Fish versus Farms 2: Geography of San Joaquin Valley unemployment

Thanks (again) to Matt Weiser of the Sacramento Bee, we learn of an August 11, 2009 report by economists at the University of the Pacific’s Eberhardt School of Business - Business Forecasting Center titled Unemployment in the San Joaquin Valley in 2009: Fish or Foreclosure?. It is an important read that compares the effects of the construction industry slowdown to water deprivations on the San Joaquin Valley economy.

Apologies for the length of the post, but it is mostly citation of the U of P report, with commentary at the margins. So to get warmed up, let’s begin with a few key excerpts gleaned from the report:

“The San Joaquin Valley has the highest foreclosure rates in the nation, as well as the largest decline in residential real estate values.”

“We estimate that water shortages are costing the San Joaquin Valley approximately 6,000 jobs in 2009 and have increased unemployment by approximately 0.3 percentage points. In contrast, we estimate the decline in private construction activity alone has eliminated 47,000 jobs and boosted unemployment by at least 2.5 percentage points.”

“Farm employment is up significantly since the drought began in 2006, and has even increased slightly during the first half of 2009 compared to 2008, despite severe water shortages in some areas.”

“As of June 2009, the data shows farm jobs in the seven counties south of the Delta water pumps is 3,200 higher than in June 2008. Over the same 12 month period, private non-farm employment in the same areas declined by 30,200. Compared to the beginning of the recession two years ago, farm jobs are up by 12,500, while private non-farm jobs have declined by 40,400. Of course, this doesn’t mean that the drought has had no impact, as some farming areas on the west side of the Valley have suffered significant drought losses.”

In other words, there has been an increase in the number of farm jobs each year of the three-year drought, but the Westlands Water District has seen decreases in farm employment. Remember from my previous fish versus water post that it is to the WWD that Sean Hannity is traveling, no doubt to continue to scapegoat environmental regulation for the San Joaquin Valley’s woes.

To continue with excerpts:

“Berkeley Economic Consulting, led by UC Berkeley Professor David Sunding, recently estimated the impacts of Delta Smelt pumping restrictions for a group of Delta water exporters. Using 2007 crop prices, Sunding et. al. estimate Delta Smelt pumping restrictions will result in $61.35 million in reduced agricultural revenue.” [The report can be found here.]

“The fact that current payroll data for the Valley consistently shows farm employment gains suggests that the drought impact may be closer to 0 than 11,700. To be conservative, our final estimate of total job losses from the current water shortage is 6,000, slightly above the midpoint between the lower and upper bounds. Estimated income loss (except pumping costs) would be adjusted in a similar manner, placing total losses at $500 million which are highly concentrated geographically on west side farms.”

Again, the economists’ analysis points to the Westlands as the district most hurt by water restrictions. Of course, since they are the last on the water rights food chain, one might expect that they would be hurt the most. Is the WWD promoting socialist policies, and isn’t that what the Bureau of Reclamation has long provided to water districts like Westlands?

More excerpts:

“The model shows a direct employment decrease of 23,908 construction jobs. California EDD data show an actual loss of 32,300 construction jobs in the San Joaquin Valley since June 2006, which supports the argument that our estimates of construction related job losses are very conservative.”

“The rise in unemployment is creating great economic hardship in the San Joaquin Valley, particularly among lower income households in the Central Valley. A disproportionate share of the impact has been felt by Latino households who make up large shares of employees in the construction and farm sectors. We estimate that water shortages from the drought and Delta environmental needs have led to the loss of 6,000 jobs and $170 million in employee compensation across the San Joaquin Valley. The collapse in construction has cost 47,000 jobs and $1.8 billion in employee compensation.”

One way to understand the data above is: Will state and federal policies continue to subsidize big agriculture while denying health care to poor farm laborers? The report ends with a few conclusions and observations regarding the impact of endangered fish protection on farm employment, and the history of unemployment in the Westlands since the Central Valley Project started irrigating that desert.

“Most experts agree that no more than one-third of the current reduction in water deliveries from the Delta can be attributed to actions to protect the Delta Smelt. The drought has a much larger impact. Thus, no more than 2,000 lost jobs can be attributed to the protection of endangered species in the Delta. The Berkeley Economic Consulting study puts the loss well below 1,000. Compared to the San Joaquin Valley’s labor force of 1.84 million, environmental restrictions have increased the San Joaquin Valley unemployment rate by no more than 0.1 percentage point, and total water related losses have increased unemployment by 0.3 percentage points. The evidence is clear that water shortages are not the primary driver of unemployment. Most media reports are citing exaggerated water shortage job losses that are 5 to 15 times the actual impact.”

“The first Central Valley Project (CVP) water was delivered to the area in 1968 and starts the intensification and transformation of the local agriculture industry. In 1982, the Reclamation Reform Act eliminated the residency requirement and increased the acreage limits for farms receiving subsidized CVP water deliveries. Irrigation water has clearly increased agricultural production, farm income, farmland values, and the demand for farm labor in the area. It is very debatable whether increased irrigation water improved the overall prosperity of the communities or its residents. In 1960, these communities had single digit unemployment rates comparable to the rest of the United States and California. In 2000, they were among the poorest places in America. Mendota’s 32% unemployment rate in 2000 was the highest of all 474 towns in California.”

This is an important, and objective, report that should be of great use to all Delta advocates. But it also should be useful to all who believe in broadening the coalition of local and environmental advocates who currently dominate opposition to Delta water exports. Clearly, those who labor on farms or in construction are suffering the most in the San Joaquin valley depression. This constituency is primarily Latino, and is in danger of being co-opted by pro-Peripheral Canal forces, discussed here and transcribed here. Aim your broadsides more precisely, pro-Delta groups. Aim it at the unsustainable and toxic agricultural system in the Westlands!

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Posted by John Bass on 11 Aug 2009 | Comments (0)

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