Many signs point to a Bakersfield boom
BAKERSFIELD — This mid-size city has become the surprise star of the Central Valley.
The state’s economic recovery has largely been concentrated on the coast, leaving behind much of the hard-hit San Joaquin Valley. But Bakersfield, perhaps best known for oil, agriculture and country music, has reclaimed an old title: boomtown.
Bakersfield has been adding population and jobs at a brisk pace and is a few thousand jobs from matching its peak employment level of five years ago. A price-fueled energy bonanza, low corporate operating costs and an advantageous location are contributing to the area’s good fortune.
Employment has grown across many sectors, including manufacturing. Even construction, which suffered mightily statewide during the housing bust, has strengthened. And unlike many struggling municipalities, in Kern County officials have recommended a budget increase that would allow hiring of more than 150 people.
Signs of growth are obvious.
San Joaquin Community Hospital, in downtown Bakersfield, is building a four-story cancer treatment center. Just south of town, equipment giant Caterpillar Inc. is finishing a distribution center. Roads and highways are getting face-lifts. And several corporations have moved operations to the area.
These and other projects have given Bakersfield something to boast about. It leads the country in year-over-year construction employment growth, with payrolls swelling by almost 23% since July 2011. By comparison, state construction employment grew by 5%.
For employers like Griffith Co., a general contractor, construction volume is up 20% from the year before for its Bakersfield branch; it expects to do more hiring when more projects get off the ground.
“It’s very exciting,” said Luke Walker, Griffith’s assistant regional manager. “We’re getting close to where we were right before the recession happened.”
According to state employment data, Kern County is just 5,600 jobs from matching its peak employment of 239,600 reached in September 2007, when developers were tossing up houses and condos at an unsustainable pace. And the big gainer is Bakersfield, the county seat and its largest city by far.
The area, which has large petroleum deposits, is benefiting from a surge in energy prices. That has led to more drilling for oil and natural gas and boosted other energy projects, which means more hiring.
“We have work in the oil fields,” said Danny Kane, business manager for the International Brotherhood of Electrical Workers, Local 428, based in downtown Bakersfield. “We have a lot of solar work. We have wind. We are just fortunate to have those opportunities in Kern County.”
Despite the gains in some sectors, the economy in the area hasn’t fully recovered.
The unemployment rate remains high, at 13.6% in July, but it has dropped 4.2 percentage points since its peak of 17.8% in March 2010. And there are still about 52,000 unemployed people in Kern County, according to data from the state’s Employment Development Department.
Economists, however, note that even during good times, Kern County has had an elevated unemployment rate compared with the state as a whole because of the seasonal hiring pattern of its large agriculture industry. During Bakersfield’s employment peak five years ago, for instance, the unemployment rate was 7.2%, compared with 5.6% for the state as a whole.
Although employment has recovered recently, population has been exploding for a decade as people have sought work opportunities and cheap housing.
From 2000 to 2010, the county’s population grew to 839,000, a jump of almost 27%, compared with 10% statewide, according to U.S. Census Bureau data. The city boasted nearly 350,000 Bakersfieldians in 2010, about 101,000 more than in 2000, a 41% increase.
“We’re growing faster than we create jobs,” said Melinda Brown, director of business development for the Kern County Economic Development Corp.
But the recent employment growth is a signal that the area has gotten past “all the layoffs, and people are hiring here and there,” she said.
The area’s population growth is the main reason San Joaquin Community Hospital is building a 60,000-square-foot cancer center, said Jarrod McNaughton, vice president of marketing and business development. The region has lacked a major hospital-based cancer clinic, and many residents travel to Los Angeles for treatment.
The project, which has created almost 100 construction jobs, is expected to be completed this year. The hospital, with about 2,100 employees, has plans for about 80 new positions in the treatment center, McNaughton said.
“We’re hiring well-paying jobs into an economy that has been pretty sluggish,” he said. “We’re tying to do our part to meet demand and help the economy here.”
The hospital has bought nearby property and will demolish buildings to make way for future growth, McNaughton said.
In addition to companies expanding, county planners have aggressively courted others who looked to cut costs during the recession, Brown said.
In the last year, several companies have decided to move operations to Bakersfield, attracted by cheaper office space and land and fast approval of business licenses. The city’s location is also a selling point; it’s just two hours north of the ports of Los Angeles and Long Beach, attractive to companies with West Coast operations.
Caterpillar last year bought 46 acres and has nearly completed a 400,000-square-foot distribution center at the Tejon Ranch Commerce Center near the junction of Interstate 5 and state Highway 99. This follows the opening of a Dollar General distribution hub this year. The industrial center houses hubs for Target, Ikea and Famous Footwear.
Tejon Ranch Co., a publicly traded company, also recently announced plans to open an outlet center in 2014 with the Rockefeller Group at the intersection of the two highways, near its commerce center.
But despite these gains, county economic planners say Bakersfield is still hindered by a variety of weaknesses.
Among them, they say, many outsiders view the city as little more than a dusty industrial and agriculture town near an interstate.
“Bakersfield’s perception is tough to overcome,” Kern County’s Brown said. “It’s a challenge in bringing companies here.”
But even more problematic for growth is the poorly educated workforce. Only 9.8% of Kern County’s population has a bachelor’s degree, according to census data, which means high-paying jobs in engineering are difficult to fill and tend to go to workers who relocate from out of state.
“Bakersfield is still a Central Valley economy,” said Eduardo Martinez, a Moody’s Analytics economist, noting that the large agriculture industry means much of the labor force is migrant workers, low-skilled and uneducated.
And the county’s reliance on oil makes it vulnerable to drops in energy prices, Martinez said. “There’s a high dependence on agriculture and mining, and that’s positive during boom years, but not so much if there’s a crash.”
To that end, employers are investing in worker training, said Richard Chapman, president of the Kern County Economic Development Corp. Other programs sponsored by Chapman’s group, such as the Alliance of Women in Energy, pair local high school students with working professionals who mentor them for careers in science and engineering.
Developing residents’ skills, Chapman said, is a priority to ensure that employment growth is more widespread and includes well-paying jobs for area residents.
“The only thing that can stop us,” Chapman said, “is the availability of the workforce.”
John Spaulding, executive secretary of the Building Trades Council for Kern, Inyo and Mono Counties, said that although hiring has increased in the last year, larger and more long-term projects needed to get off the ground to see the recovery accelerate.
Spaulding said he was looking forward to the start of construction on a hydrogen energy plant late next year, which is expected to be a multiyear project that would employ thousands.
“I think it’s going to get better,” he said. “There’s some movement.”
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