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Why do these two cities have the worst unemployment rates since 1990?




  • In Business
  • 2021-09-14 17:23:54Z
  • By USA TODAY
The City of El Centro, Calif.
The City of El Centro, Calif.  

Americans since 1990 have suffered through four recessions - Gulf War, Dot-com, Great Recession and COVID-19 - and subsequent roller coaster rides on the stock market.

Each of those economic downturns caused layoffs and heartburn for many Americans worried about the declining values of their 401(k) retirement plans.

Most communities eventually bounced back from those financial slumps.

Yet, through all of the ups and downs of the past 31 years, two cities that hug the U.S.-Mexico border have remained ignoble models of consistency.

El Centro, California, and Yuma, Arizona - separated by thousands of acres of produce crops and about 61 miles on Interstate 8 - since January 1990 have on average been the unemployment capitals of America, according to seasonally adjusted U.S. Bureau of Labor Statistics data compiled by USA TODAY. (Seasonal adjustment is a statistical technique the federal government uses that attempts to measure and remove the influences of predictable seasonal patterns.)

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The two border cities - again - held the top spots in America in July: Yuma had a 20.1% jobless rate, while El Centro had an 18.9% unemployment rate, preliminary BLS records show. By comparison, the national unemployment rate that month was 5.7% as many cities had recovered from the COVID-19 pandemic that caused businesses across the nation to close, putting millions out of work.

The high unemployment rates in Yuma and El Centro have persisted even though many American employers are having difficulty finding employees amid the most severe worker shortages on record.

Officials from both communities insist their unemployment numbers are inflated and the jobless numbers have long been anomalies because of legal migrant workers who labor in the fields for several months and then collect unemployment benefits the rest of the year.

And, they say their jobless rates act as a double-edged sword.

On one hand, it's a signal to companies that need laborers that they could relocate to Yuma or El Centro and find plenty of able-bodied workers in affordable cities with nearly year-round sunshine.

However, they say the monthly unemployment figures put an unfair spotlight and stigma on their cities, especially when they are seeking outside financial investments for economic development.

Yuma, Ariz.
Yuma, Ariz.  

Mark Vitner, a senior economist with Wells Fargo, said he understands the frustrations of city leaders in Yuma and El Centro, but he doesn't believe the unemployment figures are inflated.

He said their economies are singularly built around agriculture, and when there is such a narrow focus on one industry, it plays a major role in "what drives the unemployment there."

"There is not a large tourism or hospitality industry to absorb the excess labor," Vitner said. "There are a lot of restaurants there, but there are not a lot of opportunities that are not tied to agriculture."

Most cities below jobless average

The two border cities are among more than 380 metropolitan areas included in the Bureau of Labor Statistics jobless survey, with nearly two-thirds of those cities having jobless rates at or below the national average.

Yuma and El Centro were such outliers that only five other cities had double-digit unemployment rates. The third-worst area, Visalia-Porterville, California, had a jobless rate of 11.1%. In general, a community's unemployment rate represents the number of unemployed people as a percentage of the labor force.

While Yuma and El Centro's unemployment rates are high, they historically have been much worse.

In December 1996, Yuma had a 33.1% unemployment, and in October 1992, El Centro's jobless rate was 32.1%, federal records show. Each city has monthly unemployment rates of 30% or more at least two dozen times, records show.

However, mayors, city officials and community leaders of El Centro and Yuma say the federal numbers are misleading and artificially inflated because of tens of thousands of migrant workers who live in Mexico and legally cross the border to work on produce farms.

A woman watches youth play baseball near Kennedy Middle School in El Centro, Calif.
A woman watches youth play baseball near Kennedy Middle School in El Centro, Calif.  

Mariana Martinez, an employment engagement coordinator for jobs recruiter Arizona Work, said a person does not have to be a U.S. citizen to receive unemployment benefits. She said as long as a person has authorization from the U.S. government to work, the person can collect aid.

In El Centro, the high unemployment rate nearly caused the city to get a low bond rating, which would have forced taxpayers to fund a higher interest rate on a capital project.

Leaders from both cities say their unemployment rates should go down this fall because enhanced federal jobless benefits have ended.

The extra pay ended earlier this month in California, while Arizona in July was among the first states to end the $300 a week in supplemental jobless pay from the federal government.

The maximum weekly payout now is $450 in California and $240 in Arizona, which has one of the lowest benefits in the nation.

Meanwhile, those community leaders say the unemployment rates don't accurately reflect the actual commercial growth occurring in their cities, where they add it's affordable to buy a home and raise a family.

Mayor Cheryl Viegas-Walker changes out of her heels and into flats during a ground-breaking ceremony for the new El Centro Public Library in El Centro, Calif.
Mayor Cheryl Viegas-Walker changes out of her heels and into flats during a ground-breaking ceremony for the new El Centro Public Library in El Centro, Calif.  

No Hooverville

During tours of the cities for USA TODAY, leaders of Yuma and El Centro raised a question: If their cities really had such high unemployment, wouldn't their communities look like "Hoovervilles," shanty towns built during the Great Depression by the homeless and named after Herbert Hoover, who was president at the time?

Federal government officials "don't understand the Yuma economy," said Mayor Douglas J. Nicholls, who was raised in Yuma and returned in 1999 from the Phoenix area. "We did a study a few years ago, and the unemployment is between 8% and 12%. That's not great, but it's not 26% or whatever the current number is."

Nicholls, who owns an engineering firm, said the figures are different because the city focused on employment and unemployment only within the city limits.

The federal figures include the greater Yuma area, encompassing a large number of migrant workers and snowbirds - winter visitors who reside in Yuma but don't work - which make those numbers higher.

He said that if the federal figures were correct, "you would see families living on the street if one in four or one in three people didn't have a job," adding, "Those are Depression-era numbers and clearly, Yuma is a vibrant community, and we are not in a depression."

Young people hang out at Sidewinder Skatepark in El Centro, Calif.
Young people hang out at Sidewinder Skatepark in El Centro, Calif.  

Another point they made while driving by their respective home repair stores was that no one was lingering in the parking lot looking for work, a sight seen in many American cities where the unemployed seek to pick up short-term jobs.

Thomas J. Krolik, who works for the Bureau of Labor Statistics local unemployment statistics office, said his agency generally refrains from commenting about jobless rates for certain cities because it "would call for a considerable amount of speculation on our part."

But Krolik said that agriculture production is a "relatively important economic activity in these two, adjacent metropolitan areas," and they are subject to extreme summer weather and large seasonal fluctuation in unemployment.

About 90% of all the leafy vegetables grown in the U.S. from November through March are grown in and around the Yuma area, according to the nonprofit group Visit Yuma.

The main vegetables grown around El Centro are iceberg lettuce, leaf lettuce, broccoli, cauliflower, cantaloupes, honeydews, dry bulb onions, processor onions, carrots, sweet corn, spinach, spring mix and watermelons, according to the University of California Cooperative Extension Imperial County.

'You screw up the statistics'

About an hour's drive from Yuma and the Arizona-California state line is El Centro, with a population of roughly 44,000 residents.

Nicholls counterpart is equally skeptical about the federal unemployment figures, which have cast a pall over the city.

City officials this spring had to convince financial analysts from Standard & Poor's that the federal unemployment figures didn't truly reflect El Centro's economic vitality and its ability to repay bonds for capital projects.

The city, following presentations in March and April that included details about more than two dozen recent and proposed commercial and residential developments, ultimately obtained an "A," rating, which translates into a financial strength of "strong" and lowers interest payments for taxpayers.

Cheryl Viegas Walker, a grandmother who has been El Centro's mayor six different times, said her city's unemployment rate is high because of the federal formula.

"If anyone has taken a statistics class in college, they know that when you are dealing with numbers and have a very, very small denominator, you screw up the statistics," said Viegas Walker.

Former El Centro Mayor Sedalia Sanders and her husband Albert Sanders arrive for the groundbreaking ceremony for the new El Centro Public Library in El Centro, Calif.
Former El Centro Mayor Sedalia Sanders and her husband Albert Sanders arrive for the groundbreaking ceremony for the new El Centro Public Library in El Centro, Calif.  

The unemployment rate represents the number of unemployed people as a percentage of the labor force, which is the combination of those employed and unemployed.

The greater El Centro area's labor force in July, according to federal records, was approximately 68,000 people, or a relatively small denominator when compared with other metropolitan cities. The community had roughly 12,800 people out of work, or a relatively large numerator, resulting in a nearly 19% jobless rate.

Compare that to Anchorage, Alaska, where the number of unemployed workers hovers around 12,000 people. However, the Alaska state capital has a labor force of more than 195,000 people, resulting in an unemployment rate of around 6%.

