PD Editorial: Rebounding

Sonoma County didn’t need any more reminders of its bleak economy, but it got some this week anyhow.

Here’s a brief summary of what Steve Cochrane, senior economist with Moody’s Economy.com, had to say at Wednesday’s State of the County in Rohnert Park:

Things are bad. (Housing prices down about 40percent overall; unemployment at a 15-year high; key drivers of economy such as consumer spending, business investment, credit markets all weak.)

They’re going to get worse. (Unemployment to hit 8 percent by third quarter; housing prices to continue to fall until start of 2010; local economy to shrink 1 percent this year.)

And then they will get better. (Economy to grow by 4.5 percent in 2011.)

An earlier forecast that Sonoma State University economist Robert Eyler did for The Press Democrat predicted less of a job loss this year and a slower rebound in the years to come. But by and large, the economists agree that things will get worse before they get better. They also agree that Sonoma County business and government leaders and residents can have a major influence on how and when that recovery occurs.

Sonoma County knows the bad news. The question is, what is it going to do about it?

For that, Cochrane and others had plenty of ideas.

Green technology. This is one area of business where there’s strong public and political support and a potential for investment. In addition, Sonoma County is a prime area for green businesses to develop and grow. They already are. As Cochrane noted, green technology demonstrates “upside potential for Sonoma County entrepreneurs.”

Policy changes to lower business costs. Cochrane ran a model of various scenarios and found, for example, that just a 10 percent reduction in energy costs for county businesses would mean an additional 2,900 jobs by 2020, a $274 million increase in economic output and $16 million more in additional revenue for local government.

A 10 percent cut in water costs would mean 3,800 additional jobs, a $327 million increase in output and $19 million in additional revenue.

Invest in school children: What’s clear is the single greatest economic investment the county can make is in education — specifically, elevating the educational attainment of the region’s workforce. This was evident in Cochrane’s report as well as in a set of goals recommended by the county’s Innovation Council.

Right now there’s an educational gap among adults 25 and over. This is particularly true among Latinos, who comprise 25 percent of the local labor force and represent the fastest-growing segment of employees. If this trend continues along with increased retirements of baby boomers, it could mean increased shortages in local employees for skilled occupations

Cochrane’s research found that if Sonoma County was able to stop the widening of achievement gap and if the educational attainment of all adults 25 and over increased equally between now and 2020, it would mean 4,800 additional jobs by 2020, $40 million in additional revenue for the county and a $600 million boost to the economy.

We’ll be writing more about the Innovation Council’s report and its goals in the days to come.

But as Paul Kelley, chairman of the Board of Supervisors, said in his State of the County address, “We must think anew if we are going to maintain our strongest asset — our quality of life.”

The county also needs to think anew about how much that quality of life, and this county’s ability to rebound from this down cycle, depends on the strength of its future workforce — our children.