Economists say local job market ‘defies gravity’
It is expected to grow by about 2.1 percent during the next year
SAN FRANCISCO >> The Bay Area job market will out perform the nation during 2018, but skyrocketing housing prices might imperil the region’s economy, two economists said Monday.
“The Bay Area is defying gravity,” Jerry Nickelsburg, director of the UCLA Anderson Forecast, said during a conference co-sponsored by the Anderson Forecast and UC Hastings College of the Law.
Total non-farmpayroll jobs are expected to grow by about 2.1 percent this year in the Bay Area, by 1.9 percent statewide and by about 1.6 percent nationwide, the Anderson forecasters projected.
“The Bay Area is the most dynamic, most robust metro area” in terms of its job market and economy, William Yu, a UCLA Anderson economist, said during his presentation.
The employment upswing in the nine-county
region has occurred as more and more regions in California are enjoying a boom.
“We are just growing like crazy in California,” Nickelsburg said. “California is at full employment.”
The U.S. economy also should see strong growth, the economists said.
One area of worry that could trigger an economic slowdown: the battered brick-and-mortar segments of the retail sector.
“We have too much investment in retail; we have toomany retail jobs,” Nickelsburg warned.
Still, in the Bay Area, the technology sector’s extraordinary expansion will continue to underpin the region’s economy.
“High-tech companies are the main drivers of jobs, productivity and wage gains in the Bay Area,” Yu said.
Yu gave an example of the hiring of an employee by a tech giant in Silicon Valley that was akin to the economic multiplier often assigned to manufacturing jobs.
“Let’s say Google hires a new employee,” Yu said. “That may be one additional job, but it’s not just that. This new employee with a relatively high wage will live in a good place, go to a good restaurant, go shopping and buy services.”
Nevertheless, this techdriven economy in the Bay Area carries plenty of risks.
“Tech jobs are much more volatile than non-tech jobs,” Yu said.
Yu reminded the audience that following the dotcom boom, tech jobs plummeted at a much steeper rate than jobs in the nontech sector.
The expensive housing market was deemed to be perhaps the greatest peril for the region.
“High housing prices are a risk to the Bay Area economy,” Yu said. “It’s lucky that the the East Bay still provides affordable housing for people who work in Silicon Valley and San Francisco.”
Some panelists also expressed concern that the impact of the tech boom could create a wider chasm between economic haves and have nots. “We have economic bifurcation” in California, Lt. Gov. Gavin Newsom said while leading a tech panel during the conference. “You have Palo Alto versus East Palo Alto. Here in San Francisco you have the Tenderloin and the Marina district. You have two different worlds in one city.”
Still, the outlook for the Bay Area economy remains bright, despite the challenges.
“Bay Area job growth and personal income are expected to remain resilient in 2018, but will slow down in 2019 and 2020,” Yu said.