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April 2011, Volume 17, Number 2

California: SJV Jobs, Budget

Fresno county, which has almost a million residents, has both labor surpluses and shortages. The county's unemployment rate was 17 percent in winter 2011, but some employers complained of too few applicants for jobs requiring skills that range from welding to nursing. There were similar complaints in other areas. Across the US, the number of job openings rose from a low of 2.3 million in July 2009 to 3.2 million in November 2010, but many employers complained that they could not find qualified workers to fill vacant jobs.

High unemployment alongside hard-to-fill job vacancies in Fresno and elsewhere raises questions about whether persisting high unemployment rate due to too little aggregate demand, suggesting the need for more government stimulus to create jobs? Alternatively, the restructuring of the economy during the 2008-09 recession could have prompted layoffs of workers who require retraining to make them attractive to employers with job openings. Government action may be needed in both cases, but the first implies spending on direct and indirect job creation and the second suggests support for retraining.

Fresno has a Regional Jobs Initiative to prepare workers to fill jobs that require skills. However, employers say that the training provided by the RJI may not be appropriate. Employers often do not know exactly what skills the jobs they create will require, making it hard for them to provide advice to community colleges and other training programs. Many of the jobs offering higher wages to better trained residents are in the public sector, which is not expected to expand significantly in Fresno because of state and local budget deficits and a reluctance to raise taxes.

The California Employment Development Department's forecasts for Fresno country between 2008 and 2018 suggest that employment will rise slowly, from 390,000 to 410,000. Total farm employment is projected to remain stable at about 50,000 and manufacturing employment stable at about 27,000, including almost half in food-related manufacturing. Many of the new and replacement jobs in Fresno are in services, including cashiers, that require little training and offer relatively low wages.

The Fresno county city of San Joaquin has a higher share of children under 18 than any other California city, 41 percent compared to the state average of 25 percent. Orange Cove has the second-highest share of children. Both cities are over 95 percent Hispanic, and both have per capita incomes lower than the per capita income of Mexico, which was $10,000 in 2009, or $14,000 at purchasing power parity. Per capita income in San Joaquin was $8,000, and $7,500 in Orange Cove.

Stockton, a city of 292,000 an hour south of Sacramento, was named "America's most miserable city" by Forbes magazine in February 2011. Other cities in agricultural areas of California on the "worst city" list included Merced (ranked 3), Modesto (4), Sacramento (5), Vallejo (9), Fresno (17), Salinas (18) and Bakersfield (20). San Joaquin Valley cities were on the list because of high unemployment rates, declining house prices, and high crime rates. Stockton residents plan a "Stand up for Stockton" rally April 23, 2011 to counter the Forbes ranking.

The New York Times profiled Imperial county on March 16, 2011, emphasizing its high unemployment rate, about 30 percent. The report attributed the shrinking number of jobs in the county to the declining need for farm workers, the construction bust, and tighter border security that discouraged Mexicans from nearby Mexicali from visiting the US to shop; border waits increased from 20 minutes a decade ago to two hours or more today. Some experts attribute Imperial's high unemployment rate to the fact that some farm workers who live in Mexico and are laid off from US jobs count as unemployed even though they are not part of the Imperial labor force because they live in Mexico. The fact that some workers live in Mexico raises Imperial's unemployment rate.

Chowchilla in January 2010 did not pay the interest due on a municipal bond used to build a new City Hall; the ambitious project included commercial space that could not be rented. Chowchilla's economy depends on agriculture and prisons (8,000 of the 19,000 residents are inmates), but an 18 percent unemployment rate led to a million-dollar city budget deficit. Some California cities filed for bankruptcy. The Bay Area city of Vallejo filed for bankruptcy in 2008 after failing to re-negotiate contracts with police and firefighters that reduced wages and benefits. Bell, a largely Hispanic city in Los Angeles county, may have to file for bankruptcy after a scandal involving high wages for staff and council members.

Tensions linger in the Monterey county city of Greenfield, which attracted UFW leaders for a March 27, 2011 march in honor of Cesar Chavez. Many of Greenfield's 16,000 residents are from Oaxaca and speak native dialects rather than Spanish. There have been tensions between local residents and newcomers, with residents complaining that men waiting for day labor jobs "harass" children walking to high school.

About 40 percent of Greenfield's residents were born abroad, and over half of those 25 and older did not finish high school. Over 90 percent of residents are Hispanic, and over 80 percent speak a language other than English at home. Agriculture is the major industry, employing almost 30 percent of workers, followed by educational and health services for the city's numerous children. Per capita income in Greenfield in 2009 was $14,000, about the same as the per capita income of Mexico at purchasing power parity.

Budget. Jerry Brown, re-elected as governor in November 2010 and facing a $25 billion budget deficit for 2010-11, proposed to eliminate the deficit in the $85 billion general fund budget by reducing state spending by $12.5 billion and raising $12.5 billion by extending income, car and sales taxes that expired recently or will do so in summer 2011. Budget bills signed in March 2011 reduce the deficit by $11 billion by reducing cash welfare grants by eight percent and ending cash support for parents after four years, down from five years.

Brown also proposed that responsibilities for more government programs, and the power to raise taxes to fund them, be shifted from state to local governments. For example, Brown proposed eliminating the state's 400 local redevelopment agencies that give about $5 billion a year in tax breaks to private developers to improve blighted neighborhoods. Local governments protested that eliminating redevelopment agencies, which have been funded with property taxes since 1952, would deprive them of their most effective economic development tool.

Redevelopment agencies designate an area in their jurisdiction as blighted and establish a baseline value of property within the area. They then issue bonds to finance land purchases and infrastructure improvements, transfer the land they bought to private developers, and repay the bonds from the higher property taxes. In 2010, redevelopment agencies controlled about 12 percent of the state's property taxes.

California's debt tripled between 2000 and 2010 as voters approved, inter alia, initiatives that provided $3 billion for stem-cell research, $10 billion for high-speed rail, and $14 billion for parks and water projects. This borrowing, combined with the recession, made California the seventh most indebted US state in 2010 as measured by the ratio of public debt to personal income.

Tim Sheehan, "Valley job growth outlook: slow pace, low pay," Fresno Bee, March 13, 2011. Michael A. Fletcher, "Why does Fresno have thousands of job openings - and high unemployment?" Washington Post, February 2, 2011.

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