Moody’s Analytics, the company that provides economic analysis, credit risk data, and risk management solutions recently released a report on Sonoma County.
Examining employment, job growth, affordability, and the economy, the report identifies the major challenges facing Sonoma County. Among its findings:
Healthcare is still the standout industry, much like the case nationally, and its contribution to keeping the labor market chugging along cannot be overstated. Healthcare job growth has more than doubled total employment for the better part of the last two years, and the county’s healthcare industry is hiring at a more rapid pace than the region. In the near term, the outlook is still bright. The aging of the local population will necessitate additional hires as the elderly consume a disproportionate share of health services. In the long term, this recent pace of growth is unsustainable.
Population trends have improved slightly over the last few years, but Sonoma still suffers net out-migration. A dwindling base of young working-age residents will have two effects. It will limit the supply of workers necessary to keep healthcare employment trending higher. It will also be a headwind to growth as a smaller local population requires fewer healthcare workers to service it.
These demographic challenges are the biggest obstacles facing the county and the fundamental reason for the slightly below-average medium-and long-run outlooks. Out-migration, largely due to affordability issues that have intensified in the last decade due to the blockbuster run of house price appreciation, will hamstring the growth in various industries.
Fortunately, there appears to be some respite in the future. House price appreciation will take a breather when more supply comes on line as mortgage rates retreat. This will give time for incomes to catch up and bring affordability down, albeit slightly.
Migration patterns, while still a net negative, are improving. Population losses in 2023 were the smallest since 2016, and we expect this to improve further. One upside is Sonoma County’s relative affordability compared with neighboring Napa County and most of the Bay Area. Combined with the mortgage rate lock-in effect, this will muffle outmigration slightly in the years ahead.
“A dwindling base of young working-age residents will have two effects. It will limit the supply of workers necessary to keep healthcare employment trending higher. It will also be a headwind to growth as a smaller local population requires fewer healthcare workers to service it.”
Hmmmm. So . . .Less young people = less healthcare workers. And smaller population = fewer healthcare workers needed. And the problem is . . ????