The Apple store on Fourth St. in Berkeley had a dramatic effect on sales tax raised by the city in that shopping district. The number has quadrupled since the store opened in Aug. 2011. Photo: Patrick Nagel

Berkeley has lower unemployment rates than the county and the state, and the city remains something of a jobs magnet, according to the first ever quarterly economic development report prepared for tonight’s Council meeting by the city’s economic development department.

The report, which draws together data from the Census Bureau’s American Community Survey with the city’s own tracking of retail sales tax and other sources, provides a portrait of Berkeley’s economy following the national recession and the slow recovery in recent years.

“Over time, what you’ll get with these reports is a very good overview of what’s going on in Berkeley,” said Michael Caplan, economic development manager for the city. This week’s report will be followed by a workshop focusing on Telegraph Avenue in May, and a second report and second workshop in the second half of the year. 

Unemployment in Berkeley (blue) tracks closely the rate in Alameda County (red) and California (green). But over the last three years, Berkeley’s rate has remained a bit lower than the county’s and well below the state’s.

At the end of 2012, Berkeley’s unemployment rate was 7.8%, compared to 8.2% in Alameda County and 9.7% in California. The report calculates that around 4,700 Berkeleyans were unemployed in December 2012, out of a labor force estimated at 60,000.

When the report looks at the less up-to-date American Community Survey, however, some of the stark differences in Berkeley begin to emerge. Over the period of the ACS (2007-11), Berkeley’s average unemployment rate was 7.1%, but for African-Americans it was 17.9% and for Hispanics of any race, 8.6%. More dramatic are the variations by education: for the population aged 25 to 64, the average unemployment rate was 6.2%, but for those without a high school degree, 19.5% were unemployed; for those who completed high school, 14.6%; for those with some college, 11.1%; and for those with an undergraduate degree or higher, 3.9%.

“Clearly, it is the fact that 69% of the population in Berkeley over 25 years of age has a bachelor’s degree or higher,” the report concludes, “that explains why our city always has an unemployment rate below the State and County average.”

Few that work in Berkeley, live in Berkeley

Based on a 2011 study conducted for the city, the report states that only 17.1% of the jobs in Berkeley are actually held by Berkeley residents, a proportion that has been declining. That figure does not include, however, business proprietors or the self-employed. The report cites the ACS data showing 21% of Berkeley households report income from self-employment, nearly double the national average.

The report points to high rents and house prices in Berkeley as a factor in the number of workers who travel into Berkeley. But many Berkeleyans clearly find work elsewhere.

Sales tax revenue over the last 22 years has been in decline when adjusted for inflation (red dots), although there has been some reversal of the trend in the last three years.

“You find a lot of people commute into the city and even into the South Bay,” said Caplan. “The labor force in Berkeley is desirable both in Berkeley and in the region. We still are net importers of jobs, and that is an indicator of the robustness of Berkeley’s employment sectors.”

Gather in downtown: Restaurants account for 20% of Berkeley’s retail sales. Photo: Tracey Taylor

Caplan points to the large institutional employers — including the University of California, Berkeley, and Lawrence Berkeley National Laboratory — as a steadying influence on Berkeley’s employment, even with cutbacks in recent years.

Retail sales in Berkeley have been less robust. The report cites the move to so-called big box retailers, clustered in Emeryville and elsewhere, as well as the shift to internet purchases of historic Berkeley retail strengths like books and music.

A major exception is in restaurants, which Caplan calls a “great strength.” Restaurants account for 20% of Berkeley’s retail sales based on sales tax receipts, easily the largest sector (the California average is 14%). In some commercial districts, the impact of restaurants is even greater: downtown, they account for 42% of sales tax, and in North Shattuck, 51%. The report points out that some Berkeley strengths, such as entertainment, do not generate sales tax directly.

In most commercial districts of Berkeley, restaurants have been a conspicuous bright spot. On Fourth Street, however, the breakdown of sales shows the dramatic impact of the Apple Store opening in August, 2011

There are exceptions to the trend. The opening of the Apple Store on Fourth Street in August 2011 had a dramatic effect on the sales tax raised in the category known as furniture/appliances in that district. The total has quadrupled since the opening.

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Lance Knobel (Berkeleyside co-founder) has been a journalist for nearly 40 years. Much of his career was in business journalism. He was editor-in-chief of both Management Today, the leading business magazine...