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Sacramento Valley Overview -- Ed Taylor

Sacramento Valley Overview


J. Edward Taylor

Department of Agricultural

and Resource Economics

University of California, Davis

During the 1980s, there was a vicious circle between farm employment and immigration in the western United States as well as in the nation as a whole: more farm jobs were associated with more immigrants and also more poverty and welfare use. In California, farm employment increased poverty both directly and indirectly, by stimulating new immigration. Immigration, in turn, stimulated the growth of farm jobs, as farmers took advantage of an abundant availability of low-skilled immigrant workers to extend their plantings of labor-intensive crops and to delay mechanization. The result was a demographic transformation of rural California towns coupled with rising poverty in the world’s most prosperous agricultural region, a patchwork of "poverty amid prosperity." In contrast with farm jobs, nonfarm jobs appear to have stimulated immigration slightly while decreasing poverty and welfare use (Taylor and Martin, Martin and Taylor, Taylor, Martin, and Fix).

This paper provides an overview of demographic change, employment, immigration, and poverty in the Sacramento Valley. It focuses on three counties: Colusa, Sutter, and Yuba. Patterns of demographic and economic change differ among these three counties and also between the Sacramento Valley and other agricultural regions of the state, particularly the San Joaquin Valley. Nevertheless, they suggest a similar demographic transformation, linked in part to low-skilled agricultural jobs, combined with rising poverty and public assistance demands. They also suggest a segmentation of labor markets, in which immigrants fill low-paying, low-skilled jobs; people with skills fill high-paying jobs; and many low skilled established residents, lacking upward mobility, turn to the welfare state for support. Given limited mobility within agriculture, the creation of nonfarm jobs appears to be the key to alleviating rural poverty in the future. However, this will only happen if (a) there is sufficient growth in nonfarm jobs and (b) these new jobs benefit local residents by bringing them into the work force. Otherwise, poverty and some of the highest rates of welfare use in the state will persist, and people migrating into the Sacramento Valley from other U.S. regions or abroad will be the main beneficiaries of economic growth.

Farm Employment, Immigration, and Poverty: A Vicious Circle

The circular relationship between farm employment and immigration is illustrated in Figure 1. Farm employment stimulates immigration by raising the demand for low-skill immigrant workers (Pathway AB). In an analysis of 60 California rural towns during the 1980-1990 inter-census period, we found that, other things equal, 100 additional farm jobs were associated with a 136-person increase in immigration. Farm employment draws immigrants to rural towns, and immigration in turn allows labor-intensive agriculture to expand, creating new farm jobs. A 100-person increase in foreign-born population in rural California towns was associated with 37 more workers employed in agriculture during the decade. The arrival of new workers into local labor markets appears to have stimulated farm employment by suppressing real wages for local workers and discouraging the adoption of labor-saving production practices (Martin and Taylor, 1998).


Farm employment and the low-skilled immigration to fill farm jobs, in turn, increased poverty in rural California. New employment could be negatively associated with poverty if earnings are sufficiently high to place families above the poverty line. This seems to be the case for nonfarm jobs as well as for farm jobs in the 1970s. However, average annual farm earnings for farmworkers are low; for example, California farmworkers averaged $7,320 in 1990, and most farmworker families had incomes below the poverty line. Moreover, if farm employment stimulates immigration by low-skilled people with few income prospects, it can increase poverty indirectly, through immigration. During the 1980s, an additional 100 farm jobs were associated, directly and indirectly, with 139 more individuals in poverty. The major beneficiaries of the new farm jobs were immigrants from regions with low per-capita incomes, like rural Mexico, not established local residents.

If welfare coverage of the impoverished population is complete, there will be a nearly one-to-one correspondence between poverty and welfare use. Many residents and nearly all newcomers to the rural California towns we studied are immigrants not eligible for welfare, so there is not a one-to-one relationship between poverty and welfare. A 1-person increase in the number of poor residents was associated with a 0.57-person increase in the number of welfare recipients. There was no significant direct relationship between immigration and welfare use, which casts doubt on the Prop 187 argument that immigration is motivated by access to welfare benefits.

These findings suggest that there is a vicious circle of more farm jobs, more immigration, and more poverty in rural California. Is this true for the Sacramento Valley? What lessons does the rest of rural California hold for economic development in places like Colusa, Sutter, and Yuba counties?

Is the Sacramento Valley Really "Different"?

Some observers have suggested that the Sacramento Valley is different from the San Joaquin Valley, raising questions about whether the farm employment-immigration-poverty-welfare circle characterizes Sacramento Valley economics and demographics.

