Robert Eyler, president of Economic Forensics and Analytics and a professor at Sonoma State University, offered employment statistics for Napa County on Thursday at Impact Napa.
—At Impact Napa, a conference sponsored by the North Bay (California) Business Journal on Thursday, economist Robert Eyler sent a sobering message to attendees: The labor situation in Napa Valley may get increasingly challenging, forcing them to pay higher wages and adopt more mechanization.
This forecast results partly from the increasing demand and wages for workers in nearby counties, plus limited housing in Napa Valley.
Continued improvement in the Mexican economy, which is growing at 3% per year, and changes in immigration policy and enforcement would only make things worse, Eyler said.
Looking at payrolls
As the president of Economic Forensics and Analytics and a professor at Sonoma State University, Eyler provided statistics and forecasts based on payroll records, but because of Napa’s unusual employment patterns, the numbers don’t tell a complete story.
Simply put, a high percentage of people who work in Napa County aren’t on local payrolls: Either they’re contract workers paid in another county or they work alone or in companies with fewer than four employees, which aren’t included in the numbers.
Breakdown of employers
Specifically, Napa County has 15,000 employers for only 91,000 workers including government employees and the self employed. About 1,200 of the employers are farms.
Only about 5,000 of the employers employ more than four people (which aren’t considered “payroll companies” in the data), while 10,500 companies have fewer than four employees. Employment also undergoes a seasonal surge from June to October, due to both harvest and tourism, and that is likely to continue, too.
The good news is that many people want to work in Napa, so there’s not likely to be a worker shortage developing, but employers may have to pay them more.
More and more workers are coming from outside the county—including the contract workers. Relatively cheap fuel encourages them to come from the larger population centers nearby, while high housing costs in Napa force many to live elsewhere.
A place to call home
There’s been a large shift in where the Napa labor force is living. In 2002, 37% of the labor force came from outside the county to work in Napa Valley. Now, almost 50% can say the same.
In addition, a shift has occurred in the number of workers commuting into Napa. Slightly more workers are coming from Sonoma County than Solano County, as they have in the past. And populations from both counties comprise about 15% of the work force.
The workers are getting older, too. The number of workers 55 or older has more than doubled (2.3 times), while those 29 or younger rose modestly until 2008, then dropped to only 10% above the level in 2002.
Many residents of Napa County work outside the county, too, with 32% going to Solano County and 18% to Sonoma. Perhaps showing the increase in telecommuting, about 2% work in Los Angeles and San Francisco, too.
The city of American Canyon, on the southern border that Napa County shares with Solano County, shows an interesting pattern, with 96% of the city’s employed residents working outside its borders. Residents of American Canyon are going mainly to Solano County, including Vallejo, whereas in 2002 they worked mainly in Napa County.
Eyler said that one clear trend in Napa Valley is that the rise in grape tonnage since 2000 suggests outside contract labor and mechanization are filling local labor gaps.
Interestingly, Napa County’s mix of employment hasn’t changed much since 2000. Six industries dominate hiring: hospitality, professional services, retail, winery, health care and government.
He also noted that winery wages are generally lower than the average Napa County wages, yet many winery job skills are transferable to other industries. Eyler cited this among the factors that may force wine industry wages to rise. The sales sector, for example, has a mobile work force that can easily switch into hospitality or administrative jobs such as bookkeeping.
Moreover, the increasing importance of direct-to-consumer sales will require workers who are more technically skilled, and they’ll expect higher pay.
Wine industry competition
The booming businesses of nut and fruit producers in California’s Central Valley provide increasing competition for seasonal labor, but many Napa wineries are trying to train their personnel for other positions to keep them employed year-round. Some are adding olives and other crops that complement vineyards.
They’re also paying workers better and providing benefits like insurance to create a stable work force.
On the other hand, many people enjoy the lifestyle of Napa Valley, so it will take higher wages to lure workers away from the county. That is happening, however. Wages in Solano County have risen above those in Napa and Sonoma counties since about 2005—and Solano County’s wages are about 10% higher than they were in 2005.
The forecast from the regional watchdogs
The Association of Bay Area Governments (ABAG) and the Metropolitan Transportation Commission (MTC) have forecasted growth for Napa County—as they have for all Bay Area counties—but Eyler is skeptical of their projections.
The joint group predicts there will be 163,000 people in Napa County by 2040, an increase of nearly 20% over the 2010 population of 135,000. They also predict that employment will grow by 27%, which equates to 19,000 more workers than there are now.
They see aggressive growth—but not in the wine sector:
• Professional services will grow by 24%
• Health care by 22%
• Hospitality by 17%
• Construction by 17%
• Vineyards by 4%
Meanwhile, ABAG/MTC expects winery business will shrink by 2%. If the forecast happens as is predicted, it will demand more imported labor and rising wages. It’s unlikely that the amount of housing will increase to compensate for that employment growth, although technology could provide a substitute for some of the labor needed.
Eyler summarized the implications for Napa County’s growers and vintners:
• More workers will live in other counties.
• Wages are rising in vineyard, hotel and restaurant jobs.
• Competition is rising for skilled workers in sales.
• The labor supply in Napa County is becoming more sophisticated and ethnically diverse.
• Employers are likely to expect more education from their workers.
The local labor pool in Napa County is getting older and more sophisticated due to the aging population and relatively high cost of living that accompanies the quality of life in Napa. These factors are both good and bad for wineries trying to hire people. They should expect to need a better-educated work force to meet global competition and audiences. There will be a greater demand for workers who speak Spanish, which will be necessary both inside the organization and to market to new audiences, as well as Mandarin and Cantonese for projected sales in China.