Office of Economic Development
Office of Economic Development

Business, Employment and Labor Force Trends:

A Context for Policy Development for the West Berkeley Project

                            

Employment:  the Plan Goal and Actual Performance

The West Berkeley Area Plan projected that 3,100 new jobs would be added by 2005:  700 manufacturing jobs, 1,200 office and laboratory jobs, and 1,200 retail jobs (West Berkeley Plan ((WBP)) p. 33).  It sought to stabilize and renew growth in manufacturing because “manufacturing provides many well paid jobs to people without advanced education.”  (WBP, p. 59) Instead, overall employment has not increased since the Plan went into effect in 1993 and manufacturing, in particular, has lost jobs.  The fogpicture would be much worse if Berkeley’s largest manufacturer, Bayer Healthcare, had not increased employment from 686 in 1991 to 1,700 in 2009.

 

West Berkeley Employment, 2001- 2010 (March of Each Year)

West Berkeley Employment Graph 

Source for 2001-2010 Statistics:  California Employment Development Department, Labor Market Information Division, Quarterly Census of Employment and Wages.  Source for 1991 Statistics: West Berkeley Plan, City of Berkeley. December 1993. Table 2-1, page 65.

 

Decline in the Number of Small Manufacturers

In order to stabilize and renew Berkeley’s manufacturing base, new firms need to start up or relocate here as others close down or leave the area.  Unfortunately, statistics show a steady decline in the number of small manufacturers over time:

 

Number of Establishments by Employment Size Class: Manufacturing (NAICS Industry 31), Zip Code 94710[1]

Year

Total

1-4

5-9

10-19

20-49

50-99

100-249

250-499

500-999

1000+

1994

146

45

25

31

28

9

6

1

1

 

2000

117

28

25

26

18

11

6

2

0

1

2007

96

37

19

13

17

5

3

0

1

1

2008

93

34

18

14

17

5

3

0

1

1

 

 

The very smallest size classifications represent primarily artisans and craftspeople and, on the whole, this category has remained fairly stable.  However, there is a notable decline in the number of manufacturers in the employment size range from 10 to 249 employees.  West Berkeley contained 74 such firms in 1994, 61 in 2000, and only 39 in 2008.  It would be reasonable to expect that in Berkeley the category of small and medium-sized manufacturers should contain both established locally-serving firms like bakeries and custom furniture makers, as well as a number of start-up technology firms, given that Berkeley’s boundaries include large research facilities at LBNL and UC Berkeley.  However, the data reflect that few new technology firms emerging from those research facilities are choosing to locate in Berkeley.[2]  It thus appears that Berkeley may be failing to benefit from its “comparative advantage” as a business location.

“Comparative advantage” is an economic term referring to the ability of an area (e.g., country, region, neighborhood) to produce a particular good or service at a lower opportunity cost than other area.  For Berkeley, the reason a company might choose to locate here rather than elsewhere should result from the combination of activities at the local major research facilities, along with a highly educated resident workforce.  The chart below reflects that Berkeley’s workforce is more highly educated than nearby cities.

 

EDUCATIONAL ATTAINMENT IN 2006[3]

Berkeley

Oakland

Richmond

Population 25 and over

64,610

100.00%

253,762

100.00%

66,314

100.00%

Less than a high school diploma

4,382

6.78%

59,923

23.61%

13,369

20.16%

High school graduate

5,456

8.44%

51,902

20.45%

15180

22.89%

Some college or associates degree

11,696

18.10%

58,748

23.15%

20,938

31.57%

Bachelor's degree

19,985

30.93%

45,624

17.98%

11,012

16.61%

Graduate or professional degree

23,091

35.74%

37,565

14.80%

5,815

8.77%

Totals

64,610

100.00%

253,762

100.00%

66,314

100.00%

 

If start up firms engaged in developing new products locate in Berkeley, some of them are likely to begin manufacturing here as well.  In this way, the types of companies attracted by Berkeley’s “comparative advantage” could create jobs across the spectrum of educational attainment, thus amplifying the benefits for all segments of the population. 

 

Conclusion 

While the number of very small manufacturers—essentially artisans-- has remained relatively stable in West Berkeley, the data indicate a decline in the number of small to medium-sized manufacturers over time.  This is the size range that should contain some rapidly growing firms that can be expected to hire many new workers.  The advantages of Berkeley’s location, facilities and educated workforce represent an opportunity to attract this size of manufacturer, particularly in the area of start-up technology firms, thus offering the chance to create a more vibrant and diverse economy in the area.      



[1]  Source, County Business Patterns. Zip Code data for 1994, 2000 , 2007 and 2008.  1994 is the earliest and 2008 is the latest year available on the Census Bureau website:  www.census.gov

[2] “Of the 103 businesses that we analyzed, only 14 stayed in Berkeley, while 45 located in other Bay Area cities.  We estimate that approximately 50% of these companies moved for reasons outside of the City or the University’s control.  According to our research, Berkeley missed the opportunity to attract approximately 25 companies in the last nine years.” David Agrawal, Elinor Buchen, et. al, Berkeley Economic Development: Attracting University Spin-off Businesses. (Goldman School of Public Policy research project, 5/17/2006) p. 34 and Appendix 4. 

[3] American Community Survey, 2006. 

Home | Web Policy | Text-Only Site Map | Contact Us
Office of Economic Development, 2180 Milvia Street, Berkeley, CA 94704
Questions or comments? Email: ecodev@cityofberkeley.info Phone: (510) 981-7530
(510) 981-CITY/2489 or 311 from any landline in Berkeley
TTY: (510) 981-6903
###