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January 2006, Volume 12, Number 1

San Joaquin Valley: New Appalachia?

The Congressional Research Service released a 353-page report in December 2005 that found per capita income in the eight-county San Joaquin Valley lower than in the 68-county Central Appalachia region; rates of welfare dependency were higher in the San Joaquin Valley. Both regions are anchored by one industry: the San Joaquin Valley depends largely on agriculture, while Appalachia depends largely on mining.

The CRS study was requested by San Joaquin Valley Congressional representatives to justify more federal funds for economic development, such as those provided by the Appalachian Regional Commission via the Tennessee Valley Authority.

The San Joaquin Valley has five of the top 10 US farming counties, with Fresno and Tulare counties in the number 1 and 2 spots. The San Joaquin Valley accounts for about half of the state's farm sales, or $12.5 of $26 billion in the 2002 Census of Agriculture. Most San Joaquin Valley commodities do not benefit from government subsidies except for milk, hay and cotton, which are a third of the San Joaquin Valley's farm sales. Other San Joaquin Valley commodities that could be threatened by freer trade include raisin grapes, oranges, flowers and nursery products, cling peaches and avocados.

The unanswered question in the CRS report is what would happen to seasonal farm workers and their children, up to a quarter of the San Joaquin Valley's 3.3 million residents, if government farm subsidies were reduced or there was freer trade. The San Joaquin Valley has been attracting migrants despite double-digit unemployment rates, largely because conditions are even worse in rural Mexico. Without seasonal farm jobs, the San Joaquin Valley could come to resemble Appalachia, with young people leaving for education and not returning, and the remaining residents with homes and other local attachments not attractive to investors.

Trends. In the mid-1970s, Fresno county's unemployment rate was almost a point below the state average, eight compared to nine percent, and the county's per capita income was 90 percent of the state's. In 2005, 30 years later, Fresno county's unemployment rate is twice the state rate, and its per capita income is about two-thirds of the state's.

The change in Fresno county's economic fortune has been blamed on the seasonality of agriculture, the immigration of seasonal farm workers, welfare and poor schools. The influx of migrant farm workers helps to hold down wages in other low-skill sectors, from clerical jobs to construction. Some say that the so-called golden era for Fresno and the San Joaquin Valley was an illusion, and that economic conditions looked better than they were in the past. For example, farm workers were not generally eligible for UI benefits until the late 1970s, so they were not counted as unemployed during the 1950s and 1960s.

A 2003 interview with an unauthorized worker in Orange Cove illustrates agriculture's insatiable appetite for more workers: "Everybody wants another type of work. Why? Because it's too hard for the body." This worker reported picking two tons of oranges on a good day and earning $60, representing $15 a 1,000 pound bin.

Areas of concentrated poverty are usually defined as those in which 40 percent or more of residents have incomes below federal poverty guidelines. Among the 50 largest US cities, Fresno had the highest percentage of residents living in areas of concentrated poverty. According to the 2000 census, 44 percent of Fresno residents, including 18 percent of whites, 45 percent of Blacks, and 50 percent of Hispanics, lived in concentrated poverty in Fresno. Across the US, 10 percent of all residents lived in concentrated poverty in 2000, including six percent of whites, 19 percent of Blacks, and 14 percent of Hispanics.

USDA's Rural Development program made $390 million in grants and loans in California in 2004. Some $675,000 in economic impact initiative grants is reserved for cities with unemployment rates of 19.5 percent or higher. Mendota, Parlier and San Joaquin received funds for new police and fire equipment under the program, which distributed $21 million in 2005.

Builders in the eight-county San Joaquin Valley will have to pay fees of $450 to $780 per housing unit to help finance programs to improve air quality in the region. The San Joaquin Valley Air Pollution Control District fees, the first in the US, will go into effect in March 2006 unless blocked by builders who plan to sue. The San Joaquin Valley district said that, with mountains on three sides and limited winds, strong action was needed to limit growing air pollution; a sixth of San Joaquin Valley children have asthma.

The city of Los Angeles and other southern California cities own farm land in Kern county on which they spreads treated sewage sludge. Kern residents have qualified an initiative for the June 2006 ballot that would ban the practice of using human waste on fields used to grow hay and grains. Three counties - Sutter, San Joaquin and Stanislaus - have already banned the import of sludge for spreading on farm land, and nine others have strict rules that make the importation all but impossible.

Housing. According to the National Association of Realtors' Affordability Index, a measure of the average household's ability to buy a home at current interest rates, California coastal areas with farm workers were the least affordable in the third quarter of 2005. Salinas topped the list of unaffordable places, where a typical family could afford only 41 percent of a house; followed by Santa Cruz-Watsonville, 44 percent; Santa Rosa 45 percent; and Santa Barbara-Santa Maria, 49 percent. In both San Francisco and Los Angeles, a typical family could afford 50 percent of a house.

The US has 379 metro areas, and in 47 homes were so expensive in Fall 2005 that a family earning the median income could not afford the median-priced home based on traditional lending standards.

State law requires inspections of employee housing, defined as privately owned and operated accommodations for five or more employees Most major farming counties (Frenso, Tulare, Kern, Monterey, Napa) do these inspections locally, while HCD employees do them in other counties.

In 2003, there were 23,000 employees housed in inspected facilities, and 1,700 found in illegal facilities. Fresno county reported 4,000 employees in inspected facilities and 370 in illegal facilities; Sacramento 1,000 in inspected facilities; San Joaquin 1,800 in inspected facilities; and Tulare 1,450 in inspected facilities.

California requires counties and cities to plan for building the housing needed to accommodate growing populations. Williams, at the intersection of Highway 20 and Interstate 5 in the Sacramento Valley, was given goals of 74 very low-income housing units and 64 low-income housing units over five years. Williams secured $6.5 million in grants and loans for 50 year-round migrant housing units and 10 seasonal migrant units.

California voters approved Proposition 46 in 2002, a $2.1 billion housing bond that included $200 million for farm worker housing. Proposition 200 allowed public organizations, non-profit groups and agricultural employers to apply for grants of up to $3 million to build new housing and up to $1 million to rehabilitate existing housing.

The Ripley Migrant Farm Worker Center near Blythe is to be remodeled, reducing 100 seasonal units for families to 76 larger-units open year-round, with some reserved for farm worker families. State funds will provide $3 million for the remodeling, and Riverside county funds another $1.6 million.

Between 1980 and 2000, half the new US housing was built in a development project governed by a neighborhood association; 50 million Americans now live in such developments. Neighborhood associations are credited with providing controls over the neighborhood environment desired by the residents and providing high-quality common services.

Across the US, a combination of lower mortgage interest rates and rising incomes have kept housing affordable for most Americans, helping to drive the home ownership rate to a record 69 percent in 2005. Banks today are willing to give mortgages to people with little or no down payment, compared to the 20 percent down payment often required in the 1980s.

Patrick McGreevy, "Voters Seek to Block Sludge," Los Angeles Times, January 2, 2006. Umbach, Kenneth W. 2005. San Joaquin Valley Land, People, and Economy. California Research Bureau. CRB-05-007 Cowan, Tadlock. 2005. California's San Joaquin Valley: A Region in Transition. Congressional Research Service. December 12. George Hostetter, "Broke ... and Broken," Fresno Bee, September 7, 2003.

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