Sacramento Valley Demographics

Table 1 compares selected demographic characteristics of the counties that are the focus of this conference (Colusa, Yuba, and Sutter) with Fresno County. The 1990 U.S. Population Census shows that just under 13 percent of the combined populations of Colusa, Sutter, and Yuba counties are foreign born, compared with 18 percent for Fresno County. The highest concentration of immigrants was in Colusa County (21 percent), followed by Sutter County (14 percent). Yuba County was the anomaly, with only 9 percent of its residents foreign born.

Nevertheless, the pattern of ethnic transformation in the three Sacramento counties is identical to that in Fresno County and elsewhere in rural California. Populations that were predominantly white in the 1970s are transforming into populations in which there is no ethnic majority or in which "Hispanics" are the majority. The pace of this transformation differs from county to county, but the trend is the same. The pace has been fastest in Fresno County, where the share of "Whites" is now less than 50 percent (Table 2, Panel D). Among the three Sacramento Valley counties, the transformation is most advanced in Colusa, where an estimated 55 percent of the total population was classified as "White" in 1998 (Panel C), and where "Hispanics" dominate "Whites" in the 0-5 age group (Table 3, Panel C). At the other extreme is Yuba County, where an estimated 70 percent of the population was "White" in 1998 (Table 2, Panel A). However, even in Yuba County, the demographic transformation is underway. For example, among children aged 0 to 5, the "White" share is estimated to be 60 percent in 1998, and it is projected to fall to 49 percent in 2010 (Table 3, Panel A). In 1998, the largest minority among 0-to-5-year-old Yuba County residents was not "Hispanic" (17 percent) but "Asian/Pacific Islander" (18 percent).

Reliable immigration estimates by county will not be available until after the Year 2000 Census. However, the language breakdown of limited English proficient (LEP) students in public schools offers one window into the country composition of immigrant populations in the Sacramento Valley. The percentages reported in Table 4 are from the Language Census carried out by the Educational Demographics Unit of the California Department of Education. By far, Spanish is the primary language of LEP students in Sutter (68 percent of LEP students) and Colusa (99 percent) Counties, as in Fresno (66 percent). However, Hmong is the major language spoken by LEP students in Yuba County (58 percent), followed by Spanish (37 percent). Hmong is the second most important language of LEP students in Fresno County (22 percent), but many more LEP students in Sutter County speak Punjabi (26 percent) than Hmong (3 percent), and there are no reported Hmong-speaking LEP students in Colusa County.

Sacramento Valley Economics

The share of the workforce employed in agriculture closely tracks immigration in these three Sacramento Valley counties. Colusa county, with the largest the share of foreign-born residents, also has the largest percentage of workers in farm jobs (28 percent). At the other extreme, Yuba County, with the smallest immigrant share, has the smallest percentage of the workforce employed in agriculture (8 percent). Sutter County, as in the case of immigrant shares, is in between these two extremes (11 percent). The agricultural character of these three counties is highlighted by the fact that both Colusa and Sutter Counties have a larger share of their workforces in agriculture than does Fresno County, where 10 percent of workers are in farm jobs. These numbers reflect the strong association between farm employment and immigration in the Sacramento Valley that our earlier work found for rural California as a whole. They are consistent with the hypothesis of a circular relationship between farm employment and immigration.

In the Poverty Amid Prosperity study, we found that high levels of farm employment and immigration were associated with high rates of poverty in rural California as a whole. Table 5 suggests exactly the opposite for these three Sacramento Valley counties. Colusa County, with the highest shares of immigrants and farm jobs, has the smallest share of people living in impoverished households (13 percent), including the smallest share of hispanics in poverty (21 percent). Yuba County, with the smallest shares of immigrants and farm jobs, has the highest percentage of persons living in poverty (19 percent), including impoverished hispanics (26 percent). The poverty rate in Yuba is only slightly lower than that of Fresno County, which was 21 percent in the 1990 Census. There appears to be a high incidence of poverty in Yuba that is independent of immigration or farm employment.

Growth trends in poverty, however, tell a different story. Although the poverty rate is lowest in Colusa County, the growth in poverty is highest in this county. During the 1980s, the number of Colusa residents employed in farm jobs grew by 53 percent, and the number of people living in poverty jumped 50 percent (91 percent for Hispanics). That is, in Colusa during the 1980s we see evidence of the "vicious circle" of farm employment-immigration-poverty that was uncovered in our earlier study.

