So find one thing to work on, and just collaborate the hell out of it.”
Remote work, investment could help region grow, study shows
The study also suggested that regional leaders should develop industry-specific strategies to increase entrepreneurship and assist businesses that are looking to expand within the Central Coast, identify regional infrastructure investments and work on the area’s notorious housing problems.
Another suggestion was for the Central Coast to look into promoting itself as a place where people who are continuing to work remotely can relocate.
Though a number of people will begin returning to in-person work over the coming months, Williams said a big portion of jobs will likely stay virtual for the near future or even permanently.
With that, Williams said county officials should look into ways to promote the region as a great place to live to attract those who may no longer need to live near their main offices.
Officials should also look into larger businesses creating smaller satellite offices in the region.
“Yeah, if even one in 10 of the people that are working remotely continues remotely, we’re going to have a real change on where people are willing to live,” he said. “I don’t have good data on that at this point, but it’s something that we’re looking to and so ask me again in two months and hopefully I’ll have a better answer.”
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