Coachella-Imperial Economy Continues to Struggle

Shuttered department store in Calexico | Creative Commons Photo by moominsean
Shuttered department store in Calexico | Creative Commons Photo by moominsean

As the global economy reels from crises in Europe and Washington, the results have not yet begun to trickle down to the Coachella and Imperial Valleys. Then again, the Salton Basin's economy doesn't really need a kick in the teeth from what some are calling the Tea Party Downgrade: it was doing poorly without any help.

On Tuesday, news of the staggering world markets were interspersed in Salton Basin papers with reports on local restaurant closures, debates over whether new big-box stores would rescue -- or drive the last coffin nail into -- local cities' economies, and masses of hopefuls queuing up to apply for part-time department store jobs.

In other words, life as usual in the Coachella and Imperial Valleys -- if perhaps a little more desperate.

The Salton Basin is a study in contrasts, with enclaves of astonishing wealth surrounded by varying degrees of hardship. Indian Wells, the affluent resort community, had a median household income in 2000 of $93,986. The single largest employer of residents of adjacent Palm Desert is the JW Marriott Desert Springs Golf Resort, which employs 2,000. Palm Desert's next largest job provider, with 1,500 positions, is a private security firm.

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In Indio, 15 minutes east of Indian Wells on Highway 111, the median household income was $34,624 in 2000: about a third of that in Indian Wells. Neighboring Coachella, synonymous outside the Basin with a very lucrative music festival, is even poorer than Indio, with a 2000 median household income of $28,590 and almost a third of its residents living at or below the poverty line.

For much of the twentieth century the basin's economy was mainly agricultural, with tourism -- which started around Palm Springs in the 1930s, then oozed eastward toward today's high-end resorts -- an important second income. Things started to get a bit more diversified in the 1980s or so. Inland Empire sprawl started lapping at the Coachella Valley's shores, and people began to realize that if they were willing to ride out the consistent triple-digit summer temperatures, they'd be rewarded by a significantly cheaper cost of living -- aside from electricity bills to run the AC. As more year-round, non-farm-working residents arrived, the basin's economy grew somewhat more diversified, with increasing demand for goods and services not as tied to ag and tourism: dentists, plumbers, office supply stores and the like.

Which only meant that the basin was doubly vulnerable to the burst of the housing bubble in 2007: not only were Valley residents trying to keep their homes, but the basin's tourist demographic elsewhere was less likely to visit and drop wads of cash if they were trying to keep from getting foreclosed on in Covina. There was a brief boom in home sales in Coachella Valley in 2008-9, likely from people snapping up homes whose price had fallen by about half. That flurry of sales slacked off in 2010.

The root and persistent cause of the troubled economy, of course, is joblessness. This graph shows unemployment in Imperial and Riverside counties, the two counties covering the Salton Basin, marked against the California total:

A caveat: each county is larger than their section of the basin, and while Imperial County's population centers are essentially within the Imperial Valley, there's a lot of people in Riverside County outside the Coachella Valley. The Coachella Valley's unemployment is likely a point or two below the totals for Riverside County. Nonetheless, two clear pieces of information emerge from the graph:

1) The region's unemployment patterns are strongly seasonal, unsurprising in an economy still dominated by agriculture and tourism, though this is less true than it was 20 years ago;

2) Unemployment in both counties has gone up dramatically in the last two years, at rates higher than the California average, and with no indication of a downturn anytime soon.

Ironically, one aspect of the recent economic debacle in Washington may prove a partial boon to the Imperial Valley economy, which is closely intertwined with that of Baja California. A significant number of Imperial residents already commute to jobs across the border, and more cross-border traffic results from shopping and pleasure trips. If the downgrade of the US credit rating results in a devalued dollar, border cities may see an increase in business as Mexicans bring their relatively stronger peso north to buy things.

In the meantime, the Salton Basin's communities adjust. In the news today: a prominent sub-discount chain will be opening its second Palm Desert location. The store, which will sell extremely low-end household items and canned goods, will be opening in a building intended for use by a store in the defunct Circuit City chain. Selling pricy electronics gives way to selling plastic flyswatters and off-brand laundry detergent, and life goes in in the desert cities.

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