Unemployment rates in Merced, Valley dip to historic lows for 2018

Merced County’s average yearly unemployment rate for 2018 reached its lowest point in at least 28 years, and rates across its neighboring central San Joaquin Valley counties dipped to new post-recession lows not seen for a decade or more.

The December unemployment rate in Merced County was estimated at 8.2 percent. That was up from 6.7 percent in November, but lower than the 8.8 percent rate reported by the state Employment Development Department for December 2017.

Figures released by the EDD on Friday indicate that for the entire year, Merced County’s average unemployment rate was 8.1 percent – the lowest rate reported by the state in figures dating to 1990, when the state agency undertook its current reporting methods.

“We’ve had a prolonged period of economic growth, really strong job growth,” said economist Jeffrey Michael, director of the Center for Business and Policy Research at the University of the Pacific in Stockton.

Over the course of the year, Merced County saw the greatest job growth in manufacturing, which added 800 jobs between December 2017 and December 2018. State and local government agencies added 500 jobs, while construction jobs increased by 400 during the year.

Farm employment in December was up about 300 positions from the year before.

In neighboring Fresno County, the yearly rate also fell to its lowest point since 1990 at 7.4 percent. Madera County’s annual rate of 7.0 percent represented the first time the rate had been at that level since 2006.

Across the Valley, “the labor force and population are growing, but at a much more modest pace,” Michael told The Fresno Bee. “But employment has been growing rapidly.”

While the year-over-year and yearly average unemployment rates showed improvement for Merced County and the Valley, however, the region continues its historic pattern of lagging behind both statewide and national unemployment rates. California’s December unemployment rate was 4.1 percent, and the overall average for the full year was 4.8 percent. Nationally, the U.S. unemployment rate was 3.7 percent in December

Employment analyst Michael Bernick, a San Francisco attorney and Milken Institute fellow who served as director of the state employment department from 1999 to 2004, acknowledged the gap that has historically existed between unemployment rates in the Valley and the statewide average.

“But the strong economy has brought down unemployment through the state,” Bernick told The Bee. “That’s why the Valley and other areas of the state that have always seemed to have double-digit unemployment are where they are at now.”

“Yes, there remains a gap between coastal counties and the Central Valley,” he added, “but even those areas have gone down dramatically” in unemployment rates.

Bernick and Michael both said they believe that employment growth will continue through 2019, albeit at a slower pace than the past couple of years.

“There’s no reason the strong employment market can’t continue, but it is likely to slow and has already started slowing a little,” Bernick said. “There’s a caveat, though, in that we don’t know the impact of external events. I would have said tariffs, but we may be getting closer to an agreement with China.”

Michael, the UOP economist, said his center is forecasting that unemployment in the Fresno area will likely bottom out at 6.9 or 7 percent for 2019 as employment growth slows.

“There is increasing uncertainty in the economic outlook, particularly related to the global economy,” Michael said. “The international outlook is seeing slowdowns in China and other export markets even independent of tariffs.” Trade tariffs between the Chinese government and the Trump administration, on top of the already uncertain outlook, “could have some additional effect on export markets and create uncertainty for businesses.”

“From agriculture to construction, folks who are thinking about prices of components and bidding jobs now that won’t be done for a year or two, they are concerned about potential surprises” from price spikes resulting from tariffs, Michael added.