American Dream fails in Inland Empire
Kai Ryssdal: The recession is, officially, over. A lot of experts and some economic indicators agree on that. But the experts and the indicators don't know what they're talking about.
In California's Inland Empire, that's definitely true. The Inland Empire's out in in the desert east of L.A. with 4.3 million people living there, nearly double the population of Nevada. In the decades before the recession, it was the place families went to to pursue the American Dream. There were cheap suburban houses with two-car garages and good jobs in construction and warehousing and trucking. There were so many jobs, in fact, that the unemployment rate fell below 5 percent. Now, it's triple that in many towns, and the dream has turned into something of a nightmare.
Today, in the first of a two-part series, Marketplace's Mitchell Hartman takes a trip to to see what the future might hold.
Mitchell Hartman: Drive an hour east of L.A. on the freeway and you come to the town of Rialto. Population 100,000. Unemployment is over 16 percent. One in 10 of the modest tract houses here have been lost to foreclosure. Home prices have fallen by two-thirds. Main Street businesses -- from restaurants to realtors -- have shut down. It didn't used to be like this.
Robb Steel: Downtown filled up just before the recession.
I met Robb Steel in his storefront office. He's the Rialto city official in charge of economic development. And his department has been busy providing services to the city's growing population -- up more than 35 percent over just the past two decades.
Steel: We had owners that were reinvesting in the buildings and their businesses. And then it just emptied out almost overnight. Consumers can't buy -- can't buy homes, can't buy goods and services that go with homes. All those things have compounded to make this recession probably the most difficult one since the Great Depression.
Hartman: And so stepping out from the redevelopment center you can immediately see that decimation on this main street: there's a closed dry-cleaners, a closed upholsterers, an empty beauty salon...
John Husing: We are in a world of hurt.
That's John Husing, chief economist at the Inland Empire Economic Partnership. And keep in mind: everything he says about the Inland Empire, it looks even worse in cities like Rialto and San Bernardino with their preponderance of lower-income blacks and Hispanics.
Husing: We lost roughly 17-18 percent of all of our jobs, which is a huge hit.
Husing says there used to be a lot of growth here, but the engines that drove it have stalled. First, that's construction, which boomed on cheap land and loose mortgages. Retail, that'slow-wage work at all the new strip malls selling groceries and furniture to the new residents. And then, manufacturing, which benefited from blue-collar workers who came for the cheap housing. Finally, logistics, that's trucking cheap Asian imports from the huge ports of Los Angeles to local warehouses, then on to Wal-Marts and Targets all over the country.
So what's left for for Rialto and the Inland Empire? Let's start with construction. The good news?
Husing: People have not stopped having sex in California. We are still seeing a growing population.
The bad news?
Husing: We're not creating housing for them. We will have gone through somewhere between 8 and 10 years of no housing creation.
Economist John Husing says construction's down by more than half -- that's 70,000 jobs gone missing. And Housing doesn't expect it to revive until 2018. In Rialto, the only housing developments on the drawing board are now being stretched out over 20 years. How about manufacturing?
Next door to Rialto is the city of Fontana -- and one of the largest steel mills still operating in Southern California.
Brett Guge: These rolls of steel are as much as 50,000 pounds.
Brett Guge of California Steel.
Guge: It's going to be stamped, rolled, cut, shaped...
Primarily for the U.S. market. That used to include a lot of new housing, and about 100 workers -- out of a 1,000 total at the mill -- lost their jobs when the bubble burst. Now, business is back thanks to new gas pipelines and solar plants for that. Guge expects to add 50 workers next year. But these aren't jobs for everyone.
Guge: Our mill, like any mill that has survived in the United States, is highly automated, and it takes people who are good problem solvers, who are good communicators, and who have some technical capability.
That could be a problem because this region has one of the lowest education levels in the country. Only 12 percent of residents have a B.A. So what about logistics? Moving all those Chinese imports from ship to warehouse?
On a dusty four-lane highway a few miles from downtown Rialto, tractor-trailers stream into a sprawling FedEx warehouse. The town's tried hard to recruit these employers, and business is up as global trade rebounds and Americans start buying again.
Good news for warehouse worker Rudy Mendoza. I met him at Sunrise Church, a huge evangelical center in Rialto.
Rudy Mendoza: I was laid off for almost a year, I was collecting unemployment benefits, and just when it was about to expire, I got a job, thank God for that.
Mendoza is loading shoeboxes for Converse and taking home less than $20,000 a year. But here's the rub. Sketchers just opened a highly-automated, state-of-the-art facility nearby. Loading and inventory are done by robots. The pay is better than at a typical warehouse, but that means there are fewer workers. At the new warehouse, employees hardly ever touch a shoebox. So workers like Mendoza -- without the skills to move boxes around robotically -- can only hope there'll still be enough work moving them by hand.
I'm Mitchell Hartman for Marketplace.
Ryssdal: We've got some maps where you can see just how bad unemployment is in Southern California's Inland Empire and compare it to where you live -- by state and metro area. And there's a slideshow of some of the towns Mitchell visited for his story -- at the top of this page.