Jobs report: Varied explanations for one labor-force trend

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While Imperial County’s June unemployment rate of 20.8 percent was its lowest for that month in a decade, the July 21 state jobs report containing the data furthers a less-discussed trend.

The county’s labor force — the number of people age 16 or older either working or seeking employment — continues to shrink. According to records from the California Employment Development Department (EDD), the agency that compiles and releases jobs data, the county labor force numbered 73,700 in June 2016, the lowest for that month since 2008.

Due to seasonal fluctuations in agricultural employment, experts agree when reviewing Imperial County jobs data it is more accurate to look at the same month in different years, rather comparing different months in the same year.

The labor force numbered 71,800 in June 2008, EDD reports show, and then climbed to a high of 80,600 in June 2012. It has steadily declined in June since then, with the most precipitous drop coming between the 77,400 in 2016 and this year’s 73,700, a decline of 3700, or 4.8 percent.

Month-to-month data between 2016 and 2017 support the trend. The labor force has been smaller every month in 2017 compared to 2016.

One element that could explain the situation — declining population — is not a factor since Imperial County’s population has grown from 174,528 in the 2010 U.S. Census to a state Department of Finance estimate of 188,334 on Jan. 1, 2017.

This indicates an increasing percentage of the local population is not in the labor force. Those not in the labor force include those not actively seeking work, the retired, the incarcerated and active-duty military.

Interviews with local observers about the declining labor force revealed a variety of opinions and observations as to the source of the decline.

“The agriculture industry over the past two decades has migrated across the border (into Mexico),” said Miguel Figueroa, director of the Imperial County Workforce Development Office, the county’s lead employment- assistance agency.

Agriculture is among the county’s largest employers and some growers have moved operations to Mexico and Arizona due to what they say are higher operating costs in California due to regulations, labor laws and wages.

“I (also) credit that slight decrease (in the labor force) to employees moving out of the county due to regional job opportunities,” Figueroa added. “But we may recoup some of those employees with startups (new businesses).”

Imperial County District 3 Supervisor Michael Kelley admitted he had not noticed data showing the county labor force getting smaller.

“That’s surprising,” he said, but noted he has confidence that Figueroa, as head of the county jobs agency, is aware of the situation and is diligent in maximizing employment opportunities for county residents. He added Figueroa provides regular reports to the board of supervisors.

Regional economic consultant Michael Bracken maintained the situation is not a mystery, and is in fact indicative of long-standing traits of the regional and local economies.

“Looking at available information in regards to economic cycles and labor force migration, it appears that the ‘Great Recession’ (2007-09) resulted in significant numbers of migrant workers returning to Mexico,” explained Bracken, managing partner and chief economist of the Palm Desert-based Development Management Group, Inc.

“At such time as the economy began to improve, many of those workers re-entered the labor force through Imperial County on their way to markets with greater economic opportunity.”

Bracken explained he reaches his conclusions as an economist employing “research, primary data and professional analysis to provide depth and connotation.”

He noted when the recession hit and the jobs dried up, many Mexican workers throughout the U.S. simply returned to Mexico because their main purpose had been to earn wages in the U.S. and send money back to their families in Mexico.

The phenomenon of the shrinking labor force began when those workers later started re-entering the American labor force in California border areas, Bracken said. Because Mexicali’s population of more than 1 million is so much larger than Imperial County (about 190,000), there was a greater impact from those returning workers, many of whom had been employed in various U.S. locales before the recession, Bracken explained.

“Five to 10 thousand people is nothing in Mexicali. But it is in Imperial Valley,” he said.

Labor force re-entry meant applying for unemployment benefits, seeking a job, or actually gaining employment in Imperial County, Bracken added. A large influx occurred in the Imperial County city of Calexico, just across the border from Mexicali, the sprawling capital of Baja California, Bracken explained.

EDD data bears out his assertions. The Imperial County labor force grew from 71,800 during the recession in June 2008 to 80,600 in June of the recovery year of 2012.

But after the flow came the ebb, as the labor force has gradually declined to 73,700 in June 2017, nearer the 2008 level.

“The fluctuation you see is really the migration that is typical,” Bracken continued. “When they re-entered (the labor force) through Imperial Valley, they were never really going to stay anyway.”

Now, with construction booming along the coast and in the Inland Empire, those workers are moving back to traditional jobs and locations, often construction-related, Bracken said.

“The San Diego economy is on fire. Think 2005. Home prices in almost every sub-market in San Diego County exceed pre-‘Great Recession’ prices. This is fueling economic opportunity in the construction trades. Lake Elsinore will add 600 homes this year,” he noted, adding, “The cycle I just described is something that is an economic cycle going back 50 years.”

Imperial Valley observers, however, still see other forces at work that are affecting the local labor force.

“Because of the rise in the minimum wage and the overtime rules (for farmworkers) farmers are on the fast track to mechanize. That is definitely a major reason” for a decline in farm labor, stated Linsey Dale, executive director of the Imperial County Farm Bureau.

She added, “California regulations, too. You can’t compete with Arizona and Mexico because the (farm operating) costs are higher in California.”

EDD data seems to support Dale’s explanation. Farm jobs in Imperial County slumped to 10,000 in June, down from 13,800 in June 2016. That follows a period where farm jobs increased every year in June from 10,400 in 2010 to 14,100 in 2015.

But Bracken warns against reading too much into monthly farm-employment data because of seasonal fluctuations and market forces.

“Some harvesting came later (in 2017) and lettuce crops got hit. We had a very different weather pattern this year,” he said of why this June’s farm employment number may have dipped so far from 2016.

While Bracken agreed “there is some mechanization” planned in farming, he added “it hasn’t hit the street yet.”

Additionally, due to Imperial County’s relatively small size, one major event can skew job numbers. That happened, he said, when the original Brawley Beef plant closed, taking with it about 600 farm-categorized jobs.

Bracken said he agrees there are reasons besides worker departure that have caused the Imperial County labor force to shrink, explaining, “the only other major trend from the ‘Great Recession’ is people that left the labor force for such reasons as: they gave up searching for a job, retired or found an entrepreneurial or independent contractor opportunity.”

Meanwhile, the Farm Bureau’s Dale does not stand alone in her skittishness over some local employment trends.

“I notice a lot more stay-at-home moms due to difficulty returning to the workforce,” said Darletta Willis, chief executive officer of the El Centro Chamber of Commerce & Visitor’s Bureau.

The issue is fallout from the recession where people lost jobs and have struggled to find comparable work ever since, she said.

But there is a clear path to getting those people back into the labor force, Willis added, explaining, “Employers need trained employees. The chamber is working with IVC (Imperial Valley College) and SDSU (San Diego State University) to ensure our residents are meeting that need.”

She added, “The biggest we hear (needed by businesses) are soft skills. The lack of that results in the biggest turnover (of people not keeping jobs) we see.”

Soft skills include customer service, phone etiquette and time management.

The Workforce Office’s Figueroa notes the county also sees making soft skills a priority for helping local residents get, and keep, jobs. The office provides such training through SDSU, but recently issued a request for proposals to select a vendor to expand the program.

“What about people that need skills improvement? That is the people we need to get to,” Figueroa said.

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