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Growing the SACOG Region’s Logistics Sector: How Much, How Fast?

March 30, 2007

By Jock O'Connell


(This whitepaper was prepared in conjunction with a comprehensive goods movement study commissioned by the Sacramento Area Council of Governments.)


Summary

Should the Sacramento Area Council of Governments encourage the development of the region’s logistical capabilities beyond the level needed to meet the region’s own goods movement needs over the next three decades?

At present, there appears to be little enthusiasm among local elected leaders and economic development officials in the SACOG region for allocating appreciable resources to the construction of large warehouses, distribution centers and transloading facilities on a scale that would transform the Sacramento area into a multi-regional or multi-state logistics hub. However, in light of widely publicized claims that the logistics sector represents a fertile source of well-paying jobs for blue-collar workers, regional leaders are understandably concerned that they might be remiss in not pursuing an economic development strategy that could yield promising employment opportunities for many of the half-million adults in the six-county region who possess no more than a high school education and are therefore considered most at risk in a labor market increasingly biased toward individuals with technical training or at least some post-secondary education.

Our analysis finds that studies contending that the logistics sector is replacing manufacturing as a primary source of jobs for the state’s blue-collar workforce are, at best, misleading. In particular, reports indicating that average annual wages in the logistical sector exceed $40,000 misrepresent a reality in which most logistics workers take home a great deal less. And, contrary to the claims of some economists, there is scant evidence that the logistics sector offers marginally-educated, unskilled workers a broad pathway for career advancement into positions paying a middle-class income. Accordingly, this report finds no compelling reason why officials in the SACOG region should deviate from their existing reluctance to overbuild the region’s logistical capabilities.

Logistics and Blue-Collar Jobs

They are simple needs. Stores must be stocked with merchandise. Parcels must be delivered to offices and households. Goods must be stored, if only temporarily. Freight must be transported ASAP, if not JIT. Yet accommodating these everyday logistical needs in a region with a growing population and an expanding economy involves choices and compromises arrived at via a decision-making process that straddles political jurisdictions and demands the balancing of transportation plans, land-use priorities, fiscal constraints, and environmental goals.

Broadly speaking, logistics encompasses those activities involved in the movement of goods, whether from a creamery in south Sacramento to a grocery in Folsom, from a toy factory in Asia to a Roseville department store, or from the Blue Diamond processing plant in Midtown Sacramento to a bakery in Austria. In common parlance, the logistics sector includes only those functions directly related to the transportation, storage and distribution of goods by truck, rail, ship, pipeline or plane. Other definitions, however, include a broader array of ancillary functions, such as the services of logistics consultants. Most regional economic studies greatly expand the scope of the logistics sector by including businesses engaged in wholesale trade./1/

In Phase One of the SACOG Regional Goods Movement Study, the logistics sector was defined as “a variety of industry groups that involve the shipping, receiving, processing, and storage of goods.” In 2004 (the most recent year for which detailed employment and payroll data were available), this sector accounted for approximately 53,000 jobs or 5.8 percent of the SACOG region’s total employment. Employment in the Wholesale Trade sector alone accounted for 45 percent of the logistics sector’s total employment in the region, with truck transportation the next largest segment with some 11 percent of all of the region’s logistics jobs. Annual payroll in this region’s logistics sector amounted to some $2.1 billion in 2004./2/

There is no question that the SACOG region should grow its logistics sector to keep pace with population increases and economic expansion. Doing so will require, among other things, land-use policies congenial with the gradual addition of warehouses, distribution centers and other facilities needed to ensure the efficient and economical transportation of goods throughout the region. The policy implications and trade-offs inherent in resolving this land-use question are examined in elsewhere in this report.

Here the discussion seeks to illuminate the question of whether it would be in the interest of the SACOG region to promote the development of huge logistical complexes intended to serve the goods movement needs of the rest of Northern California and perhaps even adjacent states. Beyond satisfying the region’s own logistical needs, there is little apparent enthusiasm among elected leaders and economic development officials to seek to lure large-scale multi-regional distribution centers or to otherwise make the Sacramento area a major hub for logistical services./3/ Instead, there is a strong consensus that such facilities provide a relatively poor return on public investment and generally do not represent the highest and best use to which scarce commercial real estate should be devoted. The clear regional priority is to attract and/or retain enterprises engaged in high value-added research and design work, software production, or light manufacturing -- preferably in the clean energy, biomedical, and information technologies sectors.

