NC Media Watch

A quest for reason and accuracy in letters to the editor, guest editorials and other issues of interest to the citizens of Western Nevada County.

Sunday, January 30, 2005

What kind of an economy do we want?

Here are some of my thoughts, which I shared with the Nevada County Community Leadership Institute when they asked: What kind of an economy do we want?

I would like to have a balanced economy, one that can weather economic down turns, by including multiple sectors: recreation, tourism, applied technology manufacturing, and construction. However, one has to be aware of local and global trends in defining an economic vision. For example, manufacturing jobs are going to the low cost labor regions of the world. With the rising California and Nevada County cost of living, especially housing, it is hard to compete in the global labor market. The combination of local housing costs, and a global trend in manufacturing, creates some major hurdles for a balanced economy.

Other trends will have a similar impact:
The California’s education system is not keeping up, with China, Japan and India. China now graduates twice as many engineers as the US, and they speak English as a second language. Most of our engineers only speak English. We have been the innovators, the designers and creators of products in our local applied technology cluster (some call it high tech, but it is really applied technology). Not much longer. This is a trend we must adjust too in defining a local economy. Professor Fountain, speaking at Rebound 2005, pointed out that the Sacramento region lost 5,000 high tech jobs in 2004; they moved to lower cost regions in the county and overseas. Without 5,000 construction jobs to replace them, the region would have suffered economically. Professor Fountain also pointed out the construction boom in the region is coming to an end, as building has outstripped available infrastructure. The loss of high tech and constructions jobs in Roseville and Folsum could reduce the high percentage of commuters now leaving Nevada County.

The construction industry contributes over 13 percent to the California economy. We were most fortunate to have a strong construction industry in Nevada County, most likely contributing more than the state average of 13 percent to the local economy. If our local government does not build new infrastructure: roads, sewer, water, power, telecommunications, and then our construction industry will soon grind to a halt also. Over the next five years, Nevada County could lose 10 percent, or more of the construction industry’s contribution to our local economy.

The other local trend that must be addressed is demographics. The over 60 population is at 22.6 percent. In 15 years, it will be 38.4 percent, f we hold our population at 92,000. In 15 years we will add over 15,000 more seniors to the over 60 population. If we grow to 110,000 it will be closer to 20,000. Think about the health care implications, the staffing demands on our hospital and doctors? Where will the health care workers live? Most staff and clerical workers do not make enough salary to afford houses that cost over $350,000. Think about the cost of housing in 15 years, at the current growth rate in housing costs? Larry Burkhardt at the ERC has some freighting graphs.

Given the above trends, the loss of applied technology jobs and a growing senior population, it will be difficult to maintain a balanced economy. Demographic forces alone will drive us toward a retirement community economy, with a demand for health and care services. Unfortunately service jobs are on the lower end of the salary scale. That means most workers will have to commute into the community. We will lose large chunks of our younger population, who go home to their families each night. Our grade schools will decline as young families continue to leave Nevada County. The cost of services will increase demands on local government, resulting in increased fees and taxes, as the private sector is unable to provide the needed services, due to increasing labor costs, and declining federal benefits. Millions or baby boomer are going be retiring in the next 15 years. There are not be enough young people in the labor pool to back fill the costs, thus federal and state benefits will have to decline.

I could go on and on. When defining an economic vision for Nevada County, I ask that NCCLI Study team consider both local and global trends. We live in a global world and must find our economic niche, or we will suffer the consequences of a failure to think, vision, plan and then act.

Tell me what you think

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