Bay Area Economy is Rebounding

The Bay Area economy has bounced back from the recession, but experts warned Monday that long-term challenges still loom.

The region also must figure out how to expand the benefits from the economic rebound beyond the well-paid and highly skilled workers in the industries that are rebounding most strongly.

Those assessments emerged from meetings Monday at Stanford University and in San Francisco that are part of a wide-ranging effort by leaders in business, labor, politics and academia to improve the struggling California economy. The group, known as the California Economic Summit, is attempting to find solutions that don't depend on marching orders from federal or state politicians.

"The can-do spirit is there," George Shultz, the former U.S. secretary of state who is co-chair of the leadership group from the economic summit, told this newspaper. "Rather than wait for people in Sacramento or Washington to solve things, we can grapple with the problems ourselves."

The gatherings, which include the Bay Area Regional Forum meeting in San Francisco, will be used to develop an economic plan for the state and its urban centers that will be presented at the first-ever California Economic Summit in May.

"We want to be stewards of California and set aside our differences," said Julie Meier Wright, a leader of the management team for the summit, which will be held in the South Bay. "By collaborating, we can determine what is best for the state." Wright is former secretary for trade and commerce in Gov. Pete Wilson's administration.

The attendees at the San Francisco meeting received an update on the Bay Area economy and were told that the short-term rebound can't mask ongoing perils for the region.

"It's great to see that the Bay Area has recovered and that we are growing the region's GDP and job market," said Alex Maasry of McKinsey, a consulting firm that prepared the latest Bay Area Economic Profile.

But he added that the region's economy faces not merely continuing problems from the downturn but structural challenges as well."

To be sure, the Bay Area job market for technology, knowledge industries and high-end manufacturing has surged. But these industries don't always produce huge numbers of jobs, and job growth hasn't benefited all parts of the region's economy.

"It's almost a tale of two economies," Maasry said.

The Bay Area's 9 percent jobless rate is still worse than the national rate of 8.3 percent, according to McKinsey's research.

Those attending the two gatherings were told that the primary challenges facing California's economy are the statewide educational system, funding gaps for transportation and transit, the business climate, and environmental regulations and red tape.

"The question is how to solve these problems without compromising our high environmental standards and quality of life," Wright said.

At the forum in San Francisco, panelists representing the Bay Area's primary urban centers laid out their primary goals for economic improvement.

"We are not looking for handouts, we are not looking for relief," said Russell Hancock, president of Joint Venture: Silicon Valley Network. "We don't want a government that embarrasses us. California is becoming a laughingstock."

Hancock also would like to see tax reform and for the California congressional delegation to use its clout more effectively.

Karen Engel, executive director of the East Bay Economic Development Alliance, said policies must be crafted to keep homegrown businesses from moving away.

"Only about 5 percent to 6 percent of our annual job growth comes from relocations into the East Bay," Engel said. "We want to be a region that once a business starts here, it will want to stay and continue to grow here."

For the statewide effort to be successful, California's diverse and sometimes competing urban centers may have to take a more cooperative approach.

"It will be very important that there is coordination among the regions," said Laura Tyson, a professor at UC Berkeley's Haas School of Business, a top economic adviser to former president Bill Clinton and one of the key players in the California Economic Summit.