The Four E's--Population Growth in the Peninsula and Region | Invest & Innovate | Steve Levy | Mountain View Online |

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By Steve Levy

The Four E's--Population Growth in the Peninsula and Region

Uploaded: Jul 18, 2015

In 2014 the Bay Area added 85,000 residents of which 40,000 were on the peninsula and 21,600 in Santa Clara County. The regional growth rate was a little over 1%, higher than the state or nation but well below growth rates from 1950 through 1990.

Births continue to add to the regional population although Bay Area birth rates are below replacement rates, below the national average and well below historical levels. But the above average population growth is the result of above average job growth.

Bay Area firms like Apple, Google, Facebook and LinkedIn continue to add jobs and plan for additional expansions. Data released last week show another strong quarter for VC funding in the region with the Bay Area again capturing 50% of national funding with second quarter funding exceeded only by the second quarter of 2000.

Job and population growth are expected to slow in the coming years but remain near 1% per year, declining further after 2025.

Below are some beginning thoughts on how population growth relates to the economy, environment and equity.

Population growth and the economy

High tech firms, who have a choice of locating anywhere, continue in large numbers to choose the Bay Area for expansion and start-ups. They do so for a variety of reasons including the ability to attract talented workers. Despite the pressures of high housing costs and congestion, individuals and families continue to choose the region and peninsula as evidenced by the job and population growth and the demand for housing. The region saw rising sales and home prices in June. housing sales

The influx of new residents, many from abroad, has supported the growth in jobs, wages, profits and tax revenues and the sharp decline in unemployment that is currently experienced in the region.

Without the ability to attract workers, these positive aspects of economic growth would be diminished. While the most benefits accrue to those in the tech sector, the economic growth has spurred retail spending, construction and allowed local governments to rehire teachers and public safety workers.

But, as everyone knows the job and related population growth has not brought only positive impacts.

Population growth and the environment

The surge in job and population growth has led to an increase in travel, both for work and other activities, and a surge in home prices and rents.

Our roads are more crowded despite increases in CalTrain and BART ridership. Although Bay Area school enrollment has not grown, some districts have seen increases while others see falling enrollment.

In general, coming out of the recession, public services did not keep up with the pace of population growth.

From a peninsula perspective, most communities are dealing with increased congestion, travel times and parking challenges—again despite rising public transit use.

So far the measures to protect regional air quality have kept the air better than decades ago despite the growth. Water may be a long-term issue if the drought continues and responses cannot be adopted.

From a traffic and water perspective, would it be better for Bay Area residents if growth slowed or moved elsewhere, probably yes but at some cost to economic vitality. But while an individual city might choose to limit job growth, the collection of Bay Area communities on the whole welcomes job growth.

But from most environmental perspectives, growth here is better than elsewhere. Bay Area residents use less energy and water than in inland counties adjacent to the region or in the Central Valley. Global emissions are, indeed, global and it is hard to argue that other areas have more stringent emission reduction policies than California.

Population growth and equity

The benefits of economic growth are rarely shared equally. The largest equity challenge from my perspective about recent population growth is the impact it has had on rents and home prices. For most families, the cost of housing has risen far faster than their incomes, including for most middle income families. There are other equity issues in our region and society but housing and the associated costs of commuting (time and money) are the ones most associated with population growth.

Would rents and home prices have increased less if the recession were still around, almost certainly the answer is yes. Would they have increased less if we had built more housing, again the answer is almost certainly yes.

In either case it is unlikely that rents and home prices would not have increased as the economy recovered.

I have lots of ideas about how to address these multiples priorities and growth challenges but I want to hear from readers first.

Do remember that this column is about the peninsula and region and is not Palo Alto specific.