The Last Drop is a Long Way Away
Quote of the Week
“What will it take for Americans to care about decline? We agreed that part of the problem is a lack of meaningful work. A lack of seriousness of mission and purpose." Katherine Boyle, Andreessen Horowitz & Chris Power, Founder of Hadrian Automation
Big Picture
California's drought continues to make headlines as the rainy season ends and the worrying season begins about our region's remaining water supply until next year.
But things are not as dire as one may think. Jeanine Jones with CA's Department of Water Resources recently commented that among the 150 or so reservoirs monitored by DWR, levels are approximately 70 percent of historic levels, which is about average - during a drought - for this time of year.
That does not mean we should not be concerned. Much of the southwestern United States has been in a drought for the past 10 years, which is causing a slow transition toward a dryer landscape.
As we learn to adapt we must continue to learn from other parts of the world that know a little about this topic - Israel and Cape Town South Africa.
It was only four years ago that the City of Cape Town was just 90 days away from turning off the taps. At the most extreme, residents were restricted to a maximum of 13 gallons of water a day – not easy when showers alone can use up to 4 gallons a minute.
To put this into perspective, the average American family uses more than 300 gallons of water per day at home. (Roughly 70 percent of this use occurs indoors) Residents of Israel and Europeans use less than half that.
The state of California recently decided to tackle consumption by setting a new current standard for residential indoor water use to 47 gallons per person per day starting in 2025 and 42 gallons per person per day beginning in 2030.
The big question do Californians have the resolve to meet this new standard?
South Africans were able to avert their crisis by embracing a combination of demand incentives, intensive supply management, and behavioral change campaigns. A year into the crisis, with a little help of some rain, their reservoirs became 80 percent full. Though the risk of future shortages remain.
In Southern California residents have dropped their water usage by more than half throughout the last 25 years, but we’re going to need to see another 25 to 50 percent drop on top of that, throughout the next decade.
Part of the challenge is the water conservation programs financed in the '90s for low-flush toilets, low-flow showers, to name a few, have diminishing returns after 30 years of implementation. And with climate change, temperature increases and a larger population, demand for water is increasing.
Marielle Rhodeiro, a research data specialist with the CA Water Resources Control Board, recently reported that urban water use rose by nearly 19 percent in March 2022 compared with March 2020, partly because of warmer and drier conditions this year.
New data shows that the largest water increases in the state - nearly 27% - came in the LA basin and San Diego County, as well as the desert regions of southeast California that include Palm Springs and the Imperial Valley.
This does not bode well since L.A. residents have always had a great track record of conserving water – it has the lowest per capita water consumption among U.S. urban areas with populations of more than 1 million.
Whether Angelenos like it or not water restrictions are coming. Beginning next month, about 6 million Southern Californians who are reliant on the state’s aqueduct and reservoirs will face unprecedented water restrictions from the Metropolitan Water District. And the Los Angeles Department of Water and Power just announced that all of its nearly 4 million customers will be limited to outdoor watering twice a week beginning June 1.
At the same time investments are also being made. L.A. Mayor Eric Garcetti recently announced plans to boost the city’s drought resiliency through investments in water treatment and recycling facilities. This includes heavy investments in water storage, rainwater capture and reclamation which will serve towards a goal of supplying 70% of the city’s water from local sources by 2035.
But challenges remain. LADWP's infrastructure is beyond out dated - more than 10 percent of its 7,200 miles of water pipes were built 90 years ago and the average age of a city pipe is 58, compared with an optimal life span of 100 years.
Many of the pipes are so old that local water utilities lose 1 out of every 7 gallons of drinking water before it arrives to a customer. Bringing pipes that deliver water to 3.9 million people up to modernized could cost the City of L.A. tens of billions of dollars and require thousands of hours of labor, for an organization that is struggling to replace its growing wave of retiring workers.
What is important to remember is that no matter what the cost these investments are necessary in a world in which climate change will only increases volatility - the overall trend is drier, hotter, less water, with some big wet years in there.
But in the meantime permanent hardship is coming and we’re going to have to take pretty dramatic measures to address our own behavioral changes and COVID fatigue does not seem to be helping nudge people into making new sacrifices.
But the reality is LA might have their own "Day Zero" countdown and whether it is an election year or not it is important that our leaders have a stronger sense of urgency on this matter and at the same time for Angelenos to make better choices or they will turn on the tap one day and nothing comes out.
So Many Jobs, So Few Workers
In a new piece Michael Bernick argues that Americans must be Getting Back to Work: Nowand it is time to implement far stronger strategies to hasten the return to work of the millions of workers who are still unemployed and/or outside of the labor market.
Data:
The number of job openings reaching an all-time high in March at 11.5 million—providing also an all-time high 1.9 jobs per job seeker.
Despite these historically favorable numbers, nearly 1.5 million job seekers in March had been unemployed 27 weeks or more—still up 25% from the pre-pandemic level— and the average time unemployed remained high at 24.2 weeks.
Additionally, large numbers of workers in March remained outside of the labor force, which stood at an estimated 4 million workers below pre-pandemic numbers.
Recommendations are a mix of equipping unemployment insurance (UI) claimants with more effective education, tools and coaching, and motivation through verification of efforts and accountability.
The U.S. Economy Is Desperately Seeking Workers (WSJ)
The labor-force participation rate—the share of workers with a job or actively looking for one—was 62.2% last month versus 63.4% in February 2020.
That is, of course, much better than it was during the worst of the pandemic, but a lot of the things that seemed like they might draw even more people back into the labor force, such as the availability of vaccines, the easing of Covid-19 concerns and the ending of extra benefits for the unemployed, didn’t have as much of an effect as economists hoped.
What the Fed is looking for: Warmer weather, the continued easing of Covid-19 worries and the stockpiles of savings many Americans built up during the pandemic starting to diminish, more people will go on the job hunt.
If that increase doesn’t come, however, the Fed will be put in a position where it will feel it needs to bring job growth down sooner rather than later. To do that, it will need to lift rates more quickly, raising the odds that it goes too far and sends the economy into a recession.
Small Business Shedding Jobs
New ADP data showed the U.S. private sector created nearly 250,000 new jobs last month, but employers with fewer than 50 workers actually shed jobs, underscoring the challenges facing small businesses as growth becomes less certain.
Data: For all the focus on big companies, small businesses account for over 40% of U.S. economic activity.
Challenge: While big employers are falling all over themselves to offer higher pay and better benefits, small businesses have limited flexibility to do the same.
What to do: They could receive the same perks and benefits that big businesses do (giving a tax break for an Amazon HQ? Why not a local business. And better assess the rules and regulations that put them at a distinct disadvantage to their larger competitors.
Gen Z Rents a Room
The number of homebuyers who considered renting out a part of their homes rose to 31% in 2021 from 24% two years earlier, according to Zillow.
And
67% of millennials and 57% of Gen Z in the U.S. said they were willing to share their homes in exchange for cash, compared to just 34% of baby boomers, according to a 2021 Realtor.com survey.
Why: The extra money is the only way some can afford a property in a tight market.
Trend: The average U.S. mortgage rate above 5% and home prices at record highs, homeownership feels increasingly out of reach, particularly for young, first-time buyers. To make it work, some are renting out rooms or basements and using the extra income to help offset their costs.