Monterey: Economy

Major Industries and Commercial Activity

Once a leading fishing and whaling port, Monterey county's economic mainstays now are tourism and the military. While tourism has always been a major component in the city's economy, it has become the dominant industry in the last 30 years, supporting more than one third of Monterey jobs. Today, hotel taxes provide 29 percent of the city budget and the main source of funding for municipal services is derived from the visitor industry. The prime tourist season runs April through Thanksgiving. While the city's economy suffered greatly from the lack of travel due to the events of September 11, 2001, Monterey tourism is on the rebound. The Monterey Bay Aquarium is the prime attraction, and numerous restaurants, art galleries, gift shops, and an Antiques Mall have created a wide variety of shopping opportunities. Tourists also come to observe the special events tied to the historic Cannery Row Area, made famous by novelist John Steinbeck, local son of the nearby city of Salinas. Its reputation as a world class golfing destination brings golfers to the championship golf courses at Pebble Beach and other area courses. Independent travelers (those not with a tour group) make up the largest class of overnight visitors to the Monterey Bay Area and are primarily from elsewhere in California. It is estimated that 4 million people visit Monterey each year. The city's population increases to nearly 70,000 during tourist seasons.

Due to its strategic location, Monterey has historically been a key military outpost. Today, the city's military installations continue to provide tremendous support to the economy, particularly through its educational institutions. The Army's Defense Language Institute provides language instruction for agents of the FBI, Drug Enforcement Administration, and Border Patrol. The Naval Postgraduate School offers advance classroom training for Naval officers. The Fleet Numerical Meteorology and Oceanography Center, operated by the Navy, is one of the world's leading numerical weather prediction centers. According to the Monterey County Herald, these institutions contribute $1 billion to the local economy. The economic impact of spending by the School and employees of the Naval Postgraduate School alone amounts to $140.2 million channeled into the local economies of Monterey County. However, the changing needs of the military, coupled with its efforts to streamline operations, threaten the closure of many of the country's military bases and those in California are not exempt.

The government employs 18 percent of the county's work-force. Other significant sectors of Monterey's economy include trade, transportation and utilities which account for 16 percent of all employment in the county. Workers in the leisure and hospitality sector, including arts, recreation, entertainment, accommodations and food service, make up 12 percent of the workforce.

As Monterey looks to the future, the challenge will be to balance the cyclical nature of the tourist economy while finding ways to provide higher paying jobs. Monterey will increasingly see its economy based on educational and research activities. Marine biology and the environmental sciences are expected to make a very large impact on the economy of the region.

Items and goods produced: vegetables, fish and seafood, light manufactