Economic outlook hopeful but equity remains a challenge
JOHN COX, The Bakersfield Californian
Updated 5 min read
Recent business activity around Kern — large investments on the one hand, lingering income inequality on the other — have emerged as key measures of progress at what may be a defining time for the local economy.
Optimists point to a list of developments set to add jobs in distribution work, manufacturing and tourism, with every new project adding to the region's reputation as a low-cost, business-friendly land of opportunity.
Not all the new jobs pay particularly well, though, and that in combination with housing challenges and regulatory pressures serves as a reminder that the county's efforts to reduce its dependence on oil, and mitigate hard times in ag, remain works in progress.
No doubt Kern stands out as one of the most attractive places to invest in California, observed interim CEO Justin Salters with the B3K Prosperity economic development collaboration. But the challenge is still to create good jobs and ensure economic mobility for people of all backgrounds.
"Without addressing our quality jobs gap, we will continue to see high numbers of struggling families and poor outcomes regarding inclusions and deep prosperity," he said.
The good news is hard to miss: Los Angeles-based Pacific Steel Group recently won the county's approval to build a $1.2-billion mill expected to employ 440 in Mojave. Construction is expected to begin this year on the Hard Rock Hotel & Casino Tejon planned to employ thousands in Mettler.
Meanwhile, announcements of large distribution projects have become almost routine in the county's valley portion. In eastern Kern, hopes are rising that high-tech companies like Mojave-based hypersonic flight innovator Stratolaunch LLC will reinvigorate the region's aerospace industry.
Bank of America Merrill Lynch Vice President Andy Stanley, who serves on the board of the Kern Economic Development Corp., said local demand for business loans has been strong at a time when the county is attracting greater investment from outside the region.
Even if some of the incoming jobs aren't high-paying, Stanley said, they come with a multiplier effect that spreads benefits in the local economy. Also, despite the tough times in ag, evident in falling farmland values, he noted that private equity firms remain interested in local farming.
"My view is that we are very optimistic about the future and very excited about Kern County," he said.
Cal State Bakersfield economist Richard Gearhart, taking more of a street-level view, noted wealth inequality has worsened among the poorest residents of Bakersfield. Those who own homes have seen their wealth grow, while renters have not, he said.
A more positive sign is that many young working professionals priced out of the housing markets of Southern California and the Bay Area have moved to Bakersfield in recent years to start families. Gearhart said that provides a helpful boost to the local workforce.
"We are getting ourselves out of the demographic crisis that is afflicting cities, counties, states and countries around the world," he wrote in an email.
"This is one of the biggest economic stories of the decade for me," he added. "In an era where pensions and retirements are getting crushed because we don't have enough young workers to fund them, we are seeing the opposite here in Bakersfield."
An analysis KEDC commissioned from Chmura Economics & Analytics found employment in the county grew 1.2% in the 12 months ended Dec. 31. It noted the average local worker's wages were up 4.3% during the same period, but that at $57,365 per year, they remained $12,496 below the national average.
Ag remains the county's largest employer, followed by the category of health care and social assistance, then education, Chmura reported. It said the sectors with the greatest job growth during the last five years — or the ones with the most moderate employment losses — are, in order, health care, transportation and warehousing, and hospitality and food services.
The analysis projected health care will create the most local jobs over the next decade, then ag and then logistics.
The challenge in Kern remains to find ways of building up new sectors that can provide jobs comparable to the relatively high-paying positions being lost amid the state's phase-out of the local oil industry, said CEO Kate Gordon of California Forward, an organization promoting sustainable and inclusive economic development statewide.
One alternative Gordon is bullish on is carbon removal, a somewhat contentious climate action proposed in Kern that requires the same kind of industrial workforce. It takes carbon dioxide out of the air, or out of emissions streams, and stores it underground or in materials.
Another possibility she mentioned is manufacturing, which could benefit from a national push to "onshore" jobs otherwise done overseas. The county is well-positioned to benefit because of its access to transportation infrastructure and ports.
"I just think we could do a lot more in that (manufacturing) space," she said.
The county's chief economic development officer, Jim Damian, said by email the difficulties facing Kern's oil and ag industries have led to a closer engagement between local government and the private sector "to explore innovative ways" to activate local economic resources.
There are signs it's working, he wrote. He pointed to innovative local projects including a compressed-air energy storage facility proposed in eastern Kern by Toronto-based Hydrostor Inc. and UK startup BIOS Health's choice of Bakersfield to establish a clinical trials center for developing neural therapies.
Damian noted the county leads California in renewable energy production and is expected to have its first carbon removal project. Plus, he pointed out, building permits are up.
President and CEO A.J. Antongiovanni at Bakersfield-based Mission Bank said in an email that regulatory challenges plaguing the local oil and ag industries impact everyone's bottom line. But he added that other developments in the county are positively affecting the business climate, including population growth.
"We see the obstacles in our customers' paths, but we are still optimistic," he stated.
(Editor's note: This story has been changed to attribute Mission Bank's statement to Antongiovanni.)
