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Report: Napa tourism industry bouncing back, but post-COVID job growth slowing

Outdoor dining on Main Street, downtown Napa

A one-block section of Main Street between First and Second Streets has been closed to vehicle traffic during the coronavirus pandemic, creating an outdoor dining space for several downtown Napa restaurants.

An economy sent reeling by the coronavirus has in many ways bounced back far faster than in past recessions — but a North Bay economist is cautioning Napa city leaders to be mindful of slowing job growth and the pandemic’s outsize blow to employment in the tourist industries that have driven much of the city’s prosperity.

In the latest of his updates to the City Council on COVID-19’s economic impacts, Robert Eyler, an economics professor at Sonoma State University, reported a recovery in Napa and the nation that is running well ahead of the slog that followed the Great Recession’s job losses more than a decade ago.

California has gained back as many lost jobs in 16 months as it did in more than two years from November 2007, on the eve of the recession, Eyler said during his presentation to council members. State employment statistics indicate the employment bounce-back running well ahead of the last crisis when the number of lost jobs was not restored until 56 months after the recession began.

But Eyler cautioned the climb in employment is nonetheless slowing from its pace in the early months of the pandemic when the number of Napans with jobs plunged more than 20% from March to April as states hastily shuttered huge swaths of businesses to slow the virus’ spread.

As of this April, the number of Napa city jobs was still only 93.3% of its total in January 2020 — three months before the coronavirus’ arrival in the U.S. triggered abrupt business closures and stay-at-home orders, throwing millions out of work virtually overnight. The pattern closely tracks trends across California, which was at 93.4% of its 2020 employment peak.

“We have some room to go,” said Eyler, speaking by videoconference Tuesday to council members at City Hall. “We’ve wobbled some the last few months, which is typical of North Bay cities and counties, and we need to get that flat line up to the red dotted line,” he said, referring to pre-pandemic employment levels.

The city of Napa’s jobless rate as of April was 6.7%, compared to 6.3% for Napa County but improving on California’s overall figure of 8.1%. However, the number of jobs in the city and the size of its labor force — which excludes people not actively searching for work — both lagged the totals from the same month in 2019, with employment down by 9.8% and the workforce 6.1% smaller, according to the state’s Employment Development Department.

Many of the sectors where jobs have been slow to return to pre-pandemic levels are those intertwined with the Napa Valley’s wine and tourism businesses, said Eyler. In the hospitality field — including those working in hotels, restaurants, and theaters — nearly 27 of every 100 jobs that existed in April 2019 have not come back.

With warehouse employment lagging along with wine sales, and fewer people working at hair and nail salons, three sectors accounting for 24% of the county’s jobs continue to trail their employment levels from two years ago.

However, a return of visitors to Napa hotels marks a brighter spot in Eyler’s forecast, as a loosening of safety rules has accompanied the seasonal surge of tourists in the dry season — and encouraged more people to stay in Napa overnight rather than settle for day trips. Occupancy in April approached 60%, the highest mark of the pandemic period, although still well off the 80% level during the 2019 period.

The Bay Area’s northern counties of Napa, Sonoma, and Marin are seeing their hotels refill quicker than San Francisco, added Eyler, although he predicted the gradual easing of pandemic-forced air travel restrictions would bring back much of the whole region’s international tourism by the end of 2022.

The forecast’s release comes at a time when COVID-19 infections in Napa County have dropped to the lowest level in nearly a year, vaccines have become available to teenagers as well as adults, and California readies to drop most remaining business restrictions on June 15.

But Eyler’s forecast urged watchfulness by the city about harder-to-forecast factors — the direction of still-surging home prices, how quickly federal and state governments pull back unemployment benefits and eviction curbs, and above all whether the country can avoid the spread of new COVID-19 strains or flu variants that could erase many of the recent gains in reopening the economy.

How communities manage the threat of contagious disease over the coming winter may become “the biggest test of how resilient we are as an economy and as a community,” he said.

With COVID-19 vaccines becoming widespread, more visitors are finding their way to Napa Valley, report local hotel general managers. They predict an increase in business in the coming weeks and months.

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Public Safety Reporter

Howard Yune covers public safety for the Napa Valley Register. He has been a reporter and photographer for the Register since 2011, and previously wrote for the Marysville Appeal-Democrat, Anaheim Bulletin and Coos Bay (Oregon) World.

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