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Politics & Government

Santa Cruz Unemployment Half that of Watsonville

What's going on in Watsonville, which has a 27.9 unemployment rate, compared with Santa Cruz's 11.6?

The jobless rate in Santa Cruz stands at a worrisome 11.6 percent, while Watsonville's is a whopping 27.9 percent. To put that in perspective, in 1933, at the depth of the Great Depression, unemployment peaked at 27 percent—and that was before the government started tweaking the statistical methods.

So just what's going on down there?

New Factors

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There are many reasons why Watsonville's unemployment is so much higher than Santa Cruz's, some new, some old.

To begin, Santa Cruz has had lower jobless rates than Watsonville for decades, in part because of a much younger workforce in the south county and in part because of seasonal fluctuations in the agricultural labor force. But the recession and its aftermath have nailed Watsonville hard, exacerbating the disparity.

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In the past four years, the gap in unemployment rates between the two cities has averaged 11.2 percent—up from 8.8 percent over the previous seven years.

“The difference in unemployment has to do a lot with the retail base,” said Santa Cruz County Business Council director Gary Merrill. “A lot of people in Santa Cruz are employed in the retail sector, whereas in other parts of the county, it's about light manufacturing and agriculture and particularly construction, where we've had the biggest hits.”

In other words, since Watsonville has more blue-collar jobs, it's suffered more than Santa Cruz—a trend that plays out on a national scale.

Last October, Market Watch reported that national unemployment was 4.5 percent for college graduates, 10.8 percent for high school grads and 14.3 percent for those without a diploma.

Among Watsonville's blue-collar sectors, including production, manufacturing and transportation, construction may be the worst for wear.

“[Watsonville's] been terribly hard hit with the recession, and in the construction industry, the numbers are quite frankly daunting,” said Bill Tysseling, director of the Santa Cruz Area Chamber of Commerce.

“Half or more of the workforce has lost jobs. While those same percentages are also true in the north half of the county, there are fewer, although still many, construction workers there.” 

“Several hundred” public-sector jobs in schools, local and city governments have also been cut in recent years, Tysseling added, and plant closures have erased thousands more.

The closure of a 50-worker aluminum-extrusion plant owned by Indalex in late 2009 slammed Watsonville's workforce, as did the loss of Davenport's Cemex in early 2010. Other factory closures between mid-2005 and mid-2006 accounted for 2,000 lost jobs.

Although some Santa Cruz businesses such as Nordic Naturals have relocated to Watsonville in search of cheaper rents and tax breaks offered by the city's enterprise zone, they usually bring their workers with them. This does little to boost local employment, said Teresa Thomae, director of the Small Business Development Center Cabrillo College.

Watsonville's jobless rate also looks higher on the books, thanks to commuters.

Low wage workers—many of whom lost jobs in the recession—often choose to live in Watsonville even though they work in Santa Cruz or another city. That means when they lose their jobs, Watsonville's rate goes up.

Old Factors

The longstanding reason why Watsonville's unemployment is so much higher than Santa Cruz's is that among the two, only Watsonville's economy is agriculture-based.

When farming season goes on winter hiatus, unemployment always spikes among food handlers, processors, pickers, growers, shippers and storers, pushing up rates. Yet many of those jobs will bounce back.

“The people who work in agriculture will go back to work, and there is a relatively high certainty that they won't lose their jobs,” says Tysseling.

For example, this time last year, Watsonville's unemployment stood at 30.2 percent, yet by mid-spring, with farms back in full swing, the rate had fallen to 23.9 percent, a recurrent pattern.

Although ag-jobs may come back, having a seasonal workforce adds to Watsonville's overall unemployment because of a “ripple effect.”

“If they're [seasonal workers] not working, they're not buying, and the ripple effect on other businesses creates a downward cycle,” said Thomae.

With an anticipated half-million government layoffs nationwide over the next year and Gov. Jerry Brown calling for redevelopment agencies funding to be slashed, unemployment rates in either city probably aren't going to get better soon.

Without around $10 million in redevelopment money, Tysseling fears Watsonville's much-discussed Manabe-Ow development project, expected to employ some 3,000 people, will never happen. That project includes a 95-acre business park of warehouses and light industry between Highway 1 and Ohlone Parkway.

“Without redevelopment agency money, that property will sit as empty land for a decade or two, however long it takes to get to better economic times. It's a tragedy,” Tysseling said.

“If you look at how many jobs have been lost in Watsonville, that would take care of the problem.”

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