Sunday, August 16, 2009

Marginal Changes: A comment on farm job estimates

I have received several comments from environmentalists about our recently released Fish or Foreclosure study that wonder why I say the drought has cost 6,000 farm jobs, when total farm jobs have increased. I understand this, because I was the one who initially brought the fact that farm jobs in the Valley were increasing to public attention, and this fact has been repeated by many in the environmental community since. It's true, and there is nothing wrong with pointing out the total change, especially when someone is blaming 40,000 lost jobs on the Delta Smelt as Congressman Nunes did in yesterday's Wall Street Journal.

The 6,000 lost jobs are a marginal effect of drought AND include all the multiplier effects (about 3,000 of these lost jobs are agriculture jobs). Total agricultural jobs can increase by 3,000 and the drought can eliminate 3,000. It means that we feel agricultural jobs would be up by 6,000 if there were no drought, but increased by a smaller amount because of water shortages. We believe farm jobs would be increasing substantially without a drought because the recession has boosted labor supply.

Another comment on marginal effects. I believe the marginal employment effects of water supply will increase if water deliveries are cut even more than they are this year. The farm labor shortage is gone now, the ability to use even more groundwater is limited, and the water issue will progressively impact higher and higher value crops. So, our study estimated the $600-700 million in lost revenue only cut 6,000 jobs (a little less than 10 jobs per $1 million in revenue). My rough estimate is that any further losses could impact jobs at 15-20 per $1 million in lost revenue.


  1. Spin, spin, spin! It's obvious you are blogging for money. How much do you get from the lobbyists and special interest groups? Everyone knows the true estimate of job loss is not regulated to actual "farm workers" and your relation to that in your blog makes the reality of your falsifications easily identifiable. Special interests fuel your wallet and that's too bad. The fact is that the government has allowed human suffering over that of a three inch fish. The government has put 40,000 able body workers out of jobs and thats not only sick it's making Californias rise up and say enough is enough. This state was founded off the backs of farmers, loggers, miners. The reality is that we are aware of the divide and conquer technique of the environmental extremists, and liberal legislature which are killing Californias small business by regulating us out of business. We the people have had it and will no longer let the minority of extremeist rule our state. We are taking it back for the small business.

  2. I wish I were blogging for money. For your information, my total compensation from special interests for commenting on the water=jobs issue is a bumpersticker and 1 free lunch. The economists making money on this issue are all working on the other side. I suppose that I am being paid to look into the issue, because a large part of my regular job is to study and forecast employment trends in the Central Valley for the benefit of the public and business community. So, by correcting the false information, I am just doing my job.

    As for the direct criticism, I am accounting for indirect job losses and I believe this is clear in this post and in the "fish or foreclosure" paper. Click the link and read it yourself.

    If you think the Smelt restriction has caused 40,000 lost jobs, I recommend you look at the Berkeley Economic Consulting Study posted on the Coaliton for Sustainable Delta Study. They estimate an average of 720 lost jobs for the Smelt, with higher numbers in drought year like the present, and lower numbers in most other years. That study was paid for by water exporters, including MET, Kern, Westlands, San Luis, etc.

    Yes, the irrigators own consultants know that the 40,000 lost jobs because of a 2-inch fish is about 40x too high. The UC-Davis researchers who have been responsible for the big job loss numbers all along are now saying 15-20,000 on their 3rd revision of these estimates; and even they say only about 25% of this is due to the Smelt.