News Column

California's San Joaquin Valley Leads Nation in Joblessness

January 5, 2011

Marijke Rowland and Robert Rodriguez

California's San Joaquin Valley continues to be at the heart of the nation's unemployment problem.

A report released this week by the U.S. Labor Department shows that the valley accounts for six of the 10 metropolitan areas with the worst unemployment rates in the country.

The valley cities stretch from Stockton to Visalia-Porterville and also include Modesto, Merced, Fresno and Hanford-Corcoran.

Two other California metro areas also made the bottom 10: No. 1 El Centro in Imperial County and No. 2 Yuba City in Sutter County.

"It's one of those perfect storm situations," said University of California at Merced economics Professor Shawn Kantor. "So it will take a very long time for this area to recover."

The metro area jobless rates across the valley range from 18.6 percent in Merced to 16.4 percent in the Hanford- Corcoran area, well above both the California and U.S. unemployment rates of 12.4 percent and 9.8 percent, respectively.

The Labor Department report looks at 372 of the nation's largest metro areas in November.

Still, economists said it is important to note that the SanJoaquin Valley started the recession with a historically higher unemployment rate than other parts of the country. The region has been consistently above the state and national averages, even during sunnier economic times.

During the valley's boom growth years of the early to mid-2000s, the annual unemployment rate in Stanislaus County hovered between 8 percent and 9 percent.

"This particular area has chronically had high unemployment relative to the state and the country, which all ties to low educational attainment and poverty," Kantor said. "The circularity of the socioeconomic conditions make it difficult for this area to succeed economically. And then it got hit with the housing and government bubbles bursting."

The valley was among the regions affected worst when the housing and construction bubble burst nationally. But unlike other hard-hit areas such as south Florida and Las Vegas, the valley had fewer other industries to fall back on.

Stanislaus County's construction, mining and logging work force was 14,300 in November 2005, when the area's housing prices were near their peak. In November 2010, the construction work force had shrunk to 6,700, according to data from the California Employment Development Department.

Fresno resident Edward Gutierrez knows exactly how badly the construction industry was affected.

The former electrician has been out of work for more than two years.

"Things were really good, and there was a lot of work, but starting around 2008 everything came to a halt," said the 33-year-old Gutierrez. "I've done a few side jobs, but nothing steady."

Gutierrez stops by the Fresno Workforce Connection office at least once a week for any job leads. He has applied for everything from dishwashing jobs to electrician's assistant.

When the bottom dropped out of the housing and construction industries, the region fell even further.

"For several years in the early 2000s and up to 2006, our economy was expanding unnaturally as a result of the building boom," said Bill Bassitt, chief executive officer of the Stanislaus Economic Development and Workforce Alliance. "When that crashed, that put us in a really bad situation."

The valley's agriculture-based economy has been both a positive and negative. While it has remained relatively strong throughout the recession, it hasn't provided the growth needed to make up for shortfalls in other industries.

Those factors also are compounded by the lower educational attainment and younger work force in the region.

"Even though agriculture is healthy and we can expect further growth, it doesn't have the job- generation capacity to mop up all this displaced construction labor," Jeff Michael, director of the Business Forecasting Center at the University of the Pacific in Stockton.

Steve Geil, president of the Fresno County Economic Development Corp., said he isn't surprised that the valley's jobless rate continues to climb. He said the state's uncertain budget picture exacerbates the problem.

Geil said some business owners remain cautious about the future and are putting their expansion plans or new hiring on hold.

"The businesses I visit from day to day are doing well, but they just don't have the faith that what may be coming down from government is going to be good for them," Geil said. "They don't want to hire someone only to have to turn around and let them go."

While fields like transportation, logistics and health care could be growth industries for the valley in the future, economists said there are no quick fixes for the region's chronic unemployment woes.

Michael said the Business Forecasting Center projects unemployment rates will rise to about 19 percent in valley counties through the winter.

UC Merced's Kantor said larger demographic and developmental issues need to be tackled to permanently lift the area's unemployment rates out of the national basement.

"There is just not much immediately on the horizon that will provide a huge stimulus to the Central Valley," he said. "Given the nature of our economy, until we solve those chronic problems that affect our educational attainment, income and job opportunity -- which could be decades -- this particular area will have a hard time matching up to the rest of the state and other regions of the country when it comes to employment."

Source: Copyright (c) 2011, The Modesto Bee, Calif.

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