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This article was published on: 1/26/2007

Jobs going inland to cheaper locales, state study shows


By Steve Johnson
Mercury News

Eric Casares moved with his wife from San Francisco about two years ago largely for economic reasons. The couple -- who had a baby girl three weeks ago -- were able to buy a house in Fresno, something they would have had great trouble doing in the Bay Area.

"Our mortgage is less than what we were paying for rent in San Francisco,'' said the 27-year-old civil engineer, who formerly worked at the clothing company Gap. "The cost of living out here is much less. That's a huge thing.''

A lot of other people apparently have realized that, too, according to a report released Thursday by the non-profit California Budget Project of Sacramento.

Reaffirming the long-term trend of population shifting eastward, the study found that job growth in California's inland counties from 1990 to 2005 was nearly five times larger than that of 20 coastal counties, including Santa Clara County. And the trend was evident across a broad range of economic sectors.

The study -- which was based on data that businesses submit to the California Department of Economic Development -- determined that the overall number of jobs in inland counties increased 45.9 percent over the 15-year period. By contrast, jobs grew by 9.6 percent in the coastal counties -- a dozen of which were in or near the Bay Area.

Santa Clara County's job total rose by just 4.8 percent, while San Francisco County's decreased by 8.9 percent.

But that doesn't mean Silicon Valley's economy is in trouble, according to some economists, including Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto.

Levy quibbled with the study's classification of Riverside and San Bernardino counties as inland, since both are heavily linked economically to Los Angeles. But even if the study is correct in concluding inland job growth has far outpaced that of coastal areas, "this does not indicate we are losing our job base to other regions,'' he said.

Indeed, jobs in coastal communities continued to outnumber jobs in inland areas, by 10.9 million to 3.6 million in 2005. But the inland communities are catching up, according to the report.

It found that job growth in inland counties topped that of coastal counties in nine of 10 industry categories, including manufacturing, leisure and hospitality, and professional and business services. Only in the information industry, which includes telecommunications and motion pictures, did job growth in coastal areas exceed that of inland counties.

Jean Ross, the California Budget Project's executive director, said her group didn't attempt to assess the cause of the trend, which roughly parallels recent Census Bureau findings on the disproportionate population growth of inland counties. But she speculated that "a lot of it is driven by the cost of housing.''

Steve Cochrane, senior economist at Economy.com, also said it would be wrong to conclude from the study that Silicon Valley -- or other metropolitan areas along the coast -- are doomed. After all, he said, the Bay Area already has significantly rebounded from its lean years during the dot-com bust.

Even so, he believes jobs will continue to be added at a faster rate in many inland counties. Part of that is due to the Internet, cell phones and other communications devices, which have made it simpler to live in less urbanized areas and remain connected to the rest of the world. But more important, he added, it's cheaper outside of the big cities.

Consequently, Cochrane said, "it just makes sense that the jobs and the population begin to flow inward.''

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