San Luis Obispo County’s housing and commercial markets, tourism and spending growth are all moving in the right direction, and several industries — tourism, technology, wine and construction — are thriving.
It’s time to start focusing on longer-term issues: water management, housing needs and recruiting skilled workers, economist Jordan G. Levine said during a talk to more than 500 people gathered Friday for the annual Central Coast Economic Forecast. The event, held in San Luis Obispo, provided a year-in-review and 2016 projections for local, state and national economies.
“Things have come a long way since the Great Recession,” said Levine, who is director of economic research for Beacon Economics in Los Angeles. “The recovery is over — this is the expansion. We’re in expansion mode, and this is something that’s going to continue over next couple of years.”
The county’s unemployment rate, which sits at 4.1 percent, has been declining steadily since 2009 and is lower than the national unemployment rate of 5 percent. Since 2010, the county has added nearly 17,000 jobs, outpacing other Central Coast counties and putting the county “right at the top of the pack with Silicon Valley in terms of growth,” Levine said.
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Things have come a long way since the Great Recession. The recovery is over — this is the expansion.
Jordan G. Levine, Beacon Economics director of economic research
Wages are finally starting to rise, and the number of jobs is growing in some subsectors: computer systems design, architectural and engineering services, and management and technology consulting, among others.
Professional, scientific, technical and management employment is still concentrated in the city of San Luis Obispo, as are tech jobs. But virtually every city has seen job growth, especially in tourism-heavy areas including Morro Bay and Pismo Beach, Levine said.
By 2020, millennials (adults ages 18-34 in 2015) are expected to comprise 50 percent of the workforce, said Seth Mattison, founder of FutureSight Labs. He discussed the gap between how this generation and older workers view workplace culture, form relationships with superiors and interact with each other.
There are two battling ideas of a workplace culture: One — a network or interconnected web of people, talent, ideas and information — is at odds with the more traditional hierarchical structure.
“It’s going to require courageous leaders to pull together the best of both worlds,” Mattison said, “to create a new ethos so new leaders no longer see themselves as leading from top of the hierarchy but from the center of the network.”
Meanwhile, San Luis Obispo County’s wine industry continues to grow, with many of those jobs centered in the Paso Robles region. The number of tourism-related jobs in hotels and food services increased in most areas of the county, while falling slightly or remaining flat in Atascadero and Cambria.
The wine industry is also having a banner year across California, said Chris Thornberg, founding principal with Beacon Economics, who focused on the state and national economic forecast.
“Tourism is on fire. Hotel occupancy is up,” he said.
The average daily rate for hotel stays across the county increased, to as much as $171.63 in Pismo Beach. The occupancy rate for hotels in Paso Robles and San Luis Obispo rose, too.
But for local residents and would-be transplants, San Luis Obispo County is no longer the “affordable” market when compared to home prices in the Bay Area, Monterey, Santa Barbara, Los Angeles, Orange County and San Diego.
The 2015 median home price increased by $39,334 compared with 2014, to $494,406, according to Levine. Still, the data show that SLO County’s median home price is less than all of those other areas except for Santa Barbara and Monterey counties.
In addition, the supply of homes in San Luis Obispo County is tight and getting tighter, and distressed units (defaults and foreclosures) are effectively gone. The data show a mounting housing deficit in Atascadero and Paso Robles, with more people being added than housing.
“It seems like we can’t build them fast enough for the folks who want to buy them,” Levine said. “Home prices are rising, and that will be challenging ... if we’re not putting new stock in the mix.”
The building industry is “getting back to business,” however, with a surge in residential permits.
“I think we’re doing really good on providing some higher-wage opportunities in growing professional and technology (sectors), but the harder part is trying to find right way to balance the growth, especially with water issues,” Levine said. “Yes, we have water issues, but we have this housing deficit, too.”
Future challenges include diversifying and balancing local growth with water supply concerns, as well as addressing critical infrastructure needs.
“We so desperately need to invest in infrastructure in our nation and in our state, but overall public construction spending is still really weak,” Thornberg said, attributing some of the cause to ongoing concerns about the rising costs of public employee pensions.
Thornberg also addressed water issues, advocating a conversation about what he termed a misallocation of a precious resource.
“We grew a million acres of hay in the middle of a drought,” he said. “Over the last six years, there has been a max export in California of alfalfa. If we continue on this massive export boom ... we can’t do this.”
He told the crowd to worry about water policy, not the drought.