In previous years, economist Robert Eyler has summed up the North State economy and various sectors as “struggling” and “flat lined,” with dabs of positive news.
On Thursday, the director of the Center for Regional Economic Analysis at Sonoma State University used the same words, but had a more positive description, brightened with comments on job growth, and sectors “picking up.”
“In the North State, there are still lingering affects of the Great Recession. There are still industries struggling,” he told about 375 attendees at the annual North State Economic Forecast Conference put on by the Center for Economic Development at Chico State University. The event was at Gold Country Casino Event Center in Oroville.
Eyler said there has been job growth during 2015, but the question is: What kinds of jobs are they?
Looking forward, the other question is how can employment assets be used to benefit the North State, he asked.
Citing state job growth data, he noted in 2015 there were 1,150 new jobs created in Butte County, 250 in Glenn County, and 350 in Tehama County.
That growth occurred in areas including ag, tourism, education, health services and government, among others. Eyler expects 2016 to look a lot like 2015.
Job growth is good, but are those jobs recession-proof? Eyler asked.
The North State economy saw a tremendous job loss over the Great Recession, and the jobs that have come back are different than the ones lost. Noting losses in manufacturing and other types of core employment, the new jobs may not be so stable, he said.
Recession is lingering in certain parts because residents are not employed in the kinds of jobs they want or are trained for.
Planting a seed, Eyler asked at the end of his presentation, “Can we use Chico State more as a job engine for people who want to stay here?”
Keynote speaker Prem Chand, founder and CEO of Milestone Technologies, had one answer.
He suggested that the North State could capitalize on the talented graduates of Butte College and Chico State who want to stay in the area. In addition, the number of under-employed and part-timers could benefit too.
Chand suggested that business, working with education, could create opportunities where tech companies could embrace new workforces here rather than cherry picking each other in the Bay Area.
Rather than bringing the employees to the Bay Area, they would establish branches in the North State, with lower costs and larger workforce pools. It’s what Chand and Milestone did.
Chand was born in Yuba City and grew up in Biggs, but moved to the Bay Area to find a job. He founded Milestone in 1997, an IT solutions company. Considering how to expand and how to find a dedicated workforce, he opened a tiny branch in Chico in 2012 with fewer than a dozen people. Today, Milestone employs about 400 here.
Regularly, Chand notes the positive differences in worker attitudes, loyalty and abilities in the North State compared to those in the Bay Area.
Milestone is involved in IT solutions for companies. In Chico, it operates a “contact center” — basically a call center that helps customers with technology questions.
Of his idea, he said, “It’s about what we could do in the North State remotely to support technology. It would grow jobs here.”
He noted it would take cooperation between business and education, and money to make the idea work.
“It will create a stronger economy because the dollars are from an outside source,” he noted.
In summing up the 2016 economy, economist Eyler said the picture isn’t much different from 2015.
There are positive signs of an improving economy, but there are questions, Eyler noted.
What’s going to happen with the election is a major one. Countless actions and investments are being put on hold until some indication of where the country is going becomes clear.
What’s happening in shaken China and Europe is another question.
“If (international) investors lose confidence, they may move their money toward us,” he noted.
Obviously where California goes with the marijuana question is another issue.
“People are already living like (they’re in) Colorado,” said Eyler, regarding marijuana’s use.
“There will be a huge ag question if pot is legalized,” said Eyler, who’s expecting a “wild debate” in Sacramento on it.
Eyler pointed out the “new” connection between drought and housing in California. Without water, new housing construction will be up against a wall. Without more inventory, housing prices will continue upward, and some people will be forced to rent. That will spur demand in rental markets, and prices will increase.
What’s happening with rental housing prices has been part of the impetus to raise minimum wages and some cities like San Francisco have created their own minimum wage, which will go to $15 an hour in 2018. California’s is $10 now, just increased this month. Eyler noted those actions have hurt business, and doesn’t help reduce poverty.
Back to the issue of housing, Eyler suggested that California may want to rethink some land uses, maybe to the point of rezoning commercial for residential or changing empty commercial to housing uses.
As far as the economic roundup, he expects interest rates to rise, but not steeply; banks don’t look like they’re be loosening their lending strings any; and offshore manufacturing jobs probably won’t be returning to the U.S.
The dollar will remain strong, meaning less export opportunities. A strong dollar means that U.S. goods cost more overseas.
Gas prices are expected to stay low. Drivers are almost getting a tax break, while it hurts the gas industry. Another of the morning speakers, Rohit Shukla of the Larta Institute in Los Angeles, talked about the need for regions to cooperate to benefit the economy, and that more attention should be placed on teaching science, which will help countries solve problems.