Wednesday, June 17, 2015

Fourth Quarter Data shows larger drought effect on Farm Jobs

Farm jobs in the San Joaquin Valley declined significantly in the 4th quarter of 2014 compared to the same period in 2013, according to data from the Quarterly Census of Employment and Wages (QCEW) released today.  The QCEW is a census of employer tax filings, and is a very reliable estimate of employment.

The table below shows the total of monthly agricultural employment (both direct farm employment and agricultural labor contractors) across the 8 counties classified as the San Joaquin Valley.  The decline in employment exceeded 2% in each of the last 3 months of the year, in contrast to increases at the beginning of the year.  The annual monthly average shows a loss of 513 jobs, or -0.3%, in contrast to earlier estimates of a modest gain.  When this recent trend is combined with larger water shortages in 2015, it suggests that a significant decrease in agricultural employment should be expected this year.

While agricultural employment now appears to have decreased slightly in 2014, the following should be noted:

  • Farm employment in the Valley remained near an all-time high.
  • Even in the 4th (worst) quarter, the decline in jobs was less than half the consensus prediction by economists in 2014 (yes, that includes me too)
  • Total agricultural wages were up nearly 4% compared to the previous year.
  • Overall employment continues to grow in the San Joaquin Valley, and unemployment has declined to single-digits in most of the Valley, and is significantly lower than its historic average in most of the Valley despite the drought.
In contrast, both farm employment and wages decreased 3-4% during a less severe drought in 2009, which was the basis of predictions of greater losses in 2014.  The leading explanation for the smaller than expected loss in jobs is the shift to higher value crops, and while that is certainly part of the explanation - that shift was already well underway in 2009.  

Year 2014 2013 diff % diff
Jan 179,059 173,054 6,005 3.4%
Feb 177,319 171,692 5,627 3.2%
Mar 167,919 161,119 6,800 4.0%
Apr 198,015 191,217 6,798 3.4%
May 231,878 235,793 -3,915 -1.7%
June 223,892 233,722 -9,830 -4.4%
July 229,603 229,301 302 0.1%
August 239,192 239,456 -264 -0.1%
September 235,671 236,482 -811 -0.3%
October 211,829 216,994 -5,165 -2.4%
November 186,775 190,720 -3,945 -2.1%
December 169,356 177,111 -7,755 -4.6%
Average 204,209 204,722 -513 -0.3%

Thursday, June 11, 2015

How much has Cap and Trade Increased the Price of Gas in California?

My parents are visiting from Ohio, and a favorite topic of conversation on these visits is what is more expensive here than "back home" and how much.

While driving past a gas station with my Dad this weekend he suddenly whistled, "Whoa, it's $2.59 at home, that's the biggest difference I have ever seen.  What's going on?"  I mentioned that we now have AB 32 (cap and trade) covering motor fuels, and that the most quoted studies predicted about a 10 cent increase per gallon, but I haven't studied it in detail.

That conversation led me to conduct some in depth research on Gas Buddy, which generated the following chart comparing California and Ohio.

I looked going back 8 years, and it looks like the historical difference is 25-50 cents per gallon with the gap being larger in the summer.  So far in 2015, it looks the difference has been 50 cents to a dollar with the current difference being about 75 cents a gallon.  Dad was right.

The data is volatile and it is a little premature to draw conclusions, but it looks to me like the AB 32 effect is about 25 cents per gallon.

I seem to recall predictions that a price of about $10 per ton for carbon emission permits would translate into about 10 cents per gallon.  So far in 2015, the carbon price has been $12-13 per ton, so the gas price increase/gap seems higher than expected.  I wonder how the cap and trade revenue being collected by the state compares to the increased amount California drivers are paying for gas.

I am sure there are many people who are properly researching this issue, and we will be hearing a lot about it in the months and years to come.