But then there is the matter of jobs and, in particular, employment opportunities for those workers most in danger of being relegated to the sidelines as the state’s economy becomes more and more technologically infused. Repetitive labor of the sort once associated with work on assembly lines has been largely automated or outsourced, frequently to offshore locations. Blue-collar occupations increasingly require extensive technical training, if not some post-secondary education. Consider the case of one of the better paying occupational categories within the logistics sector, Wholesale Sales Representative. Unlike past salesman, today’s Willy Loman's more often than not traffic in highly sophisticated equipment and technical services where a high school degree is no longer sufficient. As a California Employment Development Department guidebook observes: “The background needed for sales jobs varies by product line and market. Many employers hire individuals with previous sales experience who lack a college degree, but they increasingly prefer or require a bachelor’s degree because job requirements have become more technical and analytical.”/4/

Still, the need to create rewarding jobs for those without advanced skill sets or a college degree persists. According to the U.S. Census Bureau’s 2005 American Community Survey, 501,531 adults (or 36.5 percent of the SACOG region’s population aged 25 and over) lack any formal schooling beyond high school. In an economy that emphasizes technology and sophisticated skill sets, this cohort is most at risk economically and socially. Across the region, the size of this marginally-educated group varies considerably, from a high of 55.6 percent in Yuba County to a low of 28.9 percent in El Dorado County. In Sacramento County, which accounts for over 60 percent of the SACOG area’s total population, that group numbered 315,999 in 2005, or 37.5 percent of the county’s residents 25 and older.

There a few signs this situation will improve. A new report from the Educational Testing Service entitled America's Perfect Storm concludes that, given current trends, the literacy level of the workforce in 2025 will be even lower than it is today. The report points to national surveys indicating that large numbers of the nation’s adults, 16 years of age and older, do not demonstrate the literacy and numeracy skills needed to fully participate in an increasingly competitive work environment. "Put crudely," the report states, "over the next 25 years or so, as better educated individuals leave the workforce they will be replaced by those who, on average, have lower levels of education and skill. Over this same period, nearly half of the projected job growth will be concentrated in occupations associated with higher education and skill levels."/5/ Commenting on this study, Peter Schrag, the respected columnist of the Sacramento Bee, concluded: “If that's correct, millions of Californians, many of them black or Latino, will be shut out; our economic competitiveness will be attenuated; income and social gaps will widen and the social and political stresses that they produce will grow with them.”/6/

Failure to meet the challenge of providing rewarding employment for this vast cohort is apt to have dire consequences not only for these individuals and their families but for society as a whole. As Janet Yellen, president of the Federal Reserve Bank of San Francisco commented in a November 6, 2006 address at the University of California at Irvine: “There are signs that rising inequality is…impairing social cohesion, and could, ultimately, undermine American democracy.”/7/

Yet many of the employment categories projected to grow the fastest in the SACOG region -- tourism, the leisure industry, and retail trade -- tend to offer wages below the region’s mean hourly wage rate of $20.38 in 2006 /8/, and certainly well beneath the wage level at which a single individual could be expected to provide a middle-class lifestyle for his or her family./9/ Other occupations that are expected to see their ranks increase in coming years -- most notably in education and health services -- are generally unavailable to those without college training. Meanwhile, employment in the manufacturing sector, the one area of the economy which had historically provided wages consistent with a middle-class lifestyle to high school graduates, has been declining in California for several years.

By most accounts, manufacturers in the Sacramento area currently employ just over 50,000 workers. But many of those are not blue-collar workers engaged in production jobs. Intel, which alone employs about one-seventh of the region’s manufacturing workforce and which is usually identified as the SACOG region’s largest manufacturer, actually manufactures nothing in commercial quantities at its facilities in Folsom and Rancho Cordova. Its employment ranks are dominated by individuals engaged in research, product design and development, and administrative support. The best estimate by the California Employment Development Department is that there are now approximately 36,000 residents of the six-county SACOG region who may be classified as working in Production Occupations./10/ But that represents just four percent of all jobs within the entire region. Where, then, will those possessing few technical skills and little more than a high school education find good-paying jobs within our community?

