In search of a future for Brentwood, CA … and the U.S. work force

Raymond Alvarez: Earthquakes, a great flood, fires – seemingly nothing could stop the rocking ’90s and California’s Contra Costa County, an area bounded by high tech companies to the south and industrial giants in the north.

Then came the fourth horseman of the apocalypse, the real estate bust.

Gravity finally caught up with the region that somehow managed to absorb a Dot.com bust and the familiar problems that strike the Golden State with some regularity. Fortunes turned in 2007. Suddenly, a robust housing industry fell quiet. Home prices plummeted. Real estate professionals scurried to grab the vanishing service jobs in the area. In 2008, The San Francisco Chronicle labeled the commuter town the poster child of the housing collapse.

When ordering by Internet, you were likely to have your merchandise shipped to the tiny neighborhood made famous by O.J. Even Bay area residents confessed to being confused. Brentwood the municipality was that far off the map.

In good times, the incorporated town west of Stockton was in the nation’s sweet spot. Vasco Road, a two-lane strip of asphalt connecting high-tech dotted Pleasanton-Dublin, was upgraded from country road to highway. BART was extended to Pittsburg, about a half hour’s drive from Brentwood.

By the late 1990s, the Bay Area economy was red hot and home seekers came looking in the burgh beyond the hills. Some raved about the small town feeling. Relatively affordable home prices and an easy 40-minute commute were deal signers for many. According to the Chronicle’s statistics, Brentwood is home to more than 53,000, quintupling in size from 1990 to 2007. The only faster growing area was a new state prison.

Today, Brentwood is pinning its hopes on Obama’s Stimulus Package.

Could lightning strike twice? Could transportation improvement ignite another growth spurt? Some are hoping that the BART extension that would bring rail service right to their door may be just what the recession doctor ordered. There can be little doubt a housing rescue would arrest falling home prices. But what if there are no jobs at BART’s next stop.

The more provocative question might be: Does Brentwood have the stuff, or can it get the stuff quickly, to make a recovery and even become a model for Obama’s future economy?

Recovery won’t come too soon for some. In a normal month in Contra Costa, 16,000 families apply for some type of public assistance, including Medi-Cal, food stamps and the like.

“In the month of January alone, our applications jumped 60 percent over what they had been in previous months, and a lot of the people now coming into our offices to apply for food or medical assistance, are people who have never been to a social service office before,” said Joe Valentine, executive director of Employment & Human Services who spoke to San Francisco’s KGO-TV.

Housing prices have plummeted

Contra Costa can be found among the 35 counties with the highest foreclosure actions identified in USA Today.

As Californians face an uncertain future, more are joining their ranks. The economy lost 39,500 retail jobs in February, and has eliminated more than 500,000 in the last year. California’s inland area reports 10.1 percent of residents there are jobless.

The stimulus spending bill includes $4.5 billion in additional monies for job training. But under current programs, many of those eligible for training are given vouchers that cover only a semester or two at community colleges. Careers in growth industries like biotechnology and health care typically require at the minimum two-year degree programs. Meanwhile, community colleges are straining under the weight of a massive influx of new students.

City of Brentwood, CA

In December 2008, Brentwood’s mayor told local real estate people the worst may have passed. City data show in November, there were 396 homes on the multiple listing service, a decrease of 33 percent or 194 units from the 590 homes on the market one year earlier. The key to the market recovery, in Brentwood and California in general, will be the disposition of the foreclosed inventory, the mayor says.

In his address to Congress, Obama called on laboratories, universities, and the imaginations of entrepreneurs to bring bold action and ideas to fore. Obama understands that linking bold ideas with timely action is the way to take the country forward, Craig Benson and Leonard Schlesinger of Babson College wrote in a recent article carried by CBSMarketwatch.com.

Sustaining whatever progress in stabilizing housing will depend on jobs, or maybe an explosion of entrepreneurial frenzy. Twitter co-founder Evan Williams let Twitter followers know last week that he had been invited to a White House economic summit.

Here is the economic rescue outlined by the New York Times:

A $75 billion housing rescue could help as many as 9 million American homeowners reduce mortgage payments.

Loan modifications. Lenders and other services can immediately begin making modifications that could help up to 4 million at-risk homeowners stay in their homes. To be eligible, homeowners with a first loan can have an unpaid principal balance up to $729,750.

Lenders and other services: Services also must follow an established process to reduce the monthly payment to no more than 31 percent of the borrowers’ gross monthly income. Services will get financial incentives, such as an upfront fee of $1,000 per modification, to encourage participation.

