Written by The Business Journal Staff
Despite Donald Trump’s claims of the nation being an economic disaster throughout his successful bid to become president, the nation and California are in pretty good shape — and Tulare County is no exception.
“California and Tulare County are still growing,” economist Christopher Thornberg told dozens of business and community leaders gathered last Friday at Visalia’s Wyndham Hotel for the 2017 Sequoia Valley Economic Summit.
This despite a glut of goods on the world market cutting into California’s foreign trade and uncertainty about the United State’s future, both before and after last year’s presidential election.
“We do have real problems,” Thornberg said, which could include the Trump administration and Republicans in Congress focusing so much on border security and not viable immigration reform, as California’s population has the highest ratio of immigrants in the nation, and the state’s industries, including agriculture, depend heavily on migrant workers.
On the upside, despite a slowdown in the nation’s recovery from the Great Recession, Thornberg said consumers are spending, and, “They’re spending for the right reasons. They’re spending because they’re making more.”
And that’s true for Tulare County, too, said Thornberg, who was speaking to the national, state and Tulare County economies based on research his company, Beacon Economics, LLC, did for the latest economic and forecast report commissioned by the Tulare County Economic Development Corp., which also put on the annual summit.
“Tulare County wages rose at a strong pace and across all major sectors,” by about 6.1 percent by the second quarter of 2016 compared to a year earlier, well above the statewide average wage growth of 2.3 percent, states the report, citing U.S. Bureau of Labor Statistics figures.
That puts the average wage in the county at $38,063 a year.
Wages also were up over the same period in Fresno County at 4 percent; Kings County at 1.2 percent; and Kern County at 1.3 percent.
Still, the average total annual wage in those three counties remained higher than for residents of Tulare County, with Kern County being the highest at $44,134.
The report didn’t mention Madera County.
It does state that in Tulare County, the construction and agricultural sectors had particularly strong years for wage earning from the latter half of 2015 through the first half of 2016, , with average payrolls increasing by 8.8 percent and 8.7 percent, respectively, compared to a year earlier.
Jobs in the leisure and hospitality industries also saw pay rates rise in the county, on average, by 4.9 percent.
“This is a reflection of the uptick in consumer spending, netting workers more hours and tipped employees higher wages from additional spending at restaurants and bars” in Tulare County, the Beacon report says.
Average wages for mid- to high-pay workers also rose, including those working in manufacturing, education, health, manufacturing, transportation, financial, business and government careers, all of which went up by 1.2 to 6 percent, with jobs in information career fields being the only major category in which average wages declined by 2.2 percent.
“Although the region continues to face significant challenges in retaining workers and adding jobs, our outlook remains positive” for continued growth in jobs and wages in Tulare County, according to the report, which notes demand for goods produced there continues to rise.
Still, Thornberg noted in his speech and later during a question-and-answer session, that there are some factors that raise considerable concern for the county and California as a whole.
One of those is the sustainability of water for communities, farms and other industries.
California is coming out of a five-year-drought, the worst ever recorded in the state, and while this year’s highly wet winter is offering much-needed relief, weather experts say recovery could take years, if not decades — but only if there are plenty of wet years on the horizon, which is anybody’s guess. And California’s aquifers are even more depleted because of the drought.
“It’s not a sustainable system” Thornberg said of depending so heavily on groundwater for irrigation and other needs.
“We have lots of water. We just use it horrendously,” which includes growing hay, a commodity that uses a lot of water but generates relatively low financial returns for farmers, so it might be better for those farmers to grow more valuable crops or sell off that water and have hay shipped here from Alabama or other states that have plenty of water, he explained.
And lawmakers are pushing “politicized solutions” to the state’s water problems “that don’t benefit the [endangered] fish and don’t benefit the farmers,” said Allan Zaremberg, president and CEO of the California Chamber of Commerce, who also spoke during the Visalia summit and joined Thornberg during the question-and-answer session.
Despite water being so tight in recent years, the agriculture industry in the Valley has been “doing fine,” showing it can cope with less available water and even increasing production in several crops last year despite large swaths of farmland being pulled out of production due to lack of water, Thornberg said.
What has hurt the industry has been a decline in prices as a glut of crops on the world market, due in part because farmers in other countries are using American practices to increase yields, according to the Beacon report. “I wouldn’t call it a bust,” said Thornberg, who characterized prices for U.S. ag goods as “soft.”
He added that he believes those prices have bottomed out, and a shift up will begin soon.
“Things will change with President Trump,” but whether they would be better or worse for California business isn’t clear, Zaremberg said.
Thornberg shared that uncertainty, noting that with fellow Republicans being in the majority within the Senate and House, Trump likely will get more done than his predecessor in the White House, but his pre-election promises and actions since taking office present both pros and cons for California business.
And there are questions of whether Trump will have the legal and legislative footing to keep some of his promises, the Beacon report notes.
Besides the president’s stance on immigration, Trump’s stance on trade issues could be troublesome for this state, which depends more on overseas trade than any other.
Then there’s the Trump administration’s decision to withdraw from the Trans-Pacific Partnership, its intent to renegotiate the North American Free Trade Agreement and it’s get-tough attitude on trade with China, which “all have significant implications for California’s transportation and logistics industries, not to mention its export services,” the report states.
“Free trade is important. We shouldn’t rein it in,” said Thornberg, adding that while the U.S. does have a legitimate gripe over trade inequities with China, if the U.S. gets into a trade war with that country, at least the side that stands to lose more than the U.S. is China.
He added that if federal environmental regulations are reduced, as Trump has promised, the effect here likely would be minimal, as California’s own, more stringent regulations still would be in effect.
During last year’s economic summit, Thornberg put a great deal of focus on what he described as the California Legislature’s very bad decision to raise the state’s minimum wage up progressively to $15 an hour.
During last week’s summit, he said predictions that large numbers of businesses will go under because of the higher wages are unlikely, as he had no doubt that restaurants and other businesses that heavily use minimum-wage workers will cut staff and raise prices for customers.
Thornberg said he hopes that before the full minimum-wage rates are implemented, state lawmakers will be able to go back and adjust the law so those rates are changed regionally to reflect the cost of living in different areas.
“If you can show low-income families hurting worse, then you may be able to back it off,” he told the crowd.