Employment and Wages in the Logistics Sector

Given the potentially corrosive social effects of growing disparities in income distribution, it is understandable that claims that the logistics sector may furnish a potent antidote to the decline of well-compensated blue-collar manufacturing jobs should resonate strongly. What public official would not be impressed by a widely circulated report prepared last year for the Southern California Leadership Council which proclaims that, in 2003, “logistics pay averaged $45,314 or more than both manufacturing ($43,871) and construction ($40,439)?”/11/

Those wage figures are roughly consistent with the findings of a 2005 monograph on logistics employment published under the auspices of the California Regional Economies Project./12/ Even though the CREP study used a rather unique definition of what it terms the logistics “cluster,” it found that logistics jobs statewide paid an average annual wage of $42,475 in 2003. Within specific functions, the occupational pattern was found to vary, but in each case the great majority of logistics jobs (81 percent) were said to offer mid-level wages, with salaries ranging from just over $27,000 to approximately $48,000 annually. About 14.6 percent of logistics jobs were found to be at the higher-level, paying wages from $48,000 to $155,000. One of the CREP study’s more remarkable findings was that just 4.2 percent of logistics jobs paid entry-level wages (i.e., from $16,400 to just above $27,000).

These are indeed remarkable claims. For a sector of the economy that is characterized by extensive use of part-time workers, witnesses seasonal fluctuations in staffing levels, and is generally associated with help-wanted ads promising wages seldom more than one or two dollars over minimum wage, such levels of compensation seem almost counter-intuitive. Yet, if they are true, the desirability of creating substantial numbers of new, well-paying jobs for a region’s blue-collar workforce could come to outweigh those land-use policy considerations that would otherwise discourage the construction of warehouses and distribution centers built to serve multi-regional markets. On the other hand, if these wage claims prove untrue, their uncritical acceptance could easily result in wasteful distortions of regional economic development policies as well as misshapen land-use priorities.

Parsing the Data

There is no doubt that the logistics sector offers a good many jobs paying wages consistent with a middle-class lifestyle. According to Employment Development Department data, the operators of the towering cranes found at the state’s seaports or at major construction sites are very well compensated, often earning well above an average of $51,000 a year. Locomotive engineers average $55,000 a year. Certain classes of supervisors and managers also earn $55,000 a year on average. Sales representatives working in wholesale trade average $58,000 a year./13/

The issue here, however, is whether such relatively well-compensated blue-collar jobs are readily available to workers lacking a post-secondary education and possessing little in the way of technical skills.

As always in analyzing statistical data, it is vital to understand the origin of the numbers. Most regional economics studies, including those done for CREP and SCAG, utilize data from the Quarterly Census of Employment and Wage (QCEW),/14/ which are in turn derived from payroll tax reports submitted by employers to the state’s Employment Development Department. These raw data are subsequently aggregated by industry sector using a six-digit NAICS code assigned to each employer based on the nature of its business./15/ A refrigerated warehouse, for example, is coded 493120, while the NAICS code for a winery is 312130.

For each industry sector (and for scores of subsectors), QCEW reports provide the number of business establishments, average monthly employment, total annual payroll, and the average weekly pay per employee./16/ For instance, the QCEW report for the 2005 calendar year indicates there were 1,627 warehousing and storage establishments in California, with average monthly employment of 63,072, a total annual payroll of $2,487,619,000, and an average weekly wage of $758./17/

QCEW data are regarded as the most complete universe of monthly employment and quarterly wage information by detailed industry at the state and regional levels. QCEW data are widely used by businesses and by public and private research organizations for economic forecasting, industry and regional analysis, economic impact studies, and other uses. But as with any data source this one has its limitations.

