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July 2012, Volume 18, Number 3

California: Labor Shortages, Housing

California farmers complained of labor shortages in summer 2012. California Farm Bureau leaders said that: "Farmers are telling us that the workers they usually see in the spring just didn't show up this year. We're just not seeing the number of people we (usually) see this time of year."

Manuel Cunha of the Nisei Farmers League predicted that labor shortages could reach 80,000 of the peak 250,000 workers employed in California's San Joaquin Valley, which Cunha says was the "worker shortage" in 1998. Cunha said that many farm worker crews were 10 to 15 percent smaller than the usual 20 to 30 workers.

When pressed, most farmers and their spokespersons could not point to specific instances of California crops that were not harvested for lack of labor. Tulare County Agricultural Commissioner Marilyn Kinoshita said: "I don't think we have a [labor] crisis on our hands." Kinoshita emphasized that workers aim to maximize their earnings, and that complaints from tree-fruit growers of too few workers to thin and harvest their crops reflect the fact that workers can earn more harvesting vegetables.

The Tulare County Farm Bureau says: "there is a great disparity between the labor pool that exists and what is needed. It's not just about better wages or benefits. People are not prepared to work outdoors. Those who are, are skilled and acclimatized to the environment."

Sanger-based farm labor contractor Fred Garza said in June 2012 he should have about 1,400 workers to thin and harvest early varieties of tree fruit but has only 1,000. Kingsburg FLC Oscar Ramos reported 500 workers in June 2012, down from 700 in 2011. Harold McClarty of HMC Farms in Kingsburg predicted that wages would go up in summer 2012 as FLCs and growers competed for available workers.

Rogelio Ponce of Sun Valley Farms in the Pajaro Valley said he had 90 workers in May 2012 but wanted 130. Berry grower J.J. Scurich said he had enough workers, but has heard talk of labor shortages and noticed "more signs in neighbors' fields" saying help wanted.

On the other hand, Firebaugh melon grower Joe L. Del Bosque said that despite fewer Mexican newcomers, he does not expect labor shortages in 2012, but "I see labor shortages in the future." Bosque said that he hired 20 people who had not done farm work before in 2011.

Tom Ikeda reported that Central Coast area vegetable growers were sharing labor via a co-op, generating win-win arrangements for workers who get more work and employers who get crops picked in a timely way.

Peter Rabbit Farms in Coachella reported that FLCs were "able to supply the workforce in our area very comfortably without any hiccups or any issues." Many farms reported that they were sticking with the same contractors used in past years, expecting them to provide workers and comply with labor and immigration laws.

Limoneira in Santa Paula, California reported that the firm is "getting by" picking its lemons, "but it is taking us a little longer than normal to harvest." Limoneira said that in 2011, a labor contractor may have had 60 to 80 people in a crew, but only half as many in 2012.

Unemployment rates in the San Joaquin Valley are dropping. Fresno county's rate dropped to 14.9 percent in May 2012, the first time in three years that the county had an unemployment rate below 15 percent. California's unemployment rate was 10.8 percent in May 2012, and the US rate was 8.2 percent.

The Brookings Institution's MetroMonitor index placed Fresno 99th among the 100 largest metropolitan areas, ahead of Little Rock, Arkansas in a ranking of how well employment, unemployment, economic productivity and housing prices are bouncing back from 2008-09 recession.

Guest Workers. AB 1544, introduced in California in January 2012, would "require" the Employment Development Department to certify that "there are not enough legal residents of California to fill all open agricultural and service industry jobs in California," so that EDD could issue permits to unauthorized workers to fill these jobs and to allow these workers' immediate family members to reside in the state. Unauthorized workers would pay fees into the California Agricultural Jobs and Industry Stabilization Program Fund, and the state would issue a report after three years on whether newly legalized permit holders displaced legal residents in the agricultural and service industries.

The bill's preamble makes a series of assertions about the importance of agriculture and deficiencies in the H-2A program to conclude that "state policy" should "assist business in these industries by providing a safe and legal way for their employees to work legally in California."

