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The Central Valley's unemployment rate fell to 7.3 percent in June 2005, narrowing the gap from the usual five-percent-higher-than-the-statewide-rate to only two percent higher. One reason for the drop in unemployment is the construction boom. Construction employment reached 22,500 or seven percent of Fresno county's jobs in June 2005. Some forecasters believe that, with construction, education and health care continuing to expand, Fresno county's average unemployment rate for 2005 could fall below double-digit rates for the first time in decades.

Fresno county's regional jobs initiative, launched in 2004, aimed to create 30,000 jobs paying at least $30,000 a year by 2009. In June 2005, Governor Arnold Schwarzenegger created an eight-county California Partnership for the San Joaquin Valley to obtain federal support for San Joaquin Valley initiatives and review the impact of state regulations on the San Joaquin Valley.

Fresno, the largest city in the Central Valley with 470,000 residents, has the most concentrated poverty among the nation's largest 50 cities. concentrated poverty was defined as census tracts in which at least 40 percent of residents had incomes below the federal poverty line in 2000. In Fresno, 44 percent of poor people live in "extreme poverty neighborhoods," twice the 22 percent rate of Los Angeles.

Fresno has some of the state's lowest fees for developers. Most cities charge developers $7,000 to $20,000 a house to cover the cost of providing infrastructure. Fresno charged $3,500 until 2004, when the fee was raised to $5,000. Municipal finance experts say that, on average, developer fees need to be about $35,000 for each new house to fully cover the costs of the additional public services required.

Low Fresno developer fees have produced additional housing, but not the infrastructure needed for the quality of life desired by higher-earning residents. In the mid-1990s, an FBI investigation sent 16 developers and politicians to prison and demonstrated the influence builders had over Fresno's zoning and development policies.

Parlier is a farm worker city of 12,700 in Fresno county hoping to spur economic development because it has been designated a federal "renewal community." Using $4 million in bond money, the city purchased 80 acres of farmland for a new business park. One of the first tenants is 125-employee Custom Produce Sales, which moved its business distributing produce to food-service companies from a nearby city to Parlier. Custom will receive, inter alia, a tax credit of $1,500 for every Parlier resident hired. The city hopes to eventually have 500 employees in the park; many may be local businesses moving from nearby cities for the tax credits.

Parlier, founded in 1876 by the I.N. Parlier family from Springfield, Illinois in what was then a wheat-growing area, is today home to residents who work seasonally in area vineyards and orchards. The city, which had a 20 percent unemployment rate in May 2005, is trying to develop more upscale housing, including a 125-home development with houses priced from $200,000 to $300,000.

Fresno County has a comprehensive economic development plan aimed at creating more nonfarm jobs in "westside" cities such as Mendota, San Joaquin and Coalinga. Economic development so far has included prisons: the Coalinga State Hospital, which opened in September 2005, houses 250 of the state's most violent sexual offenders.

UC Merced, the first UC campus in the San Joaquin Valley, opened in September 2005 with 1,000 students. There are high expectations that the campus can spur economic development in the entire San Joaquin Valley.

San Joaquin Valley leaders are trying to get the 275 miles of Highway 99 between Stockton and Bakersfield renamed Interstate 7. Highway 99 was not included in the interstate system in the 1950s, and Fresno is said to be the largest US urban area not on an interstate. If Highway 99 becomes Interstate 7, it would have to receive waivers from some interstate criteria, such as having overpasses high enough to accommodate Titan intercontinental ballistic missiles (phased out in 1987 but still a requirement for interstate overpasses).

Population. The Central Valley has five of the state's 15 largest cities: Fresno, Sacramento, Bakersfield, Stockton and Modesto. Of these, only Sacramento had a per capita income above the national median; the other cities were near the bottom of the 318 US metro areas when ranked by per capita income.

Low incomes have not deterred population growth. Three valley cities were among the 10 fastest-growing metro areas between 2000 and 2004- Las Vegas was first, Riverside-San Bernardino-Ontario second, McAllen-Edinburg-Pharr third, Stockton fourth, Sacramento ninth and Bakersfield tenth fastest-growing among the 88 metro areas with 500,000 or more residents.

California lost two million residents to other states in the early 1990s recession, but only 400,000 between 2000 and 2004. California had 36.8 million residents in July 2004, and growth continues due to 600,000 births a year and immigration. About 22 percent of US immigrants between 2000 and 2004 settled in California. A quarter of US immigrants go to two metro areas, New York City and Los Angeles and Orange counties.

In 2000, California's residents included more foreign immigrants than in-migrants from other states. About 26 percent of residents were foreign-born, while just 24 percent were from other states. In 1950, after Dust Bowl migration to California, over half of the state's residents were from other states.

Housing. The state of California provides funds to operate 25 centers that provide housing for migrant farm workers and their families. In 1996, rent was increased from $3.50 to $7 a day at 21 centers without required notice, leading to a $600,000 settlement with perhaps 12,000 affected tenants. As of July 2005, some $362,000 had been paid or authorized for 717 ex-center residents.

The Sacramento Bee on July 24, 2005 reported that Proposition 46, a $2.1 billion bond approved on a 58-42 vote in 2002, was not providing the 131,000 housing "units" promised. The National Association of Home Builders says that 21 of the 25 least-affordable US housing markets are in California, defined in terms of median income and median housing prices. The Prop 46 campaign focused on the bond's promise of affordable housing for seniors, the homeless and battered women, and farm workers.

However, the Legislature used Prop 46 funds to pay for farm worker housing that had been approved before the bond was passed. For example, Prop 46 funds were used to upgrade a 180-unit farmworker housing project in Sutter county, and the state diverted Prop 46 funds to rehab other migrant housing centers rather than build new migrant housing. Villa Cesar Chavez, 52 town houses being built in Oxnard for farmworkers, also received Prop 46 support.

Ventura county's House Farm Workers campaign takes credit for facilitating the development of 350 farm worker units that are under construction or in the planning stages. Since 1993, when Cabrillo Economic Development Corp. opened the 100-unit Rancho Sespe housing cooperative east of Fillmore, only 31 units of farmworker housing have been built in the county. Advocates say there may be as many as 30,000 farm workers in the county, and are attempting to identify places to build more farm worker housing and financing for construction.

California has seven million owner-occupied homes, and about 600,000 home sales a year. The state has even more households, since 40 percent of households rent housing. Californians have continued to buy homes despite rising prices by devoting far more than the recommended 30 percent of their incomes on housing. Half of those who bought homes in 2003-05 devoted more than 30 percent of their incomes to housing, helping to explain why 60 percent of California residents own homes despite high prices.

More affordable housing is being made available to middle-class families in places with high home prices. Families with household incomes that are 80 percent to 120 percent of the median income for an area often enter a lottery to obtain a house priced below the normal market price, but agree to share any appreciation if they resell it.

The US housing boom may be cooling. Between December 2000 and June 2005, manufacturing employment fell 17 percent, but membership in the National Association of Realtors rose 58 percent as spending on housing reached six percent of GDP. Increased housing prices over the past five years added perhaps $5 trillion to consumer assets, encouraging second mortgages and more spending.

The US Supreme Court on June 23, 2005 ruled that state and local governments can use eminent domain to take private property from one person and give it to another to generate economic benefits. However, the Kelo v. City of New London decision sparked a reaction, with politicians of both parties proposing new legislation that would sharply limit the kind eminent-domain condemnations for private development that the Supreme Court ruled constitutional.

Government. Governor Arnold Schwarzenegger vetoed SB 60, a bill that would have allowed unauthorized foreigners to obtain driver's licenses in California of a separate color and good only for driving. Supporters said that allowing unauthorized foreigners to drive would acknowledge they are in California and driving and both test them and enable them to obtain insurance. Some critics objected to the scarlet letter designation, and others said driver's licenses would make life easier for those who should not be in the US.

Former Governor Gray Davis signed a law in 2003 that allowed unauthorized foreigners to obtain regular driver's licenses. Opposition to the law was one factor in his recall later that year.

Schwarzenegger commissioned a California Performance Review that recommended 279 ways to make state government more efficient in August 2004. A year later, there was modest progress implementing them, with the major accomplishment the re-organization of the prison system. There was no progress on a plan to reorganize state agencies into 11 unified departments. One of the largest potential savings, almost $3 billion, would have come from restricting kindergarten to children who are five by September 1 instead of December 2. Schwarzenegger withdrew the proposal to abolish 88 boards and commissions, many of which regulate California professionals.

About six percent of the state budget goes to paying off debt, which is close to the limit that some Wall Street credit agencies consider acceptable for state governments. Hurricane Katrina highlighted problems with California's levee system, and there is talk of another round of borrowing to improve infrastructure, perhaps with a $15 billion bond measure on the June 2006 ballot.

California's film industry pushed for a 15 percent tax credit for the cost of wages and equipment used to make feature films in the state, with a cap of $3 million per production. The tax break would have cost the state an estimated $100 million a year and failed. Television work is increasing, but feature film activity has declined with runaway production and a consolidation of companies. Some 236 feature films were shot partially or exclusively in California in 2004, 40 percent of the 600 total. The film and television industry says that the 246,000 employees in California earn $17 billion a year.

The tax credit for film-making was controversial because it would be refundable, meaning that films that did not make money (most do not by Hollywood accounting standards) would get refunds. Independent analysts said that the industry was booming, with 52,570 production days in Los Angeles in 2004, a record. Hollywood films generated global revenues of $84 billion in 2004, including $56 billion from DVD sales.

Kerri Ginis, " West side economy takes new direction," Fresno Bee, September 19, 2005. Nancy Vogel, "A Wave of Relief After 1986 Flood," Los Angeles Times, August 15, 2005. EJ Schultz, " Parlier set to revamp economy," Fresno Bee, July 16, 2005. Sanford Nax, "Fresno, Calif., region undergoes 'economic metamorphosis, forecaster says," Fresno Bee, July 6, 2005. Berube, Alan. 2005. Katrina's Window: Confronting Concentrated Poverty Across America. http://www.brookings.edu/metro/pubs/20051012_concentratedpoverty.htm