Kern County: Last Redoubt of the California Dream? Speech to Kern County EDC Economic Summit Bakersfield, CA March 15, 2017 By Joel Kotkin, Presidential Fellow in Urban Futures, Chapman University and Executive Director, Center for Opportunity Urbanism
Main Conclusions Kern s real economy provides positive outcome for middle and working class residents Lower housing prices could lure skilled workers and millennials from coast California policies at odds with Valley realities
In a post industrial age, does stuff still matter? it certainly does.
Economic Multiplier Effect Economic Activity Generated per Dollar of Sales, 2014 Manufacturing $1.40 Agriculture, forestry, fishing, and hunting $1.17 Transportation and warehousing $1.05 Information $0.86 Professional and business services $0.66 Retail trade $0.64 Wholesale trade $0.60 Finance, insurance, real estate, rental, and leasing $0.58 Source: U.S. Bureau of Econonmic Analysis Input Output Accounts
Global Market Opportunity for Ag exports $160 Value of Trade Billions U.S. Agricultural Trade, 1976 2015 $140 Exports, $133 $120 Imports, $114 $100 $80 $60 $40 $20 $ 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Source: Compiled by USDA ERS usingg data from U.S. Department of Commerce, U.S. Census Bureau.
Global Energy Demand Chart http://www.energyxxi.org/future global energy demand andaway
Where the shale is.
Millions 2.5 U.S. Employment in the Energy Cluster, 2004 2016 2.4 2.3 2.2 2,250,241 2.1 2.0 1.9 1.8 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EMSI Employment Data, 2016.3
Energy Jobs Pay Well Management of Companies and Enterprises Energy: A High Value Sector Current Wages, Salaries, & Proprietor Earnings per Job, Select Supersectors, 2016 $115,813 Mining, Quarrying, and Oil and Gas Extraction Utilities Finance and Insurance Information Professional, Scientific, and Technical Services $103,120 $99,464 $97,525 $91,435 $82,734 Wholesale Trade Manufacturing $62,934 $71,649 Construction Average All Sectors Real Estate and Rental and Leasing Transportation and Warehousing Health Care and Social Assistance $49,934 $49,863 $49,675 $49,653 $46,048 Arts, Entertainment, and Recreation Retail Trade $33,122 $29,257 Accommodation and Food Services $19,134 Source: EMSI Employment Data, 2016.2
Share of U.S. Exports by Type 60% 50% Manufactured Goods, 50% Share of Total Exports 40% 30% Services, 33% 20% 10% Agricultural, 6% 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Energy Products, 6% Source: U.S. Census Foreign Trade Statistics
Productivity Gains Since 2001 70% 60% Manufacturing, 59% 50% 40% 30% Business, 29% 20% 10% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 U.S. Bureau of Labor Statistics Major Sector Productivity and Costs Program, Labor Productivity Index (output per hour)
High Value Regional Drivers Current Wages, Salaries, & Proprietor Earnings per Job, Select Supersectors, 2016 Management of Companies and Enterprises Mining, Quarrying, and Oil and Gas Extraction Utilities Finance and Insurance Information Professional, Scientific, and Technical Services Wholesale Trade Manufacturing $115,813 $103,120 $99,464 $97,525 $91,435 $82,734 $71,649 $62,934 Construction Average All Sectors Real Estate and Rental and Leasing Transportation and Warehousing Health Care and Social Assistance Arts, Entertainment, and Recreation Retail Trade Accommodation and Food Services $49,934 $49,863 $49,675 $49,653 $46,048 $33,122 $29,257 $19,134 Source: EMSI Employment Data, 2016.2
Total Job Growth, 2001 2016 Austin Round Rock, TX 42% Riverside San Bernardino Ontario, CA Houston The Woodlands Sugar Land, TX San Antonio New Braunfels, TX Bakersfield, CA 32% 30% 29% 27% Dallas Fort Worth Arlington, TX 23% Visalia Porterville, CA San Luis Obispo Paso Robles Arroyo Grande, CA Fresno, CA 16% 16% 18% Los Angeles Long Beach Anaheim, CA 7% Albuquerque, NM 5% Source: EMSI Complete Employment, 2017.1
Job Growth in Middle Class Occupations, 2001 2016 Austin Round Rock, TX 37% Riverside San Bernardino Ontario, CA Houston The Woodlands Sugar Land, TX San Antonio New Braunfels, TX 25% 27% 26% Dallas Fort Worth Arlington, TX Bakersfield, CA Fresno, CA 17% 20% 20% Visalia Porterville, CA San Luis Obispo Paso Robles Arroyo Grande, CA 11% 10% Los Angeles Long Beach Anaheim, CA 4% Albuquerque, NM (1%) Source: EMSI Complete Employment, 2017.1. Middle class occupations are those paying 75 200% of the national median hourly wage.
