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In California, Leisure and Hospitality workers lost almost one-third of all jobs from the pre-pandemic level. Dr. Lozono says it’s time to invest in our workforce’s education, innovation, and creativity.
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Dr. Fernando Lozano: a post-Covid path for the Monterey Bay Region

Dr. Fernando Lozano, Professor of Economics and Chair of the department at Pomona College, gives his take on how the tri-county area will emerge from the pandemic. He is a speaker at MBEP’s upcoming virtual Regional Economic Summit event on May 6, 2021.

What would an economics professor from Los Angeles have to say about the economy of the Tri-County area? Of course, my first thought goes to Monterey or Santa Cruz’s beautiful coasts or the fertile land of Salinas or Hollister.

fernando lozono
Dr. Fernando Lozano

I grew up the son of a car enthusiast. As a child, my family’s annual vacation would be to drive up to Monterey Bay every August for the Laguna Seca vintage races, the Monterey Auction week, and the Concours d’ Elegance at Pebble Beach. Some of my fondest memories with my father belong to those trips, with Monterey Bay as the setting.

If I force myself to look at the data, my perspective shifts away from the place where I spent so many summers. How will the Tri-County area emerge from the pandemic? Which assets does the region have to leverage? The strength of the region lies in the diversity of its labor force and its ability to include all workers in the recovery.

The region has two weaknesses that I will further discuss below: first, the recovery is threatened by social inequality that ranks among the greatest in the state. Second, social mobility amongst workers who grew up in the area tends to be limited. These weaknesses are currently accentuated by the adverse effects of the COVID-19 pandemic, where the Tri-County area ranks amongst the hardest hit areas in California, with substantial drops to employment and small business revenues.

Data from the Opportunity Atlas show that children who grow up in the Tri-County area fare worse on average than any child who grew up on California’s coast from San Diego to Sonoma County. This lack of opportunity is more prevalent for children who grew up in the poorest households. According to a child who grew up in a house positioned in the 25th income percentile will earn $30,000 at age 35. These workers’ earnings are ten percentage points lower than those who grew up in the greater San Jose Statistical Metropolitan Area (which includes the Tri-County) and less than the neighboring Santa Barbara or San Luis Obispo counties.

The pandemic has been harsh for Monterey Bay. Data from the Opportunity Insights project show that the total change in employment in the Tri-County has been a 16.8% decrease in Monterey County and 14.9% in San Benito County. This loss of jobs is the second and third largest among all California’s coastal counties. In contrast, the change of employment at the state level since the “Stay at Home” order has been 3.6%. Similarly, for the period between March 2020 and January 2021, small business revenue registered by the credit company Womply decreased 51.6% in Monterey, 49.8% in San Benito, and 37% in Santa Cruz. The change in small business revenue during the same period has been 29.4% at the state level. Most importantly, the trajectory of the post-pandemic recovery for Monterey Bay differs from that of the rest of the state: while the recovery in terms of employment or small business revenue has been trending upward at the state level, this is not the case for the Monterey Bay, where the data seems to have plateaued after the first stimulus payment.

The pandemic has accelerated the process of automatization, which may increase the vulnerability of low and middle-skilled workers. The pandemic has also accelerated the degree of market concentration. On top of this, low-skill essential workers who barely recovered their purchasing power from the Great Recession remain the most vulnerable. For example, for California, the largest drop in employment is amongst Leisure and Hospitality workers who have lost almost one-third of all jobs from the pre-pandemic level.

What will be the path for Monterey Bay to emerge from the pandemic? Part of the answer is investing in its skills, and the region stands to take advantage of its educational institutions. I have long been an admirer of the region’s higher education institutions: Cal State Monterey Bay and UC Santa Cruz are amongst the most transformative colleges in the United States. The synergy of a young, diverse workforce with the opportunities that these inclusive institutions offer is a blueprint for increased social mobility. The key is enhanced access for local youth and capturing the potential of developing local talent.

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The region’s higher education institutions offer local youth the opportunity to adapt to the changing workforce demands and reinvent themselves.

But education is only part of the answer. The other part of the answer lies in its people, in its diversity, in its ability to adapt and reinvent itself. This is not the first time we face a pandemic; market concentration has come and gone throughout history; and workers have always faced the threat of automation, from the “Spinning Jenny” in Lancashire to Artificial Intelligence today. The difference is that throughout history, we have always invested in people. In their education, their innovation, and their creativity. Only then can we create opportunities for everyone to participate in the economy.

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