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Economic Booms and the Haves and Have-Nots

Columnist: Lawrence Amaturo
March, 2018 Issue
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Lawrence Amaturo
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It looks like we’re in for a great ride this year. Who knows for how long, but the North Bay's economic engine is roaring on eight cylinders. Roadblocks lie in wait—employment obstacles, natural disasters, partisan disputes and often stifling regulatory hurdles—but our area's strongest companies are as vigorous as they've been in a decade. You'll see for yourself as you review this year's long anticipated NorthBay biz Top 500 data.

But is this economic windfall good news for all of us? There are always exceptions and outliers to any growth phase, but I submit that the advantage of sustained economic growth provide opportunities for the majority of us in a number of lasting and beneficial ways.

Forecasters see rising, inflation-adjusted salaries over the next five years of nearly 2 percent per year in Marin County from its already record high levels. They forecast wage growth to rise more than 2 percent per year in Sonoma County, and nearly 3 percent per year in Napa County. This wage growth is a naturally occurring function of declining unemployment levels and employers' expansion needs. Fortunately, "job growth" expansion is expected to rise 5 percent or more per year through 2022 across all three counties, according to data from their respective economic development boards. Better yet, we’re seeing acceleration in professional service fields and manufacturing fields where higher skills are needed and higher wages are provided. North Bay retail, industrial and farm production indices are also growing strongly, creating opportunities for manual and technical laborers to participate in growth as well.

So yes, I believe our economic boom can help the "many," not just the "few." National and local experts tell us to expect expanded health care availability and job opportunities in all three counties over the coming five years. We can expect expanded leisure and hospitality offerings as well. Education and job training is also on the rise. But it’s migration or more specifically, the number of "out-migrants," I fear, that may be the thing to watch in 2018. Our counties have steadily grown for the last eight years or longer, but the October 2017 firestorm should have us all concerned that residents may now be leaving our counties. The “For Sale” signs peppering the fire-scorched neighborhoods where thousands of homes once stood may be signs of a declining population. This dislocation threatens Sonoma County’s upper- and middle-class communities and is being watched in Napa County as well. Just as worrisome is the increased pressure on lower- and middle-class residential neighborhoods in Marin County. The "haves and have-nots" problem that has long plagued Marin is in for a new challenge that may impact us all.

But what else might derail our prospects for continued economic recovery? Are you someone who worries that California's political leaders have concocted a flammable mix of new laws, new taxes, new fees and new liberties, while ignoring federal laws and practices? Our exploding retirement benefits payments, statewide "sanctuary" status, and sweeping tax and fee increases have turned well-intended ideas into a toxic mix that may bankrupt our state and the spiraling problems that come with it. This isn't an argument over whether we should have benefits, compassion or taxes. Instead, it’s a question of how much can we afford before the outcome harms us all, including those we had hoped to help.

Governor Gray Davis' "SB 400" (granting new retirement benefits and a tax-free pension fund for California's 200,000 civil servants) has grown 30 times in size since its adoption, according to “The Pension Gap,” published in the Los Angeles Times in 2016. As a result, state employee pensions cost taxpayers $5.4 billion in 2016, according to the Department of Finance. In other words, California taxpayers spent more on pension payouts than on environmental protection, fighting wildfires and emergency response efforts to the drought combined.

That's not the end of it, unfortunately. Governor Brown was forced to reveal in his 2017-18 May Revised Budget that the California Public Employees' Retirement System (CalPERS) was "on track to nearly double from $5.8 billion to $9.2 billion in 2023-24." Worse yet, he revealed that long-term pension liabilities jumped $51 billion (+22%!) in 2016 to $279 billion. To put this in perspective, Cali’s long-term pension liabilities are now roughly 50 percent greater than its annual budget! Does this sound reasonable, sustainable and appropriate to you? I'd like to hear from you on this matter; you may be aware of angles I'm missing.

For me, this is less a problem for well-off folks than those who struggle with monthly bills. Business succeeds best when it succeeds for its employees, communities and shareholders. And we have to look beyond the boardroom to make sure these successes are expansive. Beyond Marin's glistening shopping malls and business parks resides a population in need of advancement. In the shadows of Napa's extravagant wineries and cultural centers, rests thousands living at or below the poverty line. And beneath Sonoma County's crowded thoroughfares and industrial parks, lie encampments of homeless people.

The North Bay economy is poised for a great 2018, and the Top 500 features the companies that will guide this advancement. As we move forward, let's work together to help others move forward along with us. Let me hear your thoughts at Lawrence@NorthBaybiz.com.



 

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