Job Growth in STEM Occupations, 2001 2016 Austin Round Rock, TX 33% San Antonio New Braunfels, TX San Luis Obispo Paso Robles Arroyo Grande, CA Houston The Woodlands Sugar Land, TX Riverside San Bernardino Ontario, CA Bakersfield, CA 29% 25% 24% 21% 21% Dallas Fort Worth Arlington, TX Fresno, CA 13% 16% Visalia Porterville, CA 2% Los Angeles Long Beach Anaheim, CA (2%) Albuquerque, NM (9%) Source: EMSI Complete Employment, 2017.1
Housing Affordability: Price to Income Ratio 2016: HIGHER IS LESS AFFORDABLE San Jose, CA Los Angeles, CA San Francisco-Oakland, CA San Diego, CA Stockton, CA Riverside-San Bernardino, CA Sacramento, CA Modesto, CA Fresno, CA Austin, TX Bakersfield, CA San Antonio, TX Dallas-Fort Worth, TX Houston, TX United States Median house price divided by median household income 0 2 4 6 8 10 12 Median Multiple Derived from Demographia International Housing Affordability Survey
Net Domestic Migration by Affordability STATES AND DC: 2000-2016 4,000,000 3,498,000 3,000,000 2,000,000 Population Growth 1,000,000 0 1,000,000 338,000 Affordable Moderately Unaffordable Seriously Unaffordable Severely Unaffordable 2,000,000 1,971,000 1,865,000 3,000,000 Derived from Census Bureau data & City Sector Model 2015 Revision
MSA Growth: California 2000-2015: OVER 500,000 POPULATION Riverside-San Bernardino, CA Bakersfield, CA Stockton, CA Sacramento, CA Fresno, CA Modesto, CA San Diego, CA San Jose, CA San Francisco-Oakland, CA Los Angeles, CA California United States Derived from Census Bureau data 0% 10% 20% 30% 40% Population Change
2000 to 2015 Net Domestic Migration SELECTED METROPOLITAN AREAS Las Vegas, NV Phoenix, AZ San Antonio, TX Riverside San Bernardino, CA Dallas Fort Worth, TX Houston, TX Portland, OR WA Denver, CO Sacramento, CA Stockton, CA Bakersfield, CA Seattle, WA McAllen, TX Modesto, CA Fresno, CA San Diego, CA San Francisco Oakland, CA El Paso, TX Los Angeles, CA San Jose, CA 20% 10% 0% 10% 20% 30% Net Domestic Migration Compared to 2000 Population Derived from Census Bureau data
2010 to 2015 Net Domestic Migration SELECTED METROPOLITAN AREAS San Antonio, TX Denver, CO Houston, TX Phoenix, AZ Dallas Fort Worth, TX Portland, OR WA Las Vegas, NV Seattle, WA San Francisco Oakland, CA Sacramento, CA Riverside San Bernardino, CA Stockton, CA San Diego, CA Modesto, CA McAllen, TX San Jose, CA Bakersfield, CA Fresno, CA Los Angeles, CA El Paso, TX 4% 2% 0% 2% 4% 6% 8% Net Domestic Migration Compared to 2010 Population Derived from Census Bureau data
Net Domestic Migration by Age CALIFORNIA AND TEXAS: 2013-2014 California is losing its next generation of wealth and leadership Net Domestic Migration 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 10,000 20,000 California Texas 0-25 26-34 35-44 45-54 55-64 65+ Derived from Internal Revenue Service data
Housing Preferences: Realtors Survey 2011 COMMUNITY PREFERENCE SURVEY Attached Single Family 7.0% Other 5.0% Multi Unit 8.0% Detached House 80.0%
Big City Millennial Life Style Choices COMPARED TO OLDER GENERATIONS Current Residence Ideal Place to Live Suburb Small City Country Big City Suburb Small City Country Millenials Older Generations 0% 10% 20% 30% 40% 50% Source: Frank N. Magid Associates
