Modesto among nation’s top financially stressed cities, assessment finds
Modesto is one of the cities experiencing the most financial stress nationwide, according to a new analysis by a New York-based financial technology company.
The assessment, released by SmartAsset, ranks Modesto 17th in the nation for financial stress, and second-highest among California cities. The top 15 spots are dominated by cities in Nevada and Texas, but New Orleans is No. 1 overall.
Modesto is joined in the top 25 by Bakersfield (No. 13), Long Beach (No. 18) Huntington Beach (No. 21) and Los Angeles, which is in a three-city tie for 22nd, alongside Tulsa, Oklahoma and Lubbock, Texas.
No California cities made the top 25 last year, which also saw New Orleans as the nation’s most financially stressed city.
SmartAsset’s 2020 assessment compares the nation’s 99 largest cities, taking into consideration eight contributing factors:
- Unemployment rate
- Percentage of its population below the poverty line
- Percentage of households severely burdened by housing costs
- History of housing insecurity
- Food insufficiency
- Percentage of the population who have forgone doctors’ visits due to the cost
- Four-year changes in median household income
- Divorce rate
Modesto’s May unemployment rate of 16.1% was higher than the statewide average, and has been impacted heavily by the coronavirus crisis. The poverty rate was 15.2%, while the percentage of households burdened by housing costs was 10.46%. In Modesto, 14.3% of adults have recently experienced food insufficiency.
While COVID-19 and the resulting economic downturn have definitely contributed to the spike in unemployment and other financial stressors, Gökçe Soydemir, the Foster Farms endowed chair of business economics at California State University, Stanislaus, said he isn’t surprised by Modesto’s high placement in this year’s ranking.
The Central Valley usually experiences above average levels of unemployment, he said, and the local housing market has been experiencing an inventory shortage for years.
“Areas like Modesto are more vulnerable to economic shocks, supply side shocks, and all that,” Soydemir said.
He said the city and the makeup of a county’s labor force factor into rankings like SmartAsset’s. Much of Modesto’s labor force is in agriculture, manufacturing and other industries that are considered unskilled, and have been hit especially hard during the pandemic. The seasonal nature of agricultural work also contributes to fluctuating unemployment rates across the Central Valley.
As Modesto and Stanislaus County’s unemployment rate continues to lower from a high in April, economists predict there could be short-term recovery as early as this winter, with longer-term recovery in 2021 and into 2022.
The county’s July unemployment measured 13.6%, down from 15% in June, according to data released by the state Employment Development Department. Local data released by the state EDD is not seasonally adjusted. June and July’s decreases in unemployment marked a further recovery from April’s high of 17%. Statewide unemployment in July was at 13.3%.
As California continues to adapt to the long-term changes in its economic landscape caused by the pandemic, different industries are expected to recover at different rates. The Central Valley has high rates of retail and restaurant workers, as well as other industries that were initially hard-hit by the pandemic, and saw a dramatic loss in jobs.
“(These jobs were) the first in line to go,” Soydemir said, “and we have a greater number of them.”
This story was produced with financial support from the Stanislaus Community Foundation, along with the GroundTruth Project’s Report for America initiative. The Modesto Bee maintains full editorial control of this work.
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This story was originally published September 6, 2020 at 5:00 AM.