Yuba County has the distinction of having one of the highest percentages of residents on welfare in the state. The 1990 Census of Population reports that 20 percent of all Yuba residents lived in households with income below the poverty line, compared with 17 percent of all Fresno residents and 11 to 12 percent of Sutter and Colusa residents. In other words, the welfare coverage of impoverished Yuba County residents is extraordinarily high. This no doubt reflects in part the fact that recent Hispanic immigrants, who do not qualify for welfare programs, constitute a relatively small share of the Yuba County population. It also reflects the presence of a significant impoverished white and Hmong population in Yuba.

Only 54 percent of Yuba County’s working-age population was employed in 1990, according to the Census. By contrast, 59 percent of the working-age residents of Fresno and Sutter Counties and 73 percent of those in Colusa County were employed in 1990. Of the three Sacramento Valley counties in this study, the welfare population grew fastest in Colusa, where poverty grew fastest, and in Yuba, where poverty grew slowest but where welfare use is unusually high. None of these three counties saw welfare use rise as quickly as in Fresno County during the 1980s.

The overarching goal of the 1986 welfare reform was to get individuals off welfare and into the work force. Table 6 shows trends in the size of the welfare population and in labor force participation in Yuba County from 1996 through 1998. It reveals decreases in the numbers of AFDC and Food Stamp recipients, but no decipherable change in the size of the work force over this period. Labor force participation remains low in Yuba County in the wake of welfare reform, and its trend is flat.

Table 7 summarizes the characteristics of Yuba County’s AFDC recipients 16 years or older. Eighty-one percent of AFDC recipients are females, and 71 percent are between the ages of 21 and 44. Most—68 to 69 percent—are non-hispanic whites. Fifteen to seventeen percent are Asian and 10 to 11 percent are Hispanics. Table 8 summarizes characteristics of the economically disadvantaged population of all five north central counties (Colusa, Glenn, Lake, Sutter and Yuba) in 1990. The majority—56 percent—are female; 44 percent are high school dropouts, and 15 percent are limited English proficient.

These numbers highlight the challenges of welfare reform, the target of which is an impoverished population that is primarily female with children, limited schooling, and in many cases limited English. Low labor-force participation poses challenges for reducing poverty and welfare use in this county. It raises the prospect that job growth, given the structure of the region’s economy, may not benefit the local population as much as it benefits newcomers, including low-skilled immigrants.

How to Break the Vicious Circle

There are two ways to break the circular relationship between employment, immigration, poverty, and welfare. The first is to raise annual earnings in agricultural jobs, without creating a stimulus to new, low-skilled immigration. The second is to provide year-round employment in non-farm jobs. Both represent major challenges to Sacramento Valley counties.

Raising Annual Earnings in Farm Jobs

Low productivity and seasonality are the keys to low annual earnings in farm jobs. Farm workers’ wages cannot exceed the value the farm workers contribute to production—that is, their productivity. Higher productivity, however, requires technological changes. Here, there are two options. The first is to keep the numbers of worker-days in a field the same but increase crop yields, so that the average worker produces more output than before. If this did not depress crop prices, it would make it possible to raise farm worker wages. For example, a worker paid piece rate might be able to pick more grapes from a more prolific grape vine in the same amount of time as before.

Increasing productivity has been a success story of American agriculture over the past half century. However, the production of more output with fewer workers has been a bigger story. In California, technological changes like biotechnology may continue to raise productivity on specialty farms. Nevertheless, they are increasingly directed not at quantity but at quality, for example, creating new tomato varieties that can be picked ripe but not spoil on the way to market. This is often a more profitable focus for agricultural research than simply increasing the quantity of fruits or vegetables harvested per acre, for which there may be diminishing returns (including downward pressure on market prices) and rising costs.

The main option to raise agricultural workers’ productivity—and ultimately, their wages—is by doing what U.S. agriculture as a whole has done for decades: producing output with fewer and fewer workers, via mechanization. This, however, requires an economic environment that creates incentives both to develop new labor-saving technologies and to use them once they are available. It also may require a shift in production from more to less labor-intensive crops. In the current environment of low real wages for farm workers and an elastic or responsive supply of new low-skilled workers from abroad, however, the incentives to adopt new labor-saving practices are largely missing. Enactment of an agricultural guest worker program would risk weakening these incentives further.