House Purchases: Under Age 35 2014-2015 NATIONAL ASSOCIATION OF REALTORS Multi Unit Other Townhous 7% 4% e 8% From National Association of Realtors, 2015 Detached House 81%
An aging population also boosts the suburbs 30% % living in urban neighborhoods, by age group 25% 2000 2014 20% 15% 18 24 25 29 30 34 35 39 40 44 45 49 50 54 55 59 60 64 65 69 70 74 75 79 80 84 85+
42 41 40 39 38 37 36 35 34 Projected national number of 20 27 and 28 35 population cohorts, 2014 to 2060 20 27 28 35 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 2052 2054 2056 2058 2060 Source: Business Insider/Andy Kiersz, data from US Census Bureau
Population Change by Ethnicity: 2000-15 100% BAKERSFIELD MSA (ONE-RACE DATA) 80% 60% 40% 20% 0% White-Non-Hispanic African American Asian Hispanic 20% Derived from Census Bureau data
500,000 450,000 Population by Ethnicity: 2000-2015 BAKERSFIELD MSA (ONE-RACE DATA) 400,000 350,000 2000 2015 300,000 250,000 200,000 150,000 100,000 50,000 0 White-Non- Derived from Census Hispanic Bureau data African American Asian Hispanic
Valude to Income Multipole 12 10 8 6 4 2 Housing Affordability by Ethnicity US & CALIFORNIA 2015 United States California 0 All White-non- Hispanic African-American Asian Hispanic Derived from Census Bureau data & City Sector Model 2015 Revision
Grand Delusions won t save California: Business Needs to Change the Debate California State Development Priorities Green Jobs and forced density High Speed Rail and transit Social engineering away from families and middle class housing and jobs
Compared to Detached (5) 8 7 6 5 4 3 2 1 0 Construction Cost by House Type SAN FRANCISCO BAY AREA Construction Cost/Square Foot Compared to Detached (5 per Acre) Derived from FBI Statistics: 2013, Major metropolitan areas (average). Figure 32
2.0 Change in Commute Shares: 2000-2015 UNITED STATES Percentage Points 1.5 1.0 0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 Drive Alone Car Pool Transit Bicycle Walk Other Work at Home 3.5 Derived from Census Bureau data
30 CO2 Emissions per Capita: By Sector AUSTRALIA 5 LARGE CAPITAL URBAN AREAS 25 20 Metric Tons 15 10 5 0 Core Inner Ring Second Ring Outer Ring Housing Form in Australia and Its Impact on Greenhouse Gas Emissions Figure 34
People Leaving California Are Actually Increasing Net Carbon Dioxide Emissions
Key Solutions and Recommendations Reform California regulatory rules to be more business friendly and react quicker to competitive challenges Focus development on higher paid employment options, particularly for new generation Transportation solutions should be 21 st Century variety, not yet another failed attempt to recreate the 19 th Develop narrative that Kern represents a different kind of California, where the dream still exists is the cutting edge of the post suburbia emerging around the country Develop a marketing outreach to professionals and companies hiring them to position Kern as an attractive place to work and live
Questions and Comments