Under AB 1544, permits would be issued only to unauthorized workers who did at least "863 hours or 150 workdays during the 24-month period ending on December 31, 2008, or earned at least $7,500" from US agricultural or service industry employment (language borrowed from AgJOBS). In order to maintain legal status, permit holders would have to do 431 hours or 75 days, or earn $3,750 a year from agricultural or service industry employment, presumably in California. If enacted, EDD is to seek a waiver from DHS to implement the program by May 1, 2013.

Beginning with Utah's HB 116 enacted in March 2011, several other states are considering proposals that would legalize unauthorized workers if the federal government grants waivers that allow state governments to issue work permits to unauthorized foreigners in their states with jobs. Utah in May 2012 was considering SB 157, which would repeal the guest worker program.

Oklahoma's SB 995, introduced in December 2011, would establish a program under the state Department of Labor that would grant permits to unauthorized workers and their families to live and work in the state if they pay fees and find sponsors to hire them and provide them with basic health insurance.

Housing. It is difficult for farm workers to find affordable housing in coastal counties such as Monterey and Ventura, where rents are often $1,500 for two-bedroom units. Many farm workers, especially those who are in an area only for seasonal harvests, live with friends and relatives or in converted garages, leading to overcrowding.

NGOs sometimes obtain loans from federal and state governments to build housing, usually for farm worker families who are legally in the US. Valle Naranjal will house 66 families in Piru in what used to be the Piru Labor Camp after a 66-unit apartment complex replaces 10 barracks-style buildings. In apartments built with USDA and HUD loans, rents are normally limited to 30 percent of income. Replacing barracks with apartments helps families but does not provide housing for the solo males who often arrive in agricultural areas to harvest crops.

Duroville, the Desert Mobile Home Park, continues to bedevil Riverside county officials, who missed a deadline to use $12 million in redevelopment funds to buy 181 new mobile homes for the remaining 1,500 residents who live in Duroville. Harvey Duro, a member of the Torres Martinez Desert Cahuilla Indians, opened 40 acres of his land to farm workers in 1997 after Riverside county began to more aggressively enforce housing regulations. Duroville, on tribal land, is not subject to local and state health and safety codes.

Some Duroville residents migrate to the San Joaquin Valley for the summer harvests. They expressed concerns that they may be gone in summer 2012 when the place to which they are scheduled to move, Mountain View Estates, finally opens.

Budget. California's budget deficit for 2011-12 widened from $9 billion to $16 billion in spring 2012 as tax revenues lagged and expenditures were higher than projected after courts blocked some planned cuts. In June 2012, legislative Democrats and Governor Jerry Brown reached an agreement on a budget that will prompt $6 billion in additional cuts if voters do not support a November 2012 initiative that aims to raise $8 billion by increasing the state sales tax from 7.5 to 7.75 percent and imposes an income tax surcharge on Californians earning $250,000 or more.

The Legislature approved a $92 billion budget with stricter work requirements and tighter time limits for welfare recipients, but checks will not be reduced. After Governor Jerry Brown's line-item vetoes, California's 2012-13 general fund budget is $91.3 billion, or $142.4 billion including dedicated funds and bond money.

There were many commentaries on California's budget problems. Most attributed the structural budget deficit to polarization in the Legislature, that is, Republicans who refuse to raise taxes and Democrats who refuse to reduce spending. With the parties deadlocked, governors often agree with the Legislature to make optimistic revenue projections in order to close the deficit and defer hard decisions on taxes and spending.

Some commentators blame state residents who enact initiatives such as Proposition 13 that reduce taxes and also approve spending via initiative, from child care services to the bullet train, that require more spending.

In June 2012 elections, voters in San Diego and San Jose approved cuts in pension benefits for current and future workers by wide margins. A combination of factors, including reductions in basic public services and the fact that police and firefighters can retire after 30 years at 90 percent of their highest salary, contributed to the 65-35 percent vote to reduce pension benefits. The laws approved in San Diego and San Jose allow current workers to continue to receive generous benefits if they contribute more to the cost of these benefits.

Unions representing public sector workers said that, with polls showing that laws to reduce pensions would pass by large margins, they saved their funds for legal challenges to the new laws. California courts have consistently ruled that pension benefits, once given, cannot be taken away.

In-Home Supportive Services illustrates the problems with California budgeting. IHSS employs 423,000 care givers to provide services to the elderly and disabled in their homes at wages ranging from $8 to $15 an hour, depending on the county in which they are employed. Almost three-fourths of IHSS care givers are relatives of the person to whom they are providing care, and 250,000 are represented by the Service Employees International Union, which had a law enacted to create a public "employer" in each county with whom the SEIU could negotiate.

The SEIU, which says that current wages are below "liveable levels," wants to change bargaining so that the union bargains with the state for wage increases rather than with the employers created in each county. It believes that statewide bargaining may enhance its power to win larger wage increases. The federal government pays almost half of the cost of IHSS, the state a third, and counties almost 18 percent.

The 290,000-resident city of Stockton became the largest US city to seek Chapter 9 bankruptcy protection in June 2012. Stockton stopped paying some creditors, cut employee pay and benefits, and laid off employees. Vallejo filed for bankruptcy in 2008.

California's coastal areas closest to the Pacific Ocean appear to be booming or stable as the return of high-tech in northern California and biotech in southern California stabilized home prices. However, inland economies sustained by population growth and construction housing are struggling. Home prices are down in the San Joaquin Valley, many home owners owe more on their mortgages than their homes are worth, and the gap between per capita income is widening between the San Joaquin Valley and the richest areas of California such as San Francisco.

California's population rose by 250,000 to 37.7 million at the end of 2011, marking a slowdown in the population growth rate to just 0.7 percent. During the 1980s, the state's population increased by two percent a year due to a combination of births, internal migration to California and immigration. During the 1990s, population growth slowed as fewer Americans moved to California from other states. Between 2000 and 2010, more Americans left California than moved to the state.

California has 10 million immigrants, a quarter of the 40 million immigrants in the US. Immigrants are over a quarter of California residents.

California may be developing a three-tiered population, with a wealthy class of entrepreneurs, a middle-class dominated by highly skilled professionals and public employees, and a poor class that includes both immigrants and natives. About 40 percent of Californians do not pay any income tax and 25 percent are in the MediCal health insurance program because they have low incomes.

Los Angeles. On April 29, 1992, four police officers were acquitted in the beating and arrest of Rodney King, sparking four days of riots in the 51-square mile South Central Los Angeles. Over 2,200 Korean-owned stores were burned, damaged or looted, accounting for an estimated half of the riot's total financial damage. After the riots, many community groups tried to prevent the reopening of Korean-owned liquor stores.

An outpouring of government and private aid followed the riots. The five-year Rebuild LA organization aimed to combine $6 billion private and public investment to create at least 75,000 jobs, but delivered far fewer. For example, an automotive repair training center closed because it could not find enough qualified applicants. In 2012, South Central LA is peaceful, but real median income is lower in 2012 than it was in 1992, and the unemployment rate is higher.

One analyst noted: "investment in depressed areas" is not attractive to private investors, who avoid areas with "bad schools, poor people and crime." The share of Blacks in South Central Los Angeles fell from about 50 percent in 1992 to 30 percent in 2012, as middle-class Blacks moved out. Hispanics are now two-thirds of South Central Los Angeles residents.

City of Los Angeles police chief Charlie Beck in March 2012 ordered officers to stop impounding the vehicles of drivers without licenses if a licensed driver can come to the scene and drive the car away. Oakland, San Francisco and San Jose have similar policies, and a bill pending in the legislature would extend the no-automatic 30-day impound policy for unlicensed drivers statewide. The costs of 30-day impounds are often more than the value of the cars often driven by unlicensed drivers.

Robert Rodriguez, "Valley faces smaller crop of workers," Fresno Bee, June 15, 2012. Ricardo Lopez, "Blacks in South L.A. have a bleaker jobs picture than in 1992," Los Angeles Times, April 28, 2012.