SLO County economy survived COVID pandemic – but now it faces bigger threat: too few workers
San Luis Obispo County’s economy has mostly recovered from a brief lull linked to the coronavirus pandemic, but economists say there’s a new problem: a labor shortage.
“Here’s the reality: There are no ‘new normals,’ ” Christopher Thornberg, founder of Beacon Economics, said during the 2021 Central Coast Economic Forecast on Friday. “But what has happened has accelerated underlying trends that were already in place in the economy. Some of them I’ve talked about for years — such as labor shortages. I said the last two, three, four years prior to this, ‘Hey, it’s coming.’ But guess what? It’s here.”
According to Thornberg, one of the biggest issues facing California, and San Luis Obispo County specifically, over the coming years is going to be a shortage of workers.
“It’s been accelerated by this pandemic,” he said during the annual event, which analyzes the Central Coast’s economy. “And these things we do have to pay attention to yet again, in that post-pandemic world we are now entering into.”
San Luis Obispo County’s unemployment rate fell to 4.6% in September — the lowest point since the local COVID-19 pandemic began in March 2020 — with an estimated 125,000 people out of a 131,000-person labor force being counted as employed in the county.
This seems like great news on its surface.
But although unemployment is low, Central Coast business owners are still having trouble finding workers.
Since early 2021, San Luis Obispo County companies have expressed concerns at difficulties finding employees, specifically for jobs in service-based industries such as restaurants and tourism.
According to Taner Osman, an economist with Beacon Economics who spoke on San Luis Obispo County’s status Friday, several job sectors locally are facing labor shortages.
Those include tourism and hospitality, as well as industries such as construction and healthcare.
Some of the difficulties in finding workers were attributed by some to extended unemployment benefits that supposedly made it easier and more attractive for potential workers to stay out of the job market while collecting benefits. Those benefits expired in September.
Thornberg, however, said the issue instead is a shrinking labor force as Baby Boomers retire.
“Remember Boomers, that enormous demographic bulge in the middle of our population?” Thornberg said. “What happened during this pandemic (is) a lot of people just retired.”
As of September, the number of people counted as part of the labor force in San Luis Obispo County was 131,000, according to data from the California Employment Development Department. That includes both employed workers and also unemployed people who are looking for work.
That number is roughly 5.6% lower than the same month in 2019, when about 138,700 people were counted as part of the labor force. Even more interestingly, the size of the labor force has been somewhat shrinking even before the pandemic.
Prior to 2017, the local labor force had been trending upwards for several years; but between September 2017 and 2018, the labor force began declining.
That downward trend became more abrupt during the height of the pandemic, leading to fewer people in the workforce.
“It’s a very serious issue,” Thornberg said. “We are running out of people.”
Though it’s tough on businesses to have so many openings, it has been a boon to those looking for work who now have the pick of jobs and benefits.
“You think about the jobs they are having trouble filling, well it’s the kind of jobs that don’t go anywhere,” Thornberg said. “Washing dishes at a restaurant, while necessary, is not a long-term career choice. So guess what? People’ve got money in the bank and they’re like, ‘Wow, I don’t need to take any job. I want a job with career levels and some skill training, benefits, right?’ ”
This creates an applicants-driven market where workers now have more options than they may have previously.
If San Luis Obispo and the Central Coast want to keep growing their economies, they need to look toward the future and ways to attract young workers, Thornberg said.
“There is no reason in the world San Luis Obispo shouldn’t have an enormous ability to attract new workers,” he said. “Not only do you live in one of the nicest places on the planet, not only are you living a couple of hours from two of the most amazing global cities on the planet, not only do you have a wonderful university which is spitting out the brightest young kids on a daily basis — but on top of all that, you have some of the finest wine you could possibly drink.”
Thornberg did have a final word of advice.
“But you can’t attract anybody if they have no place to live,” he said. “You’ve got to build it, simple as that.”
This story was originally published November 9, 2021 at 2:09 PM.
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