One drawback associated with the QCEW data stems from the fact the data are much too inclusive to shed useful light on what the average blue-collar logistics worker earns./18/ To return to an earlier example, Intel, as a maker of computer chips and related materials, is rightly classified as a manufacturer. The problem, though, is that everyone who works for Intel is categorized as being employed in the manufacturing sector, regardless of the tasks they actually perform. The company’s entire workforce -- from modestly compensated janitors and cafeteria workers to highly paid research scientists and senior executives -- is aggregated into the same broad category of manufacturing sector employees as the workers who assemble window frames at CertainTeed’s facility in West Sacramento or the laborers who cast concrete sewer pipes for Teichert Materials. Although the practice of aggregating employment and wage figures by industry enables researchers to gauge the overall impact of specific industries on the economy, what it reveals about the wages earned by individual workers or classes of workers can be extraordinarily misleading.

In most cases, the average wage figures found in QCEW reports provide an exaggerated measure of the wages actually received by most of the employees within any industry. Indeed, the methodology involved in producing QCEW wage data almost invariably yields an average wage much different from (and usually much higher than) the wage earned by the average worker.

To illustrate this deficiency in the QCEW data, consider a hypothetical industry which employs 100 people, sixty of whom earn $400 a week, thirty who take home $800 a week, and ten who receive $1,600 a week. For this industry, the QCEW methodology would produce an average weekly wage of $640./19/ Yet not only is this a wage not one single worker in the industry actually earns, it is fully 60 percent higher than the $400 wage paid to the majority of the industry’s workforce. It would therefore be wrong either to imply or to infer that $640 is what the average worker in this industry earns. Unfortunately, that is often the conclusion drawn by consumers of reports based on QCEW employment and wage data.

It is even more inappropriate to imply or to infer that the average worker earns the annual average wage attributed to his or her industry, particularly when the industry in question is noted for sharp seasonal fluctuations in staffing levels, not to mention relatively high rates of employee turnover./20/ Nonetheless, many economic studies persist in citing average annual wage figures that are crudely derived by multiplying the average hourly wage reported to EDD by 2,080,/21/ even though EDD advises data users that: “QCEW annual pay data only approximate annual earnings because an individual may not be employed by the same employer all year or may work for more than one employer at a time. Average annual pay is affected by the ratio of full-time to part-time workers as well as the number of individuals in high-paying and low-paying occupations.”/22/

To be sure, QCEW data are very useful. As previously noted, they provide a reasonably sound way of empirically measuring the economic impact of the logistics industry or any other specific industrial groupings. However, when the objective of research is to ascertain what individuals performing logistical tasks are earning, the QCEW data set is an inappropriate source of insight.

Another View: The Occupational Employment Statistics Survey

There is an alternate source of state employment and wage data which does inquire into what workers performing logistical tasks are actually earning. The Employment Development Department’s Occupational Employment Statistics (OES) survey is a semiannual mail survey measuring occupational employment and occupational wage rates for wage and salary workers in non-farm establishments, by industry. The survey samples about 37,000 establishments per year./23/

The OES survey uses the Standard Occupational Classification (SOC) system for specific occupational categories./24/ Wages for the OES survey are straight-time gross pay, exclusive of premium pay. Included are base rate, cost-of-living allowances, guaranteed pay, hazardous duty pay, tips, incentive pay including commissions and production bonuses, and on-call pay. Excluded are back pay, jury duty pay, overtime pay, severance pay, shift differentials, non-production bonuses, and tuition reimbursements. Importantly, the OES Survey provides much more than the number of workers employed in each of nearly 800 occupational categories. It provides both the mean and median hourly wages along with the mean wages earned by the bottom and the top quartiles of employees in each occupational category./25/

Why should we be concerned with the distinction between mean and median wage figures? In the case of QCEW data, the average wage is derived simply by dividing total wages paid by all companies in a given industry by the total number of workers whom those companies employed during the given reporting period. The resulting number is the mean wage for that industry. By contrast, the median wage would be that wage figure which separates the top half of wage-earners from the bottom half. Knowing the median wage is a useful antidote against the well-known “Bill Gates Gets on a Bus” statistical fallacy. (Were Mr. Gates to board a bus carrying day laborers, the mean annual income of the bus patrons would instantly soar above the billion dollar level. But it would hardly give an accurate picture of the welfare of the average person on the bus. Knowledge of the median income – and a bit of common sense – would prevent us from concluding that the average person on this particular bus had become fantastically wealthy, even thought that is precisely what the mean income figure would suggest.)/26/

