State Farm Insurance said Thursday that it is pulling the plug on 500 to 600 jobs at its regional office in Costa Mesa by the end of the year, transferring the positions and many of the people to a new facility in Bakersfield.
The decision to downgrade the Costa Mesa center and cut its payroll by 60% comes just as economists say the battered local economy is crawling out of the doldrums.
About 400 employees would remain at the office complex on Highland Avenue in Costa Mesa. Jobs being relocated to the new Central California regional office range from secretaries to executives, State Farm spokeswoman Dawn Billings said.
If the average paycheck was $40,000 a year, plus $15,000 in fringe benefits like medical insurance, vacations and sick leave, the net impact would be to drain away $22 million to $33 million a year that otherwise would have helped pump up the pace of Orange County's recovery.
Billings said Thursday that all of the workers whose jobs will be relocated can either transfer to Bakersfield or, where possible, to other State Farm locations. The company has not yet determined how many Costa Mesa employees will transfer, but "there may not be any layoffs," Billings said.
State Farm, which is based in Bloomington, Ill., is one of California's largest auto and property insurers. The company decided in the late 1980s to add a fourth regional headquarters in Bakersfield to increase its presence in the vast Central Valley. But regulatory changes and the impacts of California's recent floods, wildfires and earthquakes have forced State Farm and other insurers to cut operating costs. The company shouldered $2.53 billion in costs related to claims from the 1994 Northridge earthquake alone.
Because State Farm had two regional headquarters in Southern California--Costa Mesa and Westlake Village--the company decided to use its new Bakersfield complex, scheduled to be completed in December, as its state headquarters and to turn the Costa Mesa facility into a branch office with fewer employees, Billings said.