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Reducing development costs, licensing and startup fees will create more jobs

By   /   Thursday, November 12th, 2015  /   Comments Off on Reducing development costs, licensing and startup fees will create more jobs

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Labor markets have been weak since the Great Recession. Job creation has been slow and labor force participation has been falling.

While the Tri-Counties region has performed similarly to the nation on aggregate, its largest county, Ventura County, has underperformed the nation and its northern neighbors.

The recession brought significant contractions in non-farm jobs for each of the three counties, 8.8 percent, 6.6 percent and 8.6 percent for San Luis Obispo, Santa Barbara, and Ventura counties, respectively. These compare to about a 6 percent contraction for the nation.

The Tri-Counties’ non-farm jobs level recovered to their pre-recession high in January 2014, a few months before the national recovery in March 2014.

Since April 2012, non-farm job growth rates have varied considerably between the counties. San Luis Obispo County’s job growth rate has been double that of Ventura County.

Nationally, the civilian labor force growth rate fell substantially in 2010 and eventually declined. The local contraction was greater.

The national labor force growth rate recovered a bit in 2011, but it has been mixed since. Recently, as of late 2014, U.S. labor force growth has accelerated, while the region’s labor force has grown more slowly. The rate remains close to zero.

Most of the Tri-Counties’ labor force decline has been due to Ventura County, where the growth rate has been negative for two years.

The Great Recession caused industrial sector changes. The construction sector, manufacturing and financial activities all fell noticeably.

Education and healthcare services, and leisure and hospitality services, gained substantially. Agriculture and professional and business services also gained but more modestly. The remaining sectors did not change greatly.

Given the dissimilarity of the losing sectors of construction and manufacturing and the larger gaining sectors of education, health, leisure and hospitality sectors, it is likely that these changes in the job market contributed to a rise in the unemployment rate and to decreasing economic activity during the years since September 2007.

In contrast to the decades prior to the Great Recession, Ventura County’s job growth has slowed relative to other areas.

This means that regional job growth has slowed noticeably, because Ventura County is half of the Tri-Counties’ non-farm job market.

Given the budget constraints that local governments face and the long-run national security realities that the Naval Construction Battalion Center faces, the overarching economic development strategy should be to boost Ventura County’s private sector economy.

Promoting Ventura County’s private sector is potentially controversial. I restrict my recommendations to local policies and ignore political difficulties.

A primary recommendation is to ease real estate development costs, commercial and residential. These costs are high, driven by uncertainty, lengthy approval processes and many fees.

Each of these increases costs and adversely affects economic growth.

Existing companies are very important. Bringing businesses to a high-cost environment is particularly difficult.

We should do everything we can to facilitate the success of existing local businesses. Otherwise, as we have seen, the companies will expand or relocate outside the area.

Business licensing and startup fees should be reduced or eliminated. Eliminating business startup fees would send a signal that the region is serious about job growth, with a small general fund impact.

Infrastructure promotes private business. Good things are happening at the Port of Hueneme. However, we do not have a major airport.

Roads are important and not just Highway 101. Ventura County needs improvement of other arteries for goods moving to and from the port, and for commuters and tourists to and from key destinations like Channel Islands harbor and Ojai.

• Dan Hamilton is an assistant professor in the School of Management at California Lutheran University and director of economics for the CLU Center for Economic Research and Forecasting.

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