According to EDD reports based on the OES survey, the mean hourly wage paid to over 14.7 million California workers in 2006 was $20.88 (or $43,430 had they worked full-time for an entire year). However, the median hourly wage for these same California workers was 22.7 percent lower at $16.14./27/ In other words, half of California’s wage-earners last year were making no more than the equivalent of $33,571 annually (assuming they were paid for a full year of work)./28/ For the lowest quartile of California workers, the average wage last year was just $10.06 or $20,925 for those who managed to work a forty hour week year-round.

More germane to the point under consideration here is the status of the 1,005,490 Californians reportedly working in the forty-five Transportation and Material Moving (T&MM) occupations. These are the jobs most commonly associated with blue-collar labor in the logistics sector. They are also the jobs that represent the best employment opportunities for unskilled, marginally-educated members of the state’s workforce. In 2006, the approximately one million Californians employed in the T&MM occupational categories received a mean hourly wage of $14.05. But the median hourly wage was significantly lower, at $11.66. For those in T&MM occupations who held full-time jobs on a year-round basis, their mean and median annual wages would be $29,224 and $24,253, respectively. Neither, of course, comes close to the elevated wage levels some studies have attributed to jobs in the logistics sector.

Even worse is the wage plight of the lowest twenty-five percent of wage-earners employed in the T&MM occupations. Their average hourly wage last year was $8.55, which theoretically annualizes to $17,784. Few individuals probably volunteer for these lowest-paying jobs. More commonly, those who occupy these positions do so because they are not deemed qualified or otherwise able to perform more highly compensated tasks. Yet since this is the quartile most likely populated by unskilled and poorly educated workers, the OES data appear to be inconsistent with claims that the logistics sector represents a major source of well-paying jobs for marginally-educated members of California’s workforce./29/

In an October 2006 report entitled to “California Opportunities in Logistics,” EDD analysts profiled 31 occupational categories, including “Sales Representatives, Wholesale and Manufacturing, except Technical and Scientific Products.”/30/ (See Appendix for a roster of the occupations profiled in this report.) It employed 141,590 Californians in 2005 and, of all the logistical occupations the report examined, it is the one that appears to offer the greatest potential for good pay and career advancement, with a median hourly wage of $24.59 ($51,150 annualized). But, as we have seen, more and more of these sales jobs require technical knowledge and the ability to understand complex concepts.

For the entire range of logistics occupations identified in “California Opportunities in Logistics,” the median hourly wage was $15.37. Assuming a worker making this wage was able to work full-time for an entire year, his or her annual wage would amount to $31,554, a level substantially below the average logistics sector annual wage figures cited in SCAG and CREP reports./31/

The report also fails to sustain the claim that the logistics sector offers a broad pathway to the middle-class for workers who have no more than a high school diploma. In 2004, for example, there were an estimated 282,900 Californians classified as Laborers and Freight, Stock and Material Movers (Hand), according to OES figures. EDD forecasts that this occupational category will spawn 14,340 job openings per year through 2014. By contrast, there were 20,710 Californians working further up that particular career ladder as First-Line Supervisors/Managers of Helpers, Laborers, and Material Movers (Hand) in 2004. But job openings in this category are expected to be average just 760 per year through 2014. So while it is definitely possible for some laborers to improve their job status to a level where $20 per hour /32/ is not a completely unreasonable expectation, the path looks to be exceedingly narrow.

If we focus on the occupational categories with a preponderance of workers with a high school education or less – the very workers about whose welfare is of utmost concern – the wage expectations are a good deal more modest than is often claimed. EDD identifies 10 occupational categories in the logistics sector in which at least 70 percent of the current workforce have a high school education at best. Of these, one category (Crane and Tower Operators) boasts a statewide annual wage of $50,972. However, there are currently just 2,530 of these positions statewide, and EDD forecasts that only 120 positions in this field are expected to open up annually through 2014. For the other nine categories where employment is dominated by those with no more than a high school degree, average annual wages range from $18,844 for Packers to $38,436 for Tank Car, Truck, and Ship Loaders.