Persistent problems of the economy could easily derail recovery if employers don’t begin to rehire workers. So, the next question: What will stimulate hiring and, in the alternative, can workers hire themselves?

“The decimation of employment in legacy American brands such as General Motors is a trend that’s likely to continue,” Robert E. Hall, an economist at Stanford University’s Hoover Institution told the New York Times. “We have to stimulate the economy to create jobs in other areas.”

Going out of business in Brentwood

The economy lost 39,500 retail jobs in February, and has eliminated more than 500,000 in the last year.

The stimulus spending bill includes $4.5 billion for job training. That only begins to address an area long neglected, Andrew Stettner told the Times. In current dollars, the nation devoted the equivalent of $20 billion a year to job training in 1979, compared with only $6 billion last year, said Stettner, the deputy director of the National Employment Law Project.

“We have to seriously look at fundamentally rebuilding the economy,” he said. “You’ve got to use this moment to retrain for jobs.”

If there were ever a time that called for unconventional thinking, it would be now. So, it may seem particularly prescient that a founder of what may be the fastest growing company in the nation was invited to the White House. William’s company Twitter is poised to play a growing role in igniting an economic recovery – once it unveils its revenue model. The millions of business users flocking to his social media network suggest it has the potential.

Searching for jobs in Brentwood

Analysts may look in vain for the start of significant temporary employee hiring that would signal a bottoming of the economy. But what if businesses decide that permanent hires are no longer practical? Futurist Thomas Frey of the DaVinci Institute in Colorado is concerned, but says trends could favor Contra Costa and other counties.

“A general trend of hiring temps could gain momentum as companies feel pressures of health care costs among other influences,” Frey says. But permanent hires may become the exception rather than the rule. Frey predicts entrepreneurialism will become far more commonplace. The good news, he says, is the one- and two-man shop have a far better track record of success among small businesses.

Frey’s observations/predictions on labor:

The highest startup success rate belongs to the one-person businesses – the “Empire of One.” As the name suggests, EO is a one-person business, often a husband/wife team. Some EO businesses consult; others create products and freelance services.

A better way to help align opportunity with skills is the development of business colonies that form around specific business themes or technologies, including photonics and nanotechnology. Social media such as Twitter can bring these colonies together on an as-needed basis. Colonies will provide training, equipment, and opportunity.

Eventually colleges will offer Empire of One training, Frey believes. Until then, business colonies will seize on prospects springing up around business opportunities that draw knowledge and skill resources into various projects, much like the film industry does. Twitter and other social media will be important to proliferation of the trend.

A Twitter/Empire of One economy could already be reinvigorating communities like Brentwood. Without the Internet, email and social media, Brentwood could remain an isolated community indefinitely. In an entrepreneurial part of cyberspace, prosperity is waiting.

Michael Cushman, founder of Learn the Book and a DaVinci Institute fellow, maintains wholesale change is needed for the educational system. With currently available technology, namely wireless communication and virtual simulation, learning can be vastly improved. The problem: extricating the education system from its long marriage with a classroom model.

Here’s how remote communities might transform themselves:

Creation/transformation of community colleges that offer training inside virtual classrooms. As the earth is digitally scanned by Google, the foundation is being laid for such possibilities. Local colleges could develop SIM learning curriculum that might train students in entrepreneurialism, project leadership and exploiting online knowledge resources. Cushman says virtual learning is much more powerful, so investment will have greater payoff for individuals and employers.

A business incubator also could employ the latest SIM technology making it available to tenants. SIM technology creates a “blended reality integrating the real physical and virtual worlds.” Such blended realities already exist to a limited extent (instrumentation on a plane, navigating using a GPS enabled cell phone), but as of yet have not been deployed widely for education, Cushman said.

In Brentwood’s case, the town’s southern exposure gives way to forests of wind towers. SIM courses might be designed for wind tower maintenance and repair. Contra Costa and neighboring counties might be expected to tap the American Recovery and Reinvestment Act of 2009 for both solar and wind technologies. The Solar Energy Industries Association says solar is poised to create 110,000 jobs over the next two years. The solar energy provisions in the bill will help create 60,000 jobs in the solar industry in 2009 alone.

The sweet spot for hyper growth is the prize. How quickly communities can tool up and exploit business opportunities is a question for individuals to answer. Meanwhile, we’re anxious to hear how that discussion between Williams and Obama went.

By Raymond Alvarez