Viegas Walker, who moved from San Diego in 1987, said El Centro is a haven for retirees or full-time parents who have kids in school and are not in the workforce. That too, she said, influences the unemployment figures.

"Statistics can look pretty crazy when you deal with a small-group of folks," she said. "We have seasonal employment issues."

She adds the city still is affordable, which was one of the reasons she and her husband left San Diego to raise their family in El Centro.

"We are not facing a housing crisis that is so common," she said. You can buy a brand new house here for $300,000. And living is easy down here."

Coyne Powersports employee Armando Berdusco pushes a newly purchased all-terrain vehicle from the showroom to the shop in preparation for delivery to a customer at the store in El Centro, Calif.
Coyne Powersports employee Armando Berdusco pushes a newly purchased all-terrain vehicle from the showroom to the shop in preparation for delivery to a customer at the store in El Centro, Calif.  

Marty Coyne, owner of Coyne Powersports, agrees.

"My business has grown here, and it's a simple way of life and a great place to raise kids," Coyne said. "This is one of the best-kept secrets for housing compared to what people are paying in the big cities."

El Centro is home to the Naval Air Facility, where the Blue Angels flight demonstration squadron trains. Its Imperial Valley Mall has anchors J.C. Penny, Macy's and Dillard's - legacy retail chains that have shuttered in other U.S. cities.

"They say when you have a Starbucks, you have progress," said City Manager Marcela Piedra. "Well, we have seven."

El Centro City Manager Marcela Piedra stands in front of a city map, showing where growth has occurred.
El Centro City Manager Marcela Piedra stands in front of a city map, showing where growth has occurred.  

'An underemployment problem'

Greg LaVann is from the Bronx, New York, and has the title of economic architect for the Greater Yuma Economic Development Corp., which is responsible for creating awareness of the business opportunities in greater Yuma.

LaVann works with his counterparts across the borders in Mexico and California, and he says while Yuma is proud of the jobs the agriculture industry provides, it's not a one-trick pony.

He points to several new hotels, growing health care and manufacturing sectors. Bank deposits, a measure of economic growth, have increased 39% since 2016 to $2.4 billion across Yuma County (which has the same name as the city).

LaVann also said the Yuma area has a gross domestic product of more than $8 billion, ranking third in the state behind much larger Phoenix and Tucson.

Greg LaVann is the \"economic architect\" for Greater Yuma Economic Development Corp. He says the city has an \"underemployment problem,\" and has grown tremendously in the past few years.
Greg LaVann is the \"economic architect\" for Greater Yuma Economic Development Corp. He says the city has an \"underemployment problem,\" and has grown tremendously in the past few years.  

"We don't have an unemployment problem. We have an underemployment problem, and it works to our advantage," said LaVann, adding some Yuma residents are working in jobs in which they are overqualified and could do more.

LaVann said he makes similar pitches to manufacturing companies who need laborers in a city that has a vibrant waterfront on the Colorado River, a historic territorial prison and a U.S. Army Yuma Proving Ground and Marine Corps Air Station.

Patrick Goetz, operations director for Arizona Work, a partner of the American Job Center network, said his group found the overwhelming majority of those who were unemployed didn't have a high school education.

He said the unemployment rate in Yuma for high school graduates is 7.3% and 2.5% for college graduates. That's close to or better than the national rates in August of 6% for high school graduates and 2.8% for college graduates.

Goetz said up to 30,000 legal migrant workers cross the U.S.-Mexico border every day to work in Yuma County, but they don't work all year. So, when they collect unemployment benefits, the numbers rise.

Beautiful cities

Vitner, the Wells Fargo economist, said other agriculture-based communities like Modesto, California, may have the same challenges as Yuma and El Centro, but the northern California city has a broader economic base and an 8.5% unemployment rate in July.

Vitner added the stubbornly high unemployment rates in Yuma and El Centro over several decades are fascinating.

"It's amazing when you think about those high unemployment rates because Yuma is a beautiful city and parts of El Centro are beautiful too if you like the desert lifestyle," he said.

USA TODAY Data Editor Steve Suo contributed.

Have a tip on business or investigative stories? Reach the reporter at craig.harris@usatoday.com or 602-509-3613 or on Twitter @CraigHarrisUSAT

This article originally appeared on USA TODAY: Unemployment rate: Cites with the highest rates are Yuma, El Centro

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