Unfortunately, of these occupations with a disproportionately high representation of marginally-educated workers, those job categories that are forecast to see the most openings also happen to be those which pay the least.

EDD figures indicate that the great majority of blue-collar logistics jobs are in relatively low-paying categories such as Laborers and Freight, Stock, and Material Movers (Hand); Stock Clerks, Order Fillers; Customer Service Representatives; Packers and Packagers; Shipping, Receiving and Traffic Clerks; Light or Delivery Truck Drivers. Together, these classifications constituted 60 percent of all blue-collar logistics employment in California in 2004. Statewide, California’s 1.7 million blue-collar logistics workers earned an average of $33,355 in 2006. Yet even that level of pay does not reflect what most workers with little more than a high school education can reasonably expect.

The single largest, well-paying category of logistics occupational category is Sales Representative, Wholesale and Manufacturing except Technical and Scientific Products. Average earnings statewide in 2006 for the 148,000 Californians in this category amounted to $59,850. Yet, according to EDD, three-quarters of the workers in this occupational category have at least some college training. Indeed, half are college graduates.

It should be noted that one of the more decisive factors in separating high-wage from low-wage logistics jobs appears to be union representation, usually by the International Longshore and Warehouse Union and the International Brotherhood of Teamsters. The two highest earning occupational categories dominated by workers with no more than a high school diploma are closely associated with maritime trade and union representation. For the most part, though, workers in the logistics sector are seldom represented by organized labor.

Future employment trends in the logistics sector must also be understood in the context of ongoing efforts by supply chain managers to wring the highest degrees of productivity out of the various components of the supply chain. In many instances, this involves the substitution of technology for labor. The future is also likely to see more of the value-added logistics services moved offshore for the same reason manufacturing work has been outsourced to nations offering substantially lower labor costs. As a recent article in the Financial Times reports: “Companies from countries as far apart as Japan, Chile, Spain and the US now have goods sorted before they leave China into the right mixes for individual stores or distribution centres and labelled with the correct price. Many will be ready-packed into a display stand.”/33/

While the benefits of a robust logistics sector are felt regionally and sometimes nationally, the aesthetic and environmental downsides of facilities engaged in the movement and storage of goods are most directly experienced locally. This reality has prompted many public officials to call for greater equity in sharing the costs of ameliorating the consequences of air pollution, traffic congestion, and accelerated roadway deterioration. The same imbalance as well to the dispersal of employment in the logistics sector could be repeated. For example, a region seeking to attract enterprises engaged in wholesale trade may find that the high-paying white-collar jobs which boost average wage figures are apt to be located in downtown office towers or suburban office campuses that may be far removed from the warehouses, distribution centers and heavy rail or trucking venues where lower-paid blue-collar work is performed.

Finally, in the category of no good deed goes unpunished, communities which succeed in generating large numbers of jobs suitable for their marginally-educated, unskilled residents will often find that these job opportunities will attract workers from other communities who are similarly disadvantaged in the job market. The net result may be that the ranks of unemployed or under-employed individuals seeking entry level jobs in the logistics sector will swell, imposing a greater strain on social support networks, the availability of affordable housing and, sadly but ultimately, on law enforcement. In sum, there is very little empirical evidence to sustain the belief that the logistics sector offers a powerful antidote to the challenge of providing meaningful employment opportunities to those who are unequipped to compete in today’s labor market.

Conclusion

Contrary to several recent, well-publicized claims, the logistics sector does not appear to be providing the kinds of jobs and the numbers of jobs once associated with the manufacturing sector. At its high-water mark, manufacturing accounted for nearly 30 percent of U.S. jobs. Today in California, jobs in the logistics sector account for no more than 8.3 percent of all employment.

The wage levels often attributed to the logistics sector represent an average income that most blue-collar logistics workers are apt to find extravagant. Similarly, there is little empirical evidence that, especially in regions of California with a relatively high cost-of-living, the logistics sector offers a broad pathway to the middle-class for marginally-educated, semi-skilled workers.