The Nonfarm Employment Option

Our Poverty Amid Prosperity analysis found that, in contrast to the vicious circle between farm employment, immigration, and poverty, there is a virtuous circle between non-farm employment, immigration and poverty. That is, more non-farm jobs stimulate immigration while reducing poverty, driving down welfare use. Findings presented at Changing Face conferences in California, Iowa, and Delaware (see Changing Face area of //migration.ucdavis.edu) indicate that the key difference between farm and non-farm jobs with respect to poverty is not wages, but rather, employment stability. For example, meatpacking workers in Iowa, by having year-round work, are able to buy houses and build communities in ways that are extraordinarily difficult to do in California farm worker towns because of the seasonality of farm work. This suggests three lessons for rural development in the Northern Sacramento Valley and elsewhere.

First, the creation of non-farm jobs is vital to break the vicious circles of poverty and welfare use in rural areas. The benefits of agricultural jobs in California accrue primarily to low-skilled immigrant workers (and, through remittances, to their families abroad).

Second, the characteristics of non-farm jobs are critical. In order to alleviate poverty and promote financial stability in households and communities, non-farm jobs need to be year-round, not seasonal.

Third, to alleviate local poverty, the new jobs need to be filled by local residents. Herein lies a major challenge for areas in which labor-force participation by local residents traditionally has been low and where skills and other barriers make entrance into the work force difficult. If new jobs are filled by newcomers, whether immigrants or migrants from other regions, employment growth cannot benefit local residents and offer an alternative to welfare use.

In short, poverty alleviation through job growth requires a two-pronged approach. If the local population lacks the skills to fill new jobs, the benefits of job growth will accrue to people currently residing in other areas. If the skills of local residents increase without the creation of local jobs to match those skills, economic mobility will require geographic mobility out of poor rural communities, to other areas where jobs can be found. Matching new jobs with the skills of local residents and/or preparing local residents to fill new jobs is a major challenge to poor communities as we enter the new millenium.


References

Martin, P.L. and J.E. Taylor. 1998. "Poverty Amid Prosperity: Farm Employment, Immigration and Poverty in California." American Journal of Agricultural Economics 80(November):1008-1014.

Taylor, J. E. and P. L. Martin. 1997. "The Immigrant Subsidy in California Agriculture: Farm Employment, Poverty, and Welfare." Population and Development Review 23(4):855-874 (December).

Taylor, J. E., P. L. Martin, and M. Fix. 1996. Poverty Amid Prosperity: Immigration and the Changing Face of Rural California. Washington, DC: The Urban Institute Press.

Table 1. Colusa, Sutter, Yuba, and Fresno County Demographics Compared, 1980-1990


County


Colusa
Sutter
Yuba
Fresno

1990 Population
16275
64415
58228
667490

Working-Age Population (18-65)
9114
38004
33772
393819

Residents Who Are Foreign Born (Percent)
21%
14%
9%
18%


Source: California Rural Community (CARUCOM) Data Base (//migration.ucdavis.edu)

Table 2. Population Shares by Ethnicity, 1970-2010

White
Hispanic
Asian/Pacific Islander
Black
American Indian

Panel A:


Yuba


1970
86%
5%
3%
5%
0%

1980
82%
9%
3%
4%
2%

1990
74%
12%
8%
4%
3%

1998
70%
13%
11%
4%
2%

2010
62%
16%
16%
4%
2%

Panel B:


Sutter


1970
88%
7%
4%
0%
0%

1980
79%
12%
7%
1%
1%

1990
72%
17%
9%
2%
1%

1998
68%
18%
11%
2%
1%

2010
63%
21%
13%
2%
1%

Panel C:


Colusa


1970
81%
14%
4%
1%
1%

1980
76%
20%
2%
1%
1%

1990
62%
34%
2%
0%
2%

1998
55%
41%
2%
0%
2%

2010
42%
54%
2%
0%
1%

Panel D:


Fresno


1970
68%
23%
4%
5%
1%

1980
62%
30%
3%
5%
1%

1990
51%
36%
8%
5%
1%

1998
45%
39%
10%
5%
1%

2010
40%
42%
12%
5%
1%

Source: Compiled from State of California, Department of Finance, Race/Ethnic Population with Age and Sex Detail, 1970-2040. Sacramento, CA, December 1998

http://www.dof.ca.gov/html/Demograp/Race.htm


Table 3. Population Shares by Ethnicity, 0-5 Age Group, 1970-2010


County and Year
White
Hispanic
Asian/Pacific Islander
Black
American Indian

Panel A:


Yuba


1970
84%
7%
3%
5%
0%

1980
77%
13%
3%
6%
2%

1990
63%
15%
15%
4%
2%

1998
60%
17%
18%
3%
1%

2010
49%
20%
26%
3%
1%

Panel B:


Sutter


1970
88%
7%
4%
1%
0%

1980
70%
20%
9%
1%
1%

1990
63%
24%
10%
2%
1%

1998
56%
27%
14%
2%
1%

2010
51%
30%
16%
2%
1%

Panel C:


Colusa


1970
78%
17%
4%
1%
1%

1980
62%
33%
2%
1%
2%

1990
49%
48%
1%
0%
1%

1998
34%
63%
1%
0%
1%

2010
31%
66%
1%
0%
1%

Panel D:


Fresno


1970
55%
34%
4%
6%
0%

1980
48%
44%
2%
6%
1%

1990
35%
45%
13%
6%
1%

1998
29%
52%
13%
6%
1%

2010
25%
53%
16%
6%
1%

Source: Compiled from State of California, Department of Finance, Race/Ethnic Population with Age and Sex Detail, 1970-2040. Sacramento, CA, December 1998

http://www.dof.ca.gov/html/Demograp/Race.htm


Table 4. Percentage of LEP Students, by Language and County

Language
County


Yuba
Sutter
Colusa
Fresno

Hmong
58%
3%
0%
22%

Spanish
37%
68%
99%
66%

Khmer (Cambodian)
1%
0%
0%
3%

Rumanian
1%
0%
0%
0%

Punjabi
1%
26%
0%
2%

Total, These 5 Languages
98%
98%
99%
92%


Source: Compiled from Language Census, Educational Demographics Unit, California Department of Education

Table 5. Colusa, Sutter, Yuba, and Fresno Counties: Employment, Poverty, and Welfare Use Compared, 1980-1990


County


Colusa
Sutter
Yuba
Fresno

1990 Percentage of…

Working-Age Population Employed
73%
69%
54%
69%

Work Force Employed in Agriculture
28%
11%
8%
10%

People Living in Poverty
13%
15%
19%
21%

Hispanics
21%
34%
26%
32%

People Receiving Welfare Income
12%
11%
20%
17%

Per-Capita Income

1980
$6,169
$5,988
$4,486
$5,749

1990
$9,946
$10,652
$8,003
$9,527

1980-1990 Percentage Change In Number of…

Residents
27%
23%
17%
30%

Employed Persons
31%
31%
26%
26%

Work Force Employed in Agriculture
53%
3%
26%
26%

Residents Who Are Foreign Born
NAa
1626%
427%
2235%

People Living in Poverty
50%
68%
39%
95%

Hispanics
91%
75%
22%
66%

People Receiving Welfare Income
53%
13%
46%
70%

1980-1990 Percentage Change in Per-Capita Income
61%
78%
78%
66%


a Cannot calculate percentage change because number for 1980 was 0.

Source: California Rural Community (CARUCOM) Data Base (//migration.ucdavis.edu)

Table 6. Number of Recipients of AFDC and Food Stamps, and Civilian Labor Force, Yuba County, 1996-1998


Number of Recipients, July of…


1996
1997
1998


AFDC (Adults)
3096
2489
2320

Food Stamps
13411
11845
9563

Civilian Labor Force, 18-65
20900
21100
21000


Source: Public Welfare in California, Department of Social Sciences

www.calmis.cahwnet.gov/file/demos&e/yuba1.htm

Table 7. Characteristics of Aid to Families with Dependent Children (AFDC) Recipients, Yuba County

Percentage of Recipients 16 Years and Older, July of…

Characteristic
1996
1997
1998


Sex


Male
19%
19%
19%

Female
81%
81%
81%


Age


16-20
21%
21%
21%

21-44
71%
71%
71%

45-54
6%
6%
6%

55+
2%
2%
2%


Race


White
68%
68%
69%

Black
3%
3%
4%

Hispanic
10%
11%
11%

Asian & Pacific Islander
17%
16%
15%

American Indian
1%
1%
1%

Filipino
1%
0%
0%

Source: Employment Development Department Estimates

www.calmis.cahwnet.gov/file/demos&e/yuba2.htm

Table 8. Characteristics of Economically Disadvantaged Persons, North Central Counties, 1990


Number
Percent

Race

White
14687
62%

Black
350
2%

American Indian
682
3%

Asian
1872
8%

Hispanic
6017
26%

Sex

Male
10394
44%

Female
13213
56%

High School

Dropout
10428
44%

Graduate
4893
21%

Disabled
5028
21%

Limited English
3478
15%


Source: 1990 Census of Population and Housing, Characteristics of Economically Disadvantaged

Persons 14 to 72 Years Old http://www.calmis.cahwnet.gov/file/demos&e/northcentral5.htm)