Reports Explain Santa Cruz County Labor Shortage


Arslans Turkish Street Food on Walnut Avenue in Santa Cruz was closed one afternoon in March due to a lack of workers. (Stephen Baxter — Santa Cruz Local)

SANTA CRUZ >> Two economic reports released in May outline Santa Cruz County’s shrinking workforce, as well as some strategies for workers and employers to succeed in a high-cost area with a changing labor market.

Wednesday, a Workforce status report and the presentation was given to Santa Cruz County Workforce Development Board. The council advises Santa Cruz County supervisors and brings together business and government leaders in part to find solutions to local workforce challenges.

Peter Detlefs, Commercial Services Manager for Santa Cruz County, said the report echoed some themes he had heard over the past few years in Santa Cruz County and other areas of the Central Coast. Workforce Santa Cruz County helps connect employers and job seekers.

“In San Luis Obispo County, Santa Barbara County, and Santa Cruz County, we are all in a similar situation. We have an aging population and less educated people working in low-wage jobs,” Detlefs said.

Carlsbad-based BW Research Partnership Inc. authored the 50-page report on the state of the workforce, and its president and principal investigator Josh Williams led Wednesday’s presentation. “Prior to March 2020, the Santa Cruz County economy exhibited several positive economic indicators and trends. Unemployment was low, job quality was improving, and several upper-middle-income industry clusters had grown significantly,” according to the report on the state of the workforce.

“While we have not been able to quantify the full extent of the economic impact of COVID-19 on Santa Cruz County, it is safe to say that issues such as declining work participation and the decline in total employment due to the pandemic have hurt the county’s economic landscape and particularly reduced economic opportunity, especially for low-income residents,” the workforce report states. .

Separately, on May 20, a meeting of the Monterey Bay Economic Partnership included a presentation on economic trends in Santa Cruz and Monterey counties. Christopher Thornberg, founding partner of Beacon Economics, based in Los Angeles, presented the 60 minute report. He looked at the national economic recovery and focused on some trends in Santa Cruz County.

The two reports overlap in several of their findings:

  • Labor force participation continues to decline in Santa Cruz County. Labor force participation has been trending downward in the county since at least 2015 and has not recovered to its January 2020 level of about 61%, according to the State of the Workforce Report. The activity rate was around 58% in January. There were 10,600 fewer workers in Santa Cruz County in February 2021 compared to February 2020, according to the State of the Workforce Report.

Labor force participation was declining in Santa Cruz County even before the COVID-19 pandemic. (BW Research Partnership)

Work participation hasn’t fully rebounded in Santa Cruz County since the pandemic began. The county’s population growth, right, has been trending down since about 2016. (Beacon Economics)

  • Santa Cruz County residents tend to age. “Santa Cruz County’s population and workforce are aging, especially in the North,” Josh Williams wrote in the state of the workforce report. From 2014 to 2019, the share of residents 65 and older in North County increased 37% and 10% in South County, Williams wrote. “A population with a growing share of older residents can dampen an area’s economy as employers may struggle to find local talent,” he wrote. Thornberg noted that Santa Cruz County workers typically retire and stay in the county, rather than moving to warmer climates, as often happens with East Coast retirees.
  • There are fewer jobs in Santa Cruz County than there were before the pandemic. Additionally, the unemployment rate in Santa Cruz County is the lowest since 2005. These factors indicate that much of the available workforce is exhausted. “The problem, of course, is that you can’t fill the jobs,” Thornberg said.
  • Many low-wage workers are leaving Santa Cruz County because their housing is so expensive. Thornberg said California the economy is moving towards “very high-end sectors that can afford this housing, while low-end sectors that cannot [afford housing] have to move. Thornberg added, “We’re turning into a California country club and I don’t think that’s fair. So I would like us to build more housing.
  • An increase in remote work presents challenges and opportunities in Santa Cruz County. As many employers have expanded the ability to work from home, both reports predicted more Silicon Valley workers would buy homes in Santa Cruz County and commute occasionally. Thornberg said stock market volatility wouldn’t have a big impact on many Silicon Valley residents who want to buy homes in Santa Cruz County because they often have home equity wealth. The remote work trend also means that some Santa Cruz County employers may expand their hiring with people who live outside the county. Santa Cruz County workers may also be better able to get remote jobs from Silicon Valley employers.
  • High-paying jobs have increased in Santa Cruz County and low-paying jobs have declined. The highest paying jobs increased in Santa Cruz County 9.5% between 2015 and 2021, according to the State of the Workforce report. The lowest-paying jobs declined by 3.2% over this period.
  • Some businesses have struggled while others have thrived during the pandemic. Many tourism and hospitality businesses cut jobs in Santa Cruz County and struggled to rehire workers. Other industries such as construction and manufacturing have grown since 2020. Some retail clothing stores, for example, continue to struggle with a migration to online shopping. Other hardware, home improvement and hobby retail stores like bike shops have increased revenue since the pandemic began, Thornberg said. Farm jobs in the county were down before the pandemic and continue to decline.