Although industries engaged in the transportation, storage and distribution of goods do provide employment opportunities for marginally-educated workers, the logistics sector is no panacea for community’s seeking to create large numbers of jobs paying middle-class wages for those lacking the kinds of skills that are increasingly demanded of workers in today’s economy. There is no compelling reason, therefore, that local or regional economic development strategies should aim to bolster the region’s logistics capacity beyond the level needed to meet the region’s own needs.


End Notes

1. This practice is followed by the Southern California Association of Governments and the Association of Bay Area Governments, among other regional transportation planning organizations. One major exception is a series of recent studies done under the auspices of the California Regional Economies Project, which is jointly sponsored by the California Labor & Workforce Development Agency, the California Employment Development Department, and the California Workforce Investment Board. CREP studies do not include Wholesale Trade as part of what these studies define as the “logistics cluster.”

2. See the section entitled “Implications of Land Use Decisions on Goods Movement in the SACOG Region.”

3. That much was made abundantly clear in an October 26, 2006, focus group discussion involving several economic development directors from throughout the region.

4. California Opportunities in Logistics, EDD (October 2006). See the chapter on “Sales Representatives, Wholesale and Manufacturing, except Technical and Scientific Products,” pp. 129-132.

5. See http://www.ets.org/Media/Education_Topics/pdf/ExecSummAmPerfectStorm.pdf.

6. See Schrag’s op-ed page article in the February 7, 2007, edition of the Sacramento Bee.

7. See: http://www.frbsf.org/news/speeches/2006/1106.html.

8. The mean wage paid the approximately 870,000 wage-earners in the Sacramento MSA according to the California Employment development Department’s latest Occupational Employment and Wage Survey. By contrast, the median wage for the region was $16.90 in 2006.

9. One standard definition holds that the middle-class is composed of the quartiles of households immediately above and below the median household income. The 2005 American Community Survey fixed the median household income in the Sacramento Metropolitan Statistical Area at $53,890.

10. California Employment Development Department, Occupational Employment (May 2005) and Wage (2006 – First Quarter) Data, See: http://www.labormarketinfo.edd.ca.gov/cgi/career/?PageID=3&SubID=152.

11. John Husing, “Logistics: Southern California Has Competitive Advantages for a Major Blue Collar Sector for 1st Time Since Defense Industry After WWII,” (Southern California Leadership Council Report, 2006), p. 2. See: http://www.laedc.org/sclc/studies/center_husing-whitepaper.pdf.

12. Logistics and Manufacturing Value Chains: Meeting The Workforce And Infrastructure Demands Of A “Real Time” Economy (California Regional Economies Project, July 2005.) See: http://www.labor.ca.gov/panel/logmanufvalue.pdf. Unlike most other analyzes of the logistics sector, the CREP studies do not include Wholesale Trade as part of the logistics cluster.

13. These wage figures are drawn from a report entitled “California Opportunities in Logistics,” published in October 2006 by the California Employment Development Department, Labor Market Information Division, Information Services Group, Occupational Research Unit.

14. The Quarterly Census of Employment and Wages Program is a cooperative program involving the Bureau of Labor Statistics (BLS) of the U.S. Department of Labor and the State Employment Security Agencies (SESAs). The QCEW program produces a comprehensive tabulation of employment and wage information for workers covered by State unemployment insurance (UI) laws and Federal workers covered by the Unemployment Compensation for Federal Employees (UCFE) program. Publicly available files include data on the number of establishments, monthly employment, and quarterly wages, by NAICS industry, by county, by ownership sector, for the entire United States. These data are aggregated to annual levels, to higher industry levels (NAICS industry groups, sectors, and supersectors), and to higher geographic levels (national, State, and Metropolitan Statistical Area (MSA). The QCEW program serves as a near census of monthly employment and quarterly wage information by 6-digit NAICS industry at the national, State, and county levels.

15. The North American Industry Classification System (NAICS) has replaced the U.S. Standard Industrial Classification (SIC) system. NAICS was developed jointly by the U.S., Canada, and Mexico to provide new comparability in statistics about business activity across North America.

