ARTICLE
County’s Workforce Population: Are Housing Costs Driving Declines? Population trends continue to suggest a change in the characteristics of those who live and work in Santa Cruz County. The latest release of census data reflects continued reduction in not only the proportion of local residents between the ages of 25 to 54 but also the absolute number of those workers. Two compelling questions arise from this continuing trend. First, what does this suggest for businesses and the County’s economic environment? Second, is it the cost of housing that is driving the trend? While the total number of residents of prime working age (25-64) grew by total 770 between 2000 and 2014, the number of residents between the ages of 25 and 55 dropped by 17,149 during the period. The population of those 55 to 65, however, nearly doubled from 2000’s 19,489 to 37,408 in 2014. (The total population of Santa Cruz County during that period increased by a net of 11,601.) This change is particularly significant when compared to the rest of the State of California. The following graph reflects this disparity. The solid blue line, representing the distribution of residents by age in 2000, suggests the beginning of this trend to an older workforce population in comparison to the state (the dashed blue line.) But in 2000, the 35 to 45 year old group show that the proportions between county and state were nearly identical. For the 25 to 45 year old groups, however, the County’s population in 2010 (red lines) and 2014 (gold lines) falls sharply below the distribution of the state’s population. The impacts of this on local business are not yet clear, however, the following issues and questions seem important. Available Workforce: Much of the economic development literature over the past few years has focused on the looming exodus of the baby boomer generation. (See: The Coming Job Wars, by Jim Clifton. Gallup Polling’s CEO and When Boomers Bail by Mark Lautman, a national economic development consultant.) The core theme of both books is the economic future of communities throughout the U.S. who must adapt to shortages of skilled labor at all levels. These labor shortages – especially skilled and experienced labor – will occur over the next two decades throughout the U.S. The Santa Cruz County data suggests that as a community we are not “backfilling” our aging workforce with younger workers and in fact we are falling behind a greater than the average rate when compared to the rest of the state. Wage Pressures: A critical issue today is competition for workers. The difficulties of finding skilled workers is a well-recognized problem in Santa Cruz County at nearly every level – from executive talent to agricultural field workers. The population data suggests that this is at least in part the result of a shrinking supply of younger workers available to step into the jobs held by the County’s aging and “sooner-or-later retiring” population. This suggests a surge of wage competition for the resident workforce that is likely to challenge many local businesses over the next decade. Changes in Retail and Services: Changes in the demographics of local residents imply changes in retail stores and districts and local personal services providers. These businesses will have to continue to adapt to shoppers with different interests and incomes. It is perhaps easiest to see this in the growth and evolution of local health care. Economic Development: With change of any sort comes new economic opportunity. In addition to changing consumer’s retail and services needs, there are likely to be opportunities to take advantage of the skills and interests of “semi-retired” and second-career residents. At least anecdotally, one of Santa Cruz’s emerging trends is the relocation of boomers with business ideas and some money to spend. These issues lead us to ask ourselves, “Is this change in age demographics yet another result of high housing prices?” It is difficult to answer empirically but intuitively it seems likely. However, more housing alone may not be sufficient to address these issues. Much depends upon the type of housing that is constructed, the cost of that housing and, most especially, upon competition for that house from retirees and well-heeled workers from over the hill. What is certain is that these trends are having an economic impact and that businesses and government must plan and act now in order to take advantage of its opportunities and avoid its pitfalls.