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6,400 Workers Gone: What to Do? Editor’s note: For all the employers who put up a “We’re hiring” sign and are still looking, here’s the explanation: 6,400 fewer workers. Will the job market ever return to normal? Read on. ••• he Santa Cruz County Workforce Development Board contracted with BW Research of Carlsbad to prepare the “2022 State of the Workforce Report.” This year’s report has particular importance as the local and global economy recovers and evolves from the disruptions of the COVID-19 pandemic. These disruptions have reshaped labor markets and the balance of power between employers and employees, resulting in new challenges. Another challenge is skyrocketing rental rates: Between 2019 and 2021, the average rental rate for a 2-bedroom apartment grew from $2,400 to $3,000 per month. Half of renters spend more than 35% of their income for housing, leaving them less discretionary income to spend – and this may make talent attraction harder. This report highlights the disruptions and include deep dives into industries that have seen the greatest workforce disruptions: Healthcare, hospitality, and agriculture. Key Findings 1) Santa Cruz County’s labor market has shrunk. In December 2021, there were 6,400 fewer workers than in December 2019. However, the unemployment rate in December 2021 is roughly the same (5.4%) as it was two years prior (5.2%). This represents nearly a 5% decline in workers over two years. Labor force participation is part of the problem; between January 2015 and
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2022, labor force participation in the county declined roughly 9%. (This means more people opting not to work.) Not all of the decline is pandemic related. Labor force participation rate between January 2015 and January 2020 fell 5% before COVID-19 had arrived in the U.S. An aging population in Santa Cruz County likely plays a significant role in these trends. The county has more people 55 and older compared to the state as a whole and more people age 18 to 24, thanks to UC Santa Cruz. Combined with early retirements driven by COVID-19, this has led to an accelerated loss of workers and a lack of younger workers to replace them. The California Department of Finance estimates a net 4,600 residents moved away from Santa Cruz County between July 2019 and July 2021, representing a notable decline in population (273,000 in 2020). Many were likely low-and middleincome workers. 2) Job quality in Santa Cruz County has improved from 2015 to 2021. There has been an increase in higherpaying, higher-skill jobs and a decrease in lower-paying, low-skill jobs. Higher-earning jobs pay an average of $75,000 a year. The lowest paying jobs pay on average less than $45,000 a year. In the middle are jobs paying $45,000 to $75,000. While local job quality remains lower than the statewide average, the county has seen improvement. In the third quarter of 2021, there were 1,300 more highest-paying Tier 1 jobs, 850 more Tier 2 jobs and 1,100 fewer lowestpaying Tier 3 than in the third quarter of 2015. This indicates a shift towards a more skilled, more educated workforce with higher median annual earnings.
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3) Industries with the lowest average annual wages per worker all experienced declines in employment between 2015 and 2021, while many better-paying industries saw growth. About 2,200 accommodation and food services workers were lost between 2015 and 2021 — down 19%. That sector comprises 10% of the county’s jobs. Healthcare and social assistance--which accounts for 15% of countywide jobs and is one of the mid-earning industries--grew by 2%. Construction industry, another midearning industry, saw the most growth, 67%. Although the information industry is among the highest-earning industries in Santa Cruz County, it shrank the most, 46%. 4) Santa Cruz County residents changed their shopping and employment behavior, and they have not returned to pre-pandemic patterns. As of March 2022, people in Santa Cruz County were still spending 7% more time at home than they were before the pandemic, and they were spending 19% less time at retail and recreation locations, which include shopping malls and movie theatres. The nature of work may have also permanently changed for many; people were spending an average of 27% less time at workplaces than before the pandemic. The rise of remote work may have significant impacts, including changes in commuting patterns and businesses that relied on office lunch hours for revenue. 5) The healthcare industry, which represents 14% of jobs in the county, has seen significant disruption. According to a fall 2021 nationwide poll of healthcare workers, 18% in the healthcare industry had quit their job and another 12%
