Big Valley

Incomes in the Central Valley are way up. What’s behind the bigger paychecks?

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Households in the Central Valley are, on average, earning much more than they did just a few years ago. But like so many other changes in this region, the income growth likely has something to do with the Bay Area.

The median household incomes in Sacramento, San Joaquin and Stanislaus counties are up at least 20 percent since 2010, according to figures recently released by the U.S. Census Bureau. Stanislaus County’s jump was particularly impressive: the median household income rose about 24 percent between 2010 and 2017 and now stands at nearly $60,000 a year.

The percentage of households making more than $150,000 a year nearly doubled in Sacramento, Stanislaus and San Joaquin counties, while the share of households whose incomes placed them in poverty dropped.

There appear to be multiple Bay Area influences on the wage growth.

One notable economist — Jeff Michael of the Center for Business and Policy Research at the University of the Pacific in Stockton — said Bay Area commuters may have helped raise the income numbers.

“Some of it is driven by commuters because they just earn a lot more in the Bay Area,” Michael said. “They bring that money home and it helps support the growth in incomes.”

More than 110,000 people commuted each day from Central Valley counties to the Bay Area in 2016, according to an analysis by the Bay Area Council, a public policy and business advocacy group. San Joaquin County was home to roughly 58,000 of those supercommuters, while just under 20,000 workers are traveling to the Bay Area every day from both Stanislaus and Sacramento counties.

And the numbers are on the rise. The Council’s study found there had been a 27 percent jump in Bay Area supercommuters coming from the Northern San Joaquin Valley between 2013 and 2016 and a 25 percent increase over the same period of people commuting from the Sacramento area.

But some of those communities have treacherous commutes and a recent study by Robert Half, a human resources consulting firm in the Bay Area, found that nearly one-quarter of American workers have left a job because of their commutes. That has opened the door for Central Valley economic development officials to lure companies - and their highly-paid employees - from the Bay.

Dave White, CEO of Opportunity Stanislaus, an economic development organization, said the economy in the northern San Joaquin Valley is diversifying, with gains in the health care and IT sectors. His organization is trying to recruit two manufacturing firms from the Bay Area and several small software firms have opened in Stanislaus County, he said.

“That diversification will continue as the Bay Area continues to expand - there’s nowhere they can go except east (into the Valley),” he said. “Because of the price of housing in the Bay Area, people are moving out here and we’re benefiting from that.”

White said other well-paying job sectors are growing in Stanislaus County. The number of warehouse positions has gone up by nearly 75 percent, while heavy and civil engineering jobs have increased, driven at least partly by infrastructure work, including recent major projects on Modesto freeways.

Sacramento’s income growth is likely a product of growing government payrolls, Michael said. State figures show nearly 20,000 more Sacramento residents are working in all levels of government today than in 2010.

Again, that increase has something to do with the Bay Area, Michael said. California’s state budget relies heavily on income taxes. And as incomes explode in the Bay Area, those increases are helping to fuel expansion of the state workforce.

Far more people are also working in the Central Valley than in 2010, boosting household earnings. In Stanislaus County, the annual unemployment rate in 2017 stood at 7.5 percent; in 2010, the rate was 16.9 percent, according to the state. San Joaquin County’s unemployment rate dropped from 16.5 percent to 7 percent over that same time.

Incomes are on the rise in the southern San Joaquin Valley, but not at the same rate as in the northern counties.

Households in Fresno County are earning about 15 percent more today than in 2010. Kern County incomes are up about 10 percent and Tulare County median incomes saw about a 7 percent boost. Many families are still struggling in those areas, with at least 20 percent of households earning incomes that placed them in poverty.

The southern Central Valley is likely seeing less income growth because farming jobs still make up a relatively high share of the workforce, Michael said.

According to the state’s latest job figures, roughly 25 percent of jobs in Tulare County are in farming. More than 73,000 people in Kern County - or about 22 percent of the workforce - work in farming. Fresno has more than 50,000 in the farm industry.

At the same time, just 8 percent of the Stanislaus County workforce and about 6.5 percent in San Joaquin County is in farming.

While generally promising, the income figures for the Central Valley lag well behind some of California’s coastal cities.

In San Mateo County, for example, median household incomes grew by an estimated 41 percent and now stand at about $117,000. In Santa Clara County, in the heart of Silicon Valley, the median household income is around $119,000 — a jump of about 40 percent from 2010. In both of those counties, just under 40 percent of the households have incomes of more than $150,000 a year.

Michael said it’s unrealistic to think the Central Valley will see the kind of income growth the Bay Area has experienced in recent years.

“The way we have seen incomes and wages grow in the Bay Area during this recovery is unlike anything we’ve seen anywhere in the country,” he said. “There’s really been an income gap (between the Bay and the Valley), but it has separated to levels we haven’t seen before. If you’re comparing yourself to the coast, it can make you feel like you’re being left behind.”

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