An Economic Earthquake

An Economic Earthquake

By Mark Blackney
President/CEO

There’s an earthquake occurring in our economy that is not often addressed. During the next 10 years, 78 million of the most productive, experienced and hardest working people will be leaving the workforce as the  Baby Boomers retire. They will no longer be contributors to the economy and will depend more on services.

 

Everybody knew this was coming, but few have considered the ramifications.  I have had my eyes opened by a fascinating book, When the Boomers Bail by Mark Lautman. He is the founding director of the Community Economic Lab, a private not-for-profit think tank that creates new approaches to economic development.

His contention is that we are headed for an economic crisis based on an upcoming shortage of qualified, skilled workers to fill high paying, necessary jobs.  This seems impossible when you consider that over 14 million people are currently unemployed. But Lautman faces the issue head on – too many do not have the skills or education to maintain the economy.

This can be credited to several factors: a declining birth rate, but more importantly a declining education system that is not preparing students for the working world and has eliminated vocational education.  Add a crumbling family dynamic, a weakened social environment and poverty that do not foster an emphasis on education, and it’s easy to see how Lautman has come to his conclusion.

He goes on to say that for the first time, the number of young, educated workers will be less than the previous generation. Numerous employer and economist surveys have sounded this same alarm.

With a shortage of highly skilled workers to fill many jobs, they can be selective in the jobs they choose and dictate wages and benefits. Companies will compete for their talent.

Lower skilled workers face a different future as there will be many more of them than jobs. Wages will be kept low and their unemployment high thus making them more dependent on city services.

According to Lautman, we have to adjust to this reality and address how communities can continue forward and come out ahead.

He explains that healthy cities have economies that are growing faster than the population. That economy has to sustain city services as well as enhance the quality of life for its citizens. Skilled and qualified workers are needed to maintain that equation.

He bluntly states, that there will be, and already are, cities that are winners and losers. With the shortage of skilled workers, there will be a zero-sum labor force where winning cities will lure the qualified workers from the losing cities.

So, the challenge to every city is to become and stay a winner.

The progress of the local economy can be measured in three ways.

Growth of the economic base – The amount of income that comes from outside sources that include e-commerce, exporting or residents from other cities shopping or attending city events. Since they spend their money then leave, city services aren’t used.

The Service sector – these are local products and services sold to city residents that produce the community’s taxable transactions that run the government and its services.

Net worth of the residents – this is mostly from the increase in housing values provided that the increase comes from “real” factors such as a successful school district that attract residents, rather than from inflation. It also includes increase in monetary wealth that can add to the revenue spending within the community.

Of course, I have to look at the city of Clovis and what the Chamber can do to keep it a winner.

Lautman uses five criteria to judge a city’s health. I believe Clovis is doing pretty well.

The first is a stable and improving ecosystem. This is basically how the city tends to the environment through handling its natural resources. Clovis has done well. It has been pro-active with infrastructure by building the sewage treatment plant, water reclamation system and upgrading the landfill. It has built bike trails and provides decent bus service. Landscaping is a priority and it has been innovative in saving water and electricity. Just look at the large solar panel system on the police headquarters.

Second is low crime and improving. This one is easy. We have a top notch police force that is so good that gang members want to move to Clovis because it’s safe. Don’t worry, they don’t last long here. The police are aggressive in controlling the gang problem including working with apartment managers to make sure none are taking up residence. And our citizens know they can still call for help and get it in their neighborhoods.  We must also credit the police themselves for making concessions during the recession to help maintain their numbers to keep us safe.

World class public education is the next feature. All I have to say is Clovis Unified School District that receives numerous awards every year. I know its talented staff will be able to handle the $140 million less in its budgets after the current realignment of funds to less successful schools. Add Willow International Community College to our list of stellar academic institutions.

Fourth is affordable housing. Housing in Clovis is higher than other cities thanks to our schools and heavy demand, but it is still affordable and doing very well adding net worth to its citizens. The city has been careful with its growth plans ensuring enough services to accommodate new residents

And finally, an economy that is growing faster than its population. Based on recent sales tax returns and the health of the city budget, we fulfill this requirement. Hundreds of new jobs are coming through a state call center, distribution plant near Pelco and the expansion in the health sector. The new Clovis Crossings shopping center is exceeding expectations. It helps build the economic base as people from Fresno and the foothills are now visiting our city and adding to our sales tax income.

All is not smooth sailing for Clovis. We exist in a depressed area with many cities struggling with high unemployment, drop out rates, poverty and budget deficits. We have to work even harder to keep our talented, qualified workers by providing an enticing, hospitable environment.

So, what role is the Clovis Chamber playing in helping the economy grow faster than the population?  Our work with our business members through networking events and educational forums has helped them grow and hire new employees.  Our next step, is to partner with the US Department of Commerce to increase exports and e-commerce that will further expand our economic base. We present the largest, 2 day events in the Central Valley that bring in hundreds of thousands of visitors who, according to the city, provide over $6 million of income to local businesses.

We are addressing the qualified worker problem by constantly supporting Clovis Unified’s efforts. And, of course, by presenting the Young Entrepreneur’s Academy to create new business owners, we are increasing the employer pool.

We all have to realize that we are facing a brand new reality in our economic future. If you have children, you must make sure they become highly skilled, qualified workers in whatever field they aspire to. And we have to handle the new dynamic of a growing sector of retirees and low skilled workers who demand more services. That means we all have to be active members of our communities to make sure they are winners.

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