These areas saw job growth in Merced County despite high unemployment rate

Merced County continues to grapple with one of the highest unemployment rates in California’s Central Valley, despite posting job growth in key areas such as manufacturing, agriculture and the public sector.

Director of Workforce Investment, Erick Serrato, said the county’s unemployment rate was recorded at 10.4% in May, down from 11.3% in April. This figure, while it is improving, remains the highest in the region with neighboring Stanislaus and Madera counties recording significantly lower rates in April at 7.2% and 8.5%, respectively.

The county saw its lowest unemployment rate in recent years at 6%, twice in the last decade in September 2019 and then again in September 2022. Following the onset of the COVID-19 pandemic, the county’s unemployment rate skyrocketed to 13.8%. Since the end of the pandemic, the county’s unemployment rate has steadily risen.

Serrato noted that Merced County’s unemployment rate typically peaks in February and declines through the summer months, with September often marking the annual low point. Historically, the highest unemployment rate was recorded in the mid-1990s at about 26.4%.

Merced County’s labor force is made up of about 123,000 workers, a figure comparable to Marin and Santa Cruz counties, Serrato said. Of those, about 110,000 are employed at any given time. Despite the overall labor pool, Merced County consistently ranks among the highest in unemployment statewide and is historically the second highest in the Central Valley.

Neighboring Stanislaus County and Madera County recorded March unemployment rates of 7.2% and 8.5% respectively. Serrato said that over the past year, the county has seen overall jobs growth increase by 3.9%. While the exact cause of that growth is unknown, Serrato said the figures suggest that Merced County employers are expanding and adding workers.

“We don’t see a lot of data that suggests there’s a wave of new businesses being born,” Serrato said. “So that growth is more likely attributed to employment growth within existing businesses.”

Transportation and warehousing, comprising about 3% of the workforce, saw a decrease of 9.1%.

The University of California, Merced continues to play a pivotal role as one of the fastest growing and most stable full-time employers in the county while continuing to keep the workforce diversified and strong. As the university continues to grow, its influence on local employment figures increase.

Manufacturing jobs, which make up about 8% of the county’s workforce, have seen the most significant growth at 13.1%. Agriculture, which represents about 10% of local jobs, recorded a 6.2% increase. Serrato stressed the important role agriculture plays in supporting the broader economy, even though it’s not the largest job sector.

“Even though agriculture on its own is not the largest job sector, it is so integral to our economy that it largely makes all of the other sectors possible,” said Serrato. “It’s what you want to see.”

The closure of the SaveMart Distribution Center in 2024 resulted in the loss of about 275 jobs and a decline in transportation jobs. Serrato said that many of those displaced workers were truck drivers and while their union and Worknet Merced County provided support helping drivings find new employment, job responsibilities and commute distances were affected.

“Luckily there’s been a strong need for truck drivers and so a lot of those workers were able to find jobs pretty rapidly,” said Serrato. “ However, the job quality and the job requirements likely changed.”

This result was truck drivers who had previously worked in positions transporting goods locally, to taking positions that required transporting goods over longer distances, or taking positions with employers outside of Merced County leading to a longer commute for the worker, Serrato said.

While Stanislaus County has seen a wave of layoffs recently, Serrato said Merced County has not experienced such an event. As Stanislaus County has the strongest economic ties to Merced County, Merced’s economy has done reasonable well, but Serrato warned that it doesn’t take much to depress the economy should it experience a large amount of job loss.

Serrato highlighted the importance of tradable sectors such as agriculture and manufacturing in driving economic growth due to the production of goods sold outside the county. Non-tradable sectors such as healthcare and public sector, primarily circulate money within the local economy.

“Economies grow based on their tradable sectors, not on their non-tradable sectors,” said Serrato.

Despite strong performance in certain sectors, unpredictable variables pose risks to the county’s economic stability. These risks include federal and state budget cuts, tariffs and port slowdowns.

“We have a significant number of our workers that are involved in truck driving,” Serrato said. “If you have slowdowns at the Port of Long Beach, or the Port of L.A., or the Port of Oakland, that affects workers in our county because they are the people who transport the goods up and down the state.”

While tariffs could have little to no impact on the Central Valley economy, Serrato cautioned that they could pose a potential threat as it would affect trade partners especially for goods such as fruit, nuts and vegetables.

According to recent report by NPR, port officials at the Port of Los Angeles, the busiest port in the Western Hemisphere, reported seeing a 35% drop in cargo for the first week of May since tariffs against Chinese goods increased, compared to the same week the previous year.

“If we continue to see a depression in activity at the ports, then it could put truck drivers out of work or it could certainly make it less lucrative for them to be in that kind of business,” Serrato said.

While there currently are no indicators showing a lot of atrophy in that sector, Serrato said that is something experts continue to monitor.

Serrato said that while jobs for recent college graduates entering the workforce exist, ongoing studies are being done to determine whether the local economy can absorb the growing number of graduates, such as those from UC Merced.

“If there are enough jobs in our area that require a college degree, it would make sense for them to stay,” said Serrato.

Of Merced County’s 110,000 workers, it is estimated that about 27,000 county residents commute to areas outside of the county for work on a daily basis, Serrato said. The result is a disproportionately high number of “supercomputers” who are commute two or more hours each way for work. Stanislaus County and Santa Clara County are the number one and number two destinations respectively, where Merced County residents are traveling to on a daily basis for work.

Those traveling long distances for employment likely do so for a significant increase in wages relative to what they would be able to earn within Merced County, Serrato said. Whereas those who commute to a neighboring county such as Stanislaus County likely do so for wages that are $1.50 - $2 more than what they would earn in Merced County.

With Merced County facing the same generational issues that most of the country faces by becoming demographically older due to declining birth rates and aging residents, even with the influx of students, Serrato said Merced County’s jobs are becoming more diversified and the county’s workforce is getting better. He said that 20 years ago the county had a larger concentration of jobs in agriculture, now the county is seeing a strong and robust education and public sector as well as a growing healthcare sector while still seeing growth in agriculture which show good signs for the local economy.

Serrato said overall, the county has shown a lot of resilience.

“We haven’t had major layoffs, we continue to grow in the right sectors–there’s really interesting points of innovation in terms of the employers that are growing, so the signs are generally good but the outcome because of tariffs and other factors is making it a little unpredictable,” he said.

Information about Worknet Merced County and the services offered can be found at the Worknet Merced County website.