Workforce issues pose the biggest constraint on business growth in Marin County, and it does not look like there is a whole lot of relief in sight, according to responses from 253 participants survey of the business community in the region.
Nearly 60% of those Marin Economic Forum surveyed said they had problems hiring and retaining employees. The results of a survey, focus groups and one-on-one interviews about local business retention and expansion challenges was presented at the organization’s seventh annual “Forecasting the Future” event, held Jan. 29 at the Marin Civic Center Showcase Theater in San Rafael.
“Companies aren’t able to grow because they do not have access to talent to grow,” said Alex Boyd, a business-retention expert who presented the findings of the survey.
He said regional competition for labor across all skill levels indicates the talent pool is diverse, but shallow.
Further, the forum found that potential employees, for example, in the life sciences industry, might prefer to work in the South Bay because of more opportunities for “lateral movement” — get future jobs — in the same business sector.
“We were surprised to hear about high-wage jobs that could afford housing here but aren’t deciding to move here,” said Mike Blakeley, CEO of Marin Economic Forum.
Boyd said the report also found that 37% to 62% of labor is being sourced from outside the county, and that shortage is causing managers to spend more time on recruiting efforts than the core business.
On transportation, 40% of respondents said public transit options are not ideal.
“Marin does not seem to be as well-networked as other areas,” Boyd noted.
Without good public transit options, the area suffers from increased congestion even with slow growth. Businesses report transportation issues is causing them to lose employees, particularly “last mile” connectivity, he said.
When Sonoma Marin Area Rail Transit trains started rolling between Sonoma and Marin counties in mid-2017, business booster groups and local firms told the Business Journal there was a need for shuttles between stations and workplaces.
Ultimately, the risk is that businesses will relocate outside of the county so they can better access the labor pool, Boyd said.
On business climate, he said companies reported having to navigate multiple levels of regulations, resulting in lost time. Increasing costs of compliance also is a factor, especially with inspections for permits and particularly for the foodservice industry, he added.
“This acts as a barrier to investment” in the long term, Boyd said.
He noted many other regions have tried to be more collaborative partners versus the adversarial condition that exists right now. Local businesspeople reported that the area needs a centralized platform where they can find permitting requirements at the city, county, state and federal levels, particularly in secondary languages.
The survey also found that commercial and retail space is lacking, partially because zoning laws are inconsistent and not keeping pace with business trends.
“Having not as much industrial space limits the types of businesses that can operate here,” Boyd said.
Nearly two-thirds of the respondents said they located their businesses in Marin because the owner or founder lives there. Business owners overlook the poor business climate because it is a good place to live, but it runs counter to other areas where businesses locate because of favorable business resources, regulations and access to talent, he said.
There are “fewer incentives” here in Marin than other parts of the area. For example, the county lacks a major university as well as business incubators and accelerators, Boyd said, causing some companies to look outside of the area for specialized business services.
With a solid and strong business-support system, more employers might be more willing to locate to Marin County, he said.
“Many Marin businesses say a lot of the elements for business growth are in Marin,” Boyd said.
Blakeley said that as a result of the research, some people have come forward with business capital opportunities. An undisclosed forum board member is planning to set up a venture fund focused on Marin and Sonoma counties. And the forum has become a sponsor of a new Marin-focused network of angel investors.
The forum’s research included 112 survey responses, 21 interviews and 120 focus group participants.
Results are set to be posted on the project website (forecastingthefuture.org).
Also part of the conference was a forecast on the direction of the local, state and national economies by Robert Eyler, a Sonoma State University economist who consults with the forum. He reiterated his recent outlook published in the Business Journal about the local economy in the new year: No recession readily apparent until 2022, and a pause in Federal Reserve interest rate changes until the second half of this year.
He noted that Marin County’s gross county product is over three-quarters of Sonoma County’s, despite having just over halt (52%) of the residents.
“We are a productive county, regardless of the population size,” Eyler said.
An analysis of unemployment data after the October 2017 wildfire in Napa and Sonoma counties showed rapid recovery in joblessness in the months afterward, suggesting that the events didn’t have a lasting impact. That assessment was echoed in a report for the Sonoma County Economic Development Board earlier this month suggested no lasting impact on local business activity or outmigration because of the 2017 fires, Kincade Fire last year and several public safety power shutoffs this past fall.
“We should not expect a localized recession, regardless of disaster, regardless of PSPS — period,” he said. We’re going to follow regional and state level leads in terms of where this economy is going.”
This story has been updated with more details and quotes from the conference.
Correction: Potential Marin employees, particularly in life sciences, might prefer to work in the South Bay because of more professional opportunities in the same sector, with more such companies there. The original reference noted a preference based on South San Francisco housing opportunities.