16. The same data are also provided for sectors and subsectors within major industry categories out to the six-digit NAICS level of specificity. For example, the data indicate that there were 1,709 Warehousing & Storage (NAICS 493) establishments in California during the second quarter of 2006, of which 157 were refrigerated facilities (NAICS 493120).

17. A weekly wage of $758 annualizes to $39,416.

18. Perhaps paradoxically, the QCEW data also suffer from being insufficiently encompassing. Since independent contractors are not included in payroll reports to EDD, truck drivers who own and operate their own vehicles are excluded from the data. Yet such drivers, who play a critical role in transporting goods to and from the state’s major seaports, are by most accounts struggling to make ends meet. Also excluded from the data on logistics sector employment are those who perform tasks that are inherently logistical but who do not work for a logistics company. For example, a truck driver employed by a retail bakery is counted as a bakery worker, not as a truck driver.

19. The total weekly payroll would equal $64,000, which would be divided by the number of employees (100).

20. U.S. Bureau of Labor Statistics, “Occupational Outlook Handbook,” http://www.bls.gov/oco/ocos243.htm.

21. The number of hours for which an employee would be paid were he or she worked 40 hours a week over a full year.

22. See: http://www.labormarketinfo.edd.ca.gov/cgi/databrowsing/?PageID=176. Similarly crude is the common practice of multiplying a known average hourly wage by 2,080 to obtain an annual average wage. 2,080 represents the number of hours for which a full-time worker would be paid if he or she worked year-round (40 hours per week x 52 weeks = 2.080.)

23. A more complete set of technical notes for the OES survey is available at the BLS website at http://www.bls.gov/oes/current/oes_tec.htm.

24. The Standard Occupational Classification structure and definitions can be found at the Bureau of Labor Statistics http://www.bls.gov/soc/home.htm

25. Occupations in which workers do no generally work 2,080 hours per year have only one set of wage rates. Occupations such as teachers and pilots have only annual wage rates reported; and the occupations actors; dancers; musicians and singers; and entertainers and performers, sports and related workers, all other have only hourly wages reported.

26. A third type of average – the mode – would indicate the wage earned by the largest number of workers in the given category. In the hypothetical example cited in this analysis, the mode would be $400, the amount earned by sixty percent of the industry’s workers.

27. The median is that statistical measure where half of the workers earn more and half earn less.

28. The variation between mean and median wages for all workers in the Sacramento area was somewhat smaller at just over 20 percent ($20.38 versus $16.90). 30. California Employment Development Department, Labor Market Information Division (in cooperation with the California Workforce Investment Board and the California Regional Economies Project), California Opportunities in Logistics. 2006.

31. For comparison sake, this median income level is about 60 percent of the median household income for the Sacramento Metropolitan Statistical Area, which in 2005 was $53,890.

32. Median hourly wage for someone in this category was $19.55 in 2006, according to OES data.

33. See “China wraps up new trend in exporting” in the Financial Times, March 27, 2007.


Appendix: Occupations Profiled in “California Opportunities in Logistics”

Air Traffic Controllers; Aircraft Cargo Handling Supervisors; Aircraft Mechanics and Service Technicians; Airfield Operations Specialists; Airline Pilots, Copilots, and Flight Engineers; Bus and Truck Mechanics and Diesel Engine Specialists; Captains, Mates, and Pilots (Ship and Boat); Cargo and Freight Agents; Cleaners of Vehicles and Equipment; Couriers and Messengers; Crane and Tower Operators; Customer Service Representatives; Dispatchers; Driver/Sales Workers; First-Line Supervisors/Managers of Helpers, Laborers, and Material Movers, Hand; First-Line Supervisors/Managers of Transportation and Material-Moving Machine and Vehicle Operators; Laborers and Freight, Stock, and Material Movers; Logisticians; Material Moving Occupations; Packers and Packagers, Hand; Postal Service Workers; Rail Transportation Occupations; Sailors and Marine Oilers; Sales Representatives, Wholesale and Manufacturing; Ship Engineers; Shipping, Receiving, and Traffic Clerks; Stock Clerks and Order Fillers; Transportation Inspectors; Transportation, Storage, and Distribution Managers; Truck Drivers, Heavy and Tractor-Trailer; Truck Drivers, Light or Delivery Services.