How fast people get back to work to determine Solano’s economic recovery
September 25 2020Daily Republic September 25, 2020
By Todd R. Hansen
FAIRFIELD — Solano County’s economic recovery depends a great deal on getting its workforce back to work, but the real challenge may be defining what those jobs look like.
“Some businesses will not come back,” Robert Burris, president and chief executive officer for the Solano Economic Development Corp., said in an interview after a virtual program on the county’s economic recovery by economist Robert Eyler, a professor at California State University, Sonoma, and principle of Economic Forensics and Analytics out of Petaluma.
Economist Robert Eyler speaks at the Solano Economic Development Corporation’s breakfast event at Travis Credit Union in Vacaville, Thursday, Aug. 15, 2019. (Robinson Kuntz/Daily Republic file)
Eyler also said there are going to be small businesses that will not come back from the effects of the Covid-19 pandemic, and went so far as to say, when questioned, that CARES Act and other funding resources should go to those companies that will survive rather than trying to save those that may be doomed.
“The point is we know small businesses are hurting,” Eyler said. “Some are going to make it, some are not.”
He cited a Harvard University study that shows about 31.6% of small businesses in Solano County – 25 employees or fewer – that were open Jan. 1 were closed as of Aug. 9. The question is how many will stay closed.
Eyler was asked what those closures might mean to the character of the communities, especially if the vacancies pop up in the downtown areas. He admitted that could be a recovery issue as well.
He added that if the downtown areas are severely affected, that will put additional pressure on businesses outside the downtowns that depend on consumer traffic for their own successes.
“But there is a way to put people back to work even if their traditional jobs are lost – and retraining is part of that,” Burris said in the interview.
He said that job retraining is one of the traditional roles the Solano Economic Development Corp. plays, as well as helping existing businesses to expand and to attract new industry into the county.
Another pressure on those traditional jobs is whether businesses look to technology and automation upgrades as they move forward.
Burris said that expanding the manufacturing base and other business sectors that have proven to be more resilient through the pandemic will help the county when the next emergency comes.
Eyler said Solano County may also benefit from what is showing to be an exodus out of larger urban counties, and those individuals bringing their businesses or their capital to their new locations.
He noted how many of the state’s more rural counties have fared better through the pandemic than more urban centers, and not necessarily because of farming, which has helped Solano County.
There is a belief among some economists, Eyler said, that rural counties are benefitting from business investment by people getting out of the urban centers.
Solano County, he said, is a mix of rural, suburban and urban centers.
Eyler said the key to recovery will be business stability, and he defined that as the point at which the business owners feel secure enough to begin to rehire employees and regrow their businesses.
He said when that rehiring begins, that is when Solano County will see its economic recovery speed up.
But Eyler also said that is influenced by domestic policies, meaning when the state will allow those businesses to reopen in the Covid-19 environment.
Burris was not willing to dive into the political pool on whether the state is being too slow in those decisions, but said the one thing Solano County does not need is a “roller coaster” economy.
He said businesses do not do well when they are allowed to progress only to be shut down, again, which already took place once in Solano County and across the state. Another rise and fall would negatively affect their sustainability, and another critical factor in the recovery: consumer confidence.
“The key is we see consistent, positive numbers,” Eyler said about residents coming off unemployment, as well as bank investment and consumer spending. “These are the signs of recovery.”
Consumer confidence, Eyler said, will be influenced by the presidential election, global economic factors that could affect the equity markets as well as if there is another Covid-19 surge through the fall and winter seasons.
“We’ve got to wear our masks and wash our hands, folks,” Eyler said.
He said the November election could also have an influence on the future of Travis Air Force Base, something he said the county will have to watch closely going into 2021.
Although not mentioned specifically, Travis does seem a bit more secure because of the commitment already made by the Air Force to bring in the KC-46 Pegasus mission and its support group to the base.
Eyler’s presentation also included a look at the housing market, which Eyler said is still doing fairly well in Solano County as median prices continue to rise in terms of both asking price and purchase price.
The economist also noted that projections show the recession created by the pandemic will likely be a five-year recovery period, which compares to the seven-year period from the Great Recession.
Overall, according to the Federal Reserve Bank of Philadelphia, the gross domestic product for 2020 will be down 5%. However, the projections for 2021 is a 3.2% growth rate, followed by 3.5% in 2022 and 2.2% in 2023.
The GDP is the market value of all the final goods and services produced in a specific time period.
Eyler said Solano County may not see the same level of pre-Covid unemployment numbers until 2024.
Most people who have Covid-19 experience only mild or moderate symptoms, such as fever and cough. Some people, especially older adults and those with underlying health problems, experience more severe illness such as pneumonia and at times, death.
The vast majority of people recover. The World Health Organization reports people with mild illness recover in about two weeks, while those with more severe illness may take three to six weeks to recover.