The reports also offered some suggestions:

  • Show young workers in Santa Cruz County career paths to in-demand jobs in healthcare, information technology, construction trades, and hospitality management. Williams suggested business leaders work with schools and community groups to show students career paths that pay enough to live in Santa Cruz County.
  • Strengthen the education and training of young South County residents. South County has a younger population that can play an important role in the county’s future workforce, Williams said. Apprenticeships, internships and blended education programs could help, he said.
  • Government-subsidized child care would help many women in Santa Cruz County return to work, Thornberg and Williams said. Many women left the Santa Cruz County workforce during the pandemic and have not returned due in part to school closures and a lack of child care. Detlefs of Workforce Santa Cruz County noted that Santa Cruz County leaders directed some American Rescue Plan Act money to child care programs in the fall. Capitol and Valley of the Scotts leaders also directed funds toward childcare programs.
  • Additional workforce housing in Santa Cruz County would help keep workers in Santa Cruz County and make it easier for employers to fill jobs. Thornberg essentially said that new housing construction has not kept up with job growth. He called for more multi-family housing such as apartments. Many South County residents work in North County, so more homes in North County would help reduce commute times.
  • Cultivating talent within an organization could help fill positions with more responsibility. For example, Thornberg said hotel maintenance staff could be trained in management roles.

The State of the Workforce Report listed 25 common jobs in Santa Cruz County who earn a living wage and are expected to grow by more than 5% from 2019 to 2024. These jobs “could provide particularly good opportunities for workers in Santa Cruz County,” Williams wrote. These jobs and their median annual earnings include:

  • Registered Nurses ($142,938).
  • General Managers and Operations Managers ($106,475).
  • Computer systems analysts ($92,498).
  • Police and Sheriff Patrol ($108,805).

Detlefts said the Workforce Development Board requested that the state of the workforce report include a section on health care trends. About 14% of jobs in Santa Cruz County are in health care, and health care employment grew more than 26% from 2010 to 2020, according to the report.

There has been high turnover in health care nationwide since the start of the pandemic, Nate Hunt, project manager at GW Research Partnership, said during Wednesday’s presentation.

“National surveys show that about 18% of workers who worked in health care before the pandemic ended up quitting at some point during the pandemic, and 12% were laid off,” Hunt said. “A lot of those people have come back, but the fact that some residual amount hasn’t come back still leads to the gaps that we’re seeing right now. And those gaps — those kinds of worker shortages — are going to be hard to fill.”

According to the State of the Workforce report, some of the top reasons healthcare workers left their jobs were the pandemic, lack of money, opportunity or career advancement, or the feeling of being “exhausted or overworked”.

A survey suggests healthcare workers quit their jobs during the pandemic for many reasons. (GW Research Partnership)


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