Stanislaus County job growth lags behind Valley

The San Joaquin Valley’s economy has grown at a slower pace this year than last year, and employment gains in Stanislaus County lag those Valley-wide, a just released business forecast shows.

But there’s good news in Merced County, according to Gökçe Soydemir, a California State University, Stanislaus, business economics professor.

Merced has been the Valley’s “fastest-growing county in employment for the past two years,” Soydemir found.

His annual report, released Tuesday, said Merced’s employment rate has grown 2.5percent this year, compared with the 0.7percent increase in Stanislaus and a 1.5percent increase for the entire San Joaquin Valley.

Soydemir spotted both positive and negative trends for the Valley.

“The ongoing drought did exact a toll on employment growth in some parts of the region,” he warned.

Stanislaus and Merced fared better than counties farther south, such as Madera, Kings and Tulare.

“It’s visible to the eye as you drive down the Valley,” Soydemir said. Farm fields look increasingly dry the farther south you go, “and you can see signs that say ‘no water, no jobs.’ ... You don’t see that up here.”

While agriculture in Stanislaus has stayed green, the economy as a whole hasn’t fared as well.

Soydemir found average weekly wages increased just 1.2percent in Stanislaus during the last year, which was well below inflation and less than the Valley-wide increase of nearly 2.6percent.

Next year he expects wages throughout the Valley to about keep pace with inflation. But Valley employers are starting to see the need for granting raises.

“Upward pressure on wages is now forming,” said Soydemir, who joined CSU Stanislaus’ faculty in 2011. “The employee turnover rate is increasing because wages have been stagnant. That’s definitely true in Stanislaus.”

To keep good employees, the professor said, employers will need to start boosting salaries.

Home prices already have skyrocketed.

“Stanislaus home values appreciated 27.1percent in 2014. The rate of appreciation was the highest in the San Joaquin Valley,” Soydemir said. “The average appreciation in home values in the Valley was 18percent. Projections point to more balanced growth in 2015 and 2016, avoiding any potentially disruptive bubbles.”

Stanislaus’ home prices plummeted during the recession, and housing problems were compounded by the foreclosure crisis. Soydemir’s numbers show that’s over now.

But soaring home values are not good either, he warned.

“We cannot sustain those rates forever,” Soydemir said. He predicted home prices soon will level off to “a balanced growth rate that’s more sustainable.”

His economic forecast also looked at big-picture trends for the Valley.

Non-farm employment categories – such as retail trade and leisure and hospitality services – performed better this year than farm-related categories like wholesale trade and manufacturing, Soydemir found.

Manufacturing employment turned negative in 2014, coinciding with a statewide decline. His report shows the Valley’s manufacturing jobs have decreased by a 0.5percent annual rate during the last decade, and “projections point to no growth or very negligible growth” during the next two years.

Soydemir said the Valley isn’t keeping pace with the state’s economic recovery.

“In areas where there is an abundance of land, labor and capital, like there is in the San Joaquin Valley, growth should surpass that of the state. This has not yet materialized, and very recently the Valley’s employment growth fell slightly below California’s employment growth,” the report states.

Besides the drought, Soydemir blamed the Valley’s relatively low employment growth on “the prevalence of unskilled labor intensity relative to skilled, as well as the shifting demand for skilled work.”

“The Valley’s unskilled workforce is a good match for sectors such as retail,” the report notes, “which require relatively less skill than other sectors, such as manufacturing, financial activities, education and health services.”

The Valley’s retail trade employment grew by 3.64percent in 2014, and it is projected to grow even more in 2015 and 2016.

This story was originally published October 28, 2014 at 3:35 PM with the headline "Stanislaus County job growth lags behind Valley."