The long awaited State of the Workforce was release by the county earlier this month. While Santa Cruz is riding a gnarly wave of recovery post-Covid, there's an undercurrent of issues as our older wave-riders start hanging ten toward retirement. The population might be shrinking, but their ear and nose hair isn't! And speaking of 'hairy,' our housing issues are tougher to tackle than a monster wave at Mavericks, and unfortunately, there isn't a miracle pill to swallow for this particular ache.

Before we give a snapshot of the findings, I’d like to give a shoutout to Christopher Neely at Lookout Santa Cruz and his superb article on the impending silver tsunami.

Christopher interviews Clay Kempf, executive director of the Seniors Council of Santa Cruz and San Benito Counties, who believes that there will be a surge in demand for senior services. Hopefully there are a number of Santa Cruz surfers riding the silver tsunami who will stay in good shape rather than be laid up on the beach.

Key Findings

1. Robust Recovery - Santa Cruz County's economy is bouncing back strongly from the COVID-19 pandemic, with its 2022 job growth surpassing both California and the US. Despite facing severe job losses and a slower recovery in 2021, the county saw a 9% increase in jobs from 2017 to 2022, higher than state and national rates. However, with a higher 2023 unemployment rate and lower labor force participation rate compared to California, the county's job market continues its recovery process.

2. High paying jobs - Santa Cruz County's recent job additions predominantly occurred in higher-paying sectors, despite overall job quality being below the statewide average. The majority of the employment growth from 2017 to 2022 has been in the highest-paying jobs, with the Defense, Aerospace, Transportation, and Manufacturing (DATM) industry - offering an average annual salary of $142,000 - expanding by 222%. Other high-paying industries like Healthcare, Biotechnology, Biomedical Devices, and Logistics also significantly contributed to job growth.

3. New Working Norm - Workplace dynamics have undergone significant change, with the north and south sub-regions of the area witnessing an almost doubled (91%) and a substantial (44%) increase in home-based work from 2017 to 2021 respectively. This trend is likely indicative of the "new normal" as more companies offer remote working options to suitable roles.

4. Demographic Shift - Despite stable regional distinctions within Santa Cruz County, ongoing demographic shifts are likely to affect its workforce. The south sub-region is younger with a higher proportion of Hispanic and Latino residents, 30% of individuals over 24 have not completed high school or an equivalent in southern Santa Cruz County.

5. Housing Pains - Housing remains a pressing concern in Santa Cruz County, with 40% of residents being renters, among whom 45% in Northern Santa Cruz County spend more than 35% of their income on housing. Racial disparities in homeownership rates further compound the issue as shown in Figure 16. This persistent problem necessitates continued focus due to its significant implications for the county's current and prospective workforce.

6. Shrinking Population - Santa Cruz County, similar to other coastal communities, experienced a population decrease of 4,800 between 2020 and 2021, primarily due to 5,000 residents relocating outside California, likely driven by housing costs. A 2023 survey showed 45% of respondents considered moving out of state due to high housing prices. This population drop, mainly among those under 65, also impacts the size of the labor pool. See graph below.

7. Investments for Growth - Significant investments in infrastructure and housing, such as a 223% increase in the county's road repair budget and additional funds for flood control, recycling, and solid waste projects, are set to stimulate demand for workers in these sectors. An additional $7 million earmarked for housing marks a drastic increase in funds for these projects. These large-scale budget changes indicate a likely surge in labor demand in these sectors in the near future.

8. Neglect Hurts - Neglecting workforce challenges in sectors like transportation, water, housing, and energy could lead to significant future issues. Factors such as a declining transportation infrastructure workforce could delay projects, while an aging workforce in water infrastructure and residential construction signifies impending retirements. As the county strives to meet its decarbonization goals, a larger energy workforce will be necessary, meaning all these sectors must engage younger talent and expand potential worker pipelines.

9. Training Needed - Despite a variety of training programs in the county, an increasing need for programs that prepare workers for key roles in infrastructure and housing construction like construction trades and management is evident. Enhancing interest in these careers will require promotional and educational initiatives, along with capacity-building support for relevant training providers.

Shrinking Population