Warehousing Jobs in San Joaquin County: The Dilemma of Focusing on One IndustryThe e-commerce boom has brought about a significant transformation in the lives of consumers, as well as entire regions. Backwaters have been turned into logistics-driven boomtowns, but the question that now arises is: What happens when the boom ends? This is a concern that is particularly pressing in San Joaquin County, located in California’s Central Valley. A decade ago, the county had one of the highest unemployment rates in the United States, and the majority of its workforce relied on seasonal agricultural jobs. However, everything changed in 2013 when Amazon.com opened its first warehouse in the area. This triggered a land rush, with major retailers competing for space to fulfill online orders for consumers in the nearby San Francisco Bay Area. As a result, jobs in the transportation and warehousing industry in San Joaquin County tripled over the course of a decade, accounting for 44% of total job growth in the metropolitan area surrounding Stockton, the county’s largest city.
Today, this industry employs approximately 17% of the area’s workforce, making it one of the highest concentrations in the country.Amazon is the largest private employer in San Joaquin County, with over 13,000 employees in 11 facilities. The company has invested a total of $9 billion in the county since 2010, which includes investments in infrastructure and employee compensation. The county has also seen a surge in the number of flights landing at the Stockton airport, all carrying goods for Amazon. However, as the pandemic-induced surge in e-commerce begins to subside, the transportation and warehousing industry in the region is experiencing a decline. Nationally, this industry was down 0.9% in January compared to the previous year, and in Stockton, it was down 5.4% year over year in December, according to data from the Labor Department. This has led to a rise in the city’s unemployment rate, which has jumped to 6.8% from a record low of 4.4% in 2022 (before seasonal adjustment).
The transportation and warehousing industry has been severely impacted by previous recessions, and if history repeats itself, it could erase much of the progress made in Stockton over the past few years. This has sparked a debate among local leaders about whether the county should continue to focus on this industry or diversify its economy.Diversification, however, is not an easy task. For years, the easiest and quickest way to expand the local economy was by bringing in more warehouses. Businesses were eager to secure space, the land was already zoned for industrial use, and there was the promise of new jobs and tax revenue. “I don’t think we really took the time to step back and say: What is our vision here? Is this what we want to be?” says Bob Gutierrez, interim president and chief executive of the San Joaquin Partnership, an economic development group. The rise of globalized supply chains, e-commerce, and the recovery from the 2007-09 recession created a high demand for warehouses and trucks to store and ship goods. The COVID-19 pandemic further accelerated this growth as consumers shifted their spending from services to goods. Midsize cities like Stockton, which are located on the outskirts of major metropolitan areas, have benefitted the most from this boom, thanks to cheaper land, lower labor costs, good transportation networks, and proximity to customers. However, as the demand for warehouses starts to cool, there are signs of a slowdown.
In 2023, San Joaquin County broke ground on only 364,000 square feet of new warehouse space, a significant drop from the nearly seven million square feet in 2022, according to CoStar, a real estate data provider. Employbridge, a hiring firm, has also reported a 10% decline in labor demand in the fourth quarter of 2023 compared to the previous year. Job seekers, who have been hopping from one job to another in search of better pay over the past few years, are now facing difficulties in finding employment. This has been a blow to individuals like Juan Hurtado, 33, who have worked in the transportation and warehousing industry for years. “Four or five years ago I was dropping jobs like it was no one’s business,” he says. “Now it’s harder.”Jeffrey Michael, an economist at the University of the Pacific in Stockton, believes that there is another risk beyond a possible recession: “This is a sector that grew rapidly and created a lot of jobs, but it’s also known to be highly susceptible to automation.” Some robotics companies are already working on machines that can perform simple tasks, which could potentially replace human workers in warehouses. The San Joaquin County is responding to these concerns by trying to upgrade the skills of its workforce and diversify into less vulnerable sectors. The region plans to use state grant money to build training programs that will prepare workers for better-paying jobs, such as repairing warehouse robots or working in other manufacturing careers. The hope is to attract factories to open in Stockton, says Thomas Pogue, director of the Center for Business and Policy Research at the University of the Pacific. Additionally, the county is also working on strengthening its adult education programs, which offer courses in welding, auto repair, forklift operation, and healthcare.
These efforts are aimed at preparing workers for a variety of job opportunities and reducing their reliance on the transportation and warehousing industry. Patricia Virgen, executive director of San Joaquin County WorkNet, an agency that helps match job seekers with employers, recalls the closure of one of the last sugar plants in neighboring Manteca about 30 years ago. This resulted in the layoff of several men who had worked there for decades, earning a good living with minimal training. “It was devastating to see grown men in tears trying to figure out: What am I going to do next,” she says. “We are kind of on the cusp of that happening again.”Elected officials in San Joaquin County are conflicted about how to proceed. While some are in favor of expanding the county’s industrial footprint to attract more warehouses, others are concerned about the risks of relying on a single industry. “You can bring up Detroit,” says Robert Rickman, a supervisor. “Detroit was a city that was just cars, right? Where is Detroit nowadays?” In the end, the supervisors have decided to monitor the industrial real estate market and periodically update the county’s stance on building warehouses.
