Valley incomes fall back further

Even during the boom years, when the housing industry was roaring and employment was growing, Northern San Joaquin Valley incomes were falling further behind the rest of California.

Just-released statistics from the state Franchise Tax Board show that Stanislaus, Merced and San Joaquin county incomes didn't keep pace from 1999 through 2006. Incomes in the three counties lagged about 25 percent behind the state as a whole, according to income tax returns for couples filing jointly.

That's surprising considering that the valley's economy appeared to soar during those years. For example, Stanislaus County's unemployment rate fell from 10.6 percent in 1999 to 8 percent in 2006. The population grew by more than 225,000 and more than 83,000 new homes were built in the three counties during those eight years.

But high-paying jobs apparently didn't follow.

"Bay Area folks who made the mad rush here for housing actually hurt the local job market," said Edward Hernandez, a human resources and business management professor at California State University, Stanislaus.

Hernandez said many of those newcomers quickly realized they couldn't stand the daily commute back to the Bay Area, so they switched to lower- paying valley jobs.

"Out of desperation they'd take any job they could just to get in. They really messed up our job market," said Hernandez, noting that starting salaries declined at some valley businesses because so many qualified workers were competing for openings. "Employers loved it."

Median incomes for couples filing joint tax returns were $66,810 statewide in 2006, but they were $55,653 in Stanislaus County, $45,396 in Merced County and $59,623 in San Joaquin County.

California's highest income earners lived in Marin County, where those filing jointly earned a median $116,626. Those earning the least were in Imperial County, where the median was $37,582.

The income statistics demonstrate that creating more jobs doesn't necessarily generate wealth, said Carol Whiteside, president emeritus of the Great Valley Center. She said many of the valley's new jobs were low-paying, entry-level or service positions, rather than a healthy mix of jobs from diverse employment sectors.

"We always assume people in the Bay Area are top wage earners, but it was the Bay Area workers making lower salaries who were the ones moving here and making the those long commutes," Whiteside said.

Wealthy workers prefer Bay Area living, Whiteside said: "Even a lot of people who have higher-paying jobs here live in the Bay Area. They do the reverse commute. They like the amenities, the schools and the lifestyle better over there."

Corporate decision makers know that, Whiteside said, which is why it is so difficult to attract high-paying businesses to valley communities. "These are very big problems we're dealing with," said Whiteside, who 11 years ago founded the nonprofit Great Valley Center in part to promote the region's economy.

Education boost draws jobs

Economic experts agree that increasing education levels is key to attracting better-paying jobs.

Hernandez said many valley residents apparently realize that because enrollment at CSU, Stanislaus, is growing, especially in its master's in business administration programs for executives.

"People come here when they can't find jobs out there," Hernandez said. "The job market is so bad for many people right now that they're going to college or moving someplace better."

The region's economy started declining in late 2006 when the housing market turned. Stanislaus' unemployment rate spiked to 11.3 percent in March, home foreclosures are at record levels and bankruptcies have risen dramatically.

"The income (statistics) are going to look a lot worse the next time they release them," Hernandez predicted. "The boom has turned into a bust for many."

Bee staff writer J.N. Sbranti can be reached at jnsbranti@modbee.com or 578-2196.