Central Valley wages 25% less than state average

It's no surprise that wages and income in the Valley are lower than average in California. But 25% lower?

That's how far the average compensation per job in Fresno County lagged behind the state average in 2009 in new statistics from the U.S. Bureau of Economic Analysis.

It's not just wages and benefits. Per-capita income -- a measure of personal income from all sources, divided by the number of residents -- is even more discouraging. Fresno County ranked 45th among California's 58 counties. Tulare, Madera and Kings counties each ranked among the bottom seven.

What's happening in the Valley? The answers aren't as obvious as one might expect.

Agriculture generally is considered the bedrock of the Valley's economy -- and low farmworker wages often are blamed for weighing down the region's pay and income.

But the bureau figures and local economic experts suggest other factors also are at play.

"A lot of it has to do with the industry mix, the characteristics of the industrial base here," said Antonio Avalos, a professor of economics at California State University, Fresno. "And agriculture is not necessarily the most important part of that."

Among the issues involved in the Valley:

  • Higher unemployment.
  • More reliance on public assistance.
  • A lack of high-tech and heavy manufacturing industries that buoy wages in other parts of the state.
  • A lower cost of living that employers use to justify lower wage scales here.
  • In earlier economic-development efforts, officials promoted the Valley as a cheap place to do business. Some experts now see that strategy as creating more problems than jobs.

    "Lower income is pulling this whole region down," said Michael Dozier, director of Fresno State's Office of Community and Economic Development. "It affects morale, how we feel about ourselves, how public services are provided."

    Dozier said low wages reduce the Valley's spending power. That repels high-end retailers and businesses, depresses spending at those that are here and hampers the ability of local governments to collect sales taxes needed for police and fire departments or to maintain streets and parks.

    The challenge now is to reverse the trend by promoting education and making the Valley a center for home-grown entrepreneurs and advanced technology related to agriculture, Dozier said.

    Industry gaps

    How exactly does compensation in Fresno County stack up against the statewide average in different industries? The gaps are across the board and wider in some industries than others. But in no single sector are wages in Fresno County higher than the state average.

    The smallest margin, according to the federal statistics, is in health care and social assistance, a field in which more than 44,500 people were employed in Fresno County in 2009.

    The average compensation per job was $50,182 in the county, compared to $51,029 statewide -- a difference of less than 1.7%, or $850 a year.

    The widest wage chasm was in manufacturing. In Fresno County, the average compensation was $49,694 in 2009. That was about $35,000 -- or 41% -- shy of the statewide average of $84,743.

    Another big difference was among managers of companies and businesses. A $34,000 gap exists between the average compensation in Fresno County of $72,725 per year and the statewide average of $106,827.

    There also is a significant disparity in accommodations and food service. The average compensation statewide was $22,437 in 2009, compared to $17,275 in Fresno County.

    The difference was less for farm jobs. The average compensation statewide was $31,416 in 2009 -- only 5.3% higher than Fresno County's average of $29,742 for the year.

    But farm jobs represented less than 5% of Fresno County's total employment in 2009 and less than 4% of the total compensation for all workers in the county.

    The recession of 2007-09 merely compounded the Valley's chronic problems as thousands of the region's workers lost their jobs and took unemployment benefits, joining others who already relied on public assistance programs.

    "This area was one of those most affected when the housing bubble burst," said Avalos, who is also the director of research at Fresno State's Center for Economic Research and Education of Central California. "We saw the construction industry booming, and then suddenly it started shedding people ... whose incomes are now less than when they were working."

    "If you compared this with normal, healthy economic conditions, the per capita income would be higher," he said.

    Aiming higher

    Dozier has long had a beef with economic development strategies pitching the Valley as a low-cost alternative to Los Angeles, San Francisco and San Jose where companies can do business.

    "I think it's a horrible way to market the region," Dozier said. "If you want to attract companies that are just looking for cheap, there will be lots of cheaper places down the road, like Mexico or just about anyplace outside California, so they're not going to stay."

    Dozier acknowledged that some believe the Valley needs to emphasize lower costs because other areas have a more educated, skilled work force.

    "We do need to address our high school dropout rates and our college attainment," he said. "We need to encourage people who live here to get the education and get the skills they need."

    Efforts like the WET (Water & Energy Technology) Incubator and the Lyles Center for Entrepreneurship, both housed at Fresno State, and community college programs aimed at energy and manufacturing technology, may help fuel a Valley turnaround.

    Dozier said such programs can create more and better-paying jobs in high-tech industries related to agriculture and home-grown businesses -- and train the workers needed to fill them.

    "But in the meantime, we need to find another thing to market," he added.

    "If we market 'cheap,' it just cheapens us. ... We need to accentuate our positives, that we're central to California, close to good ports and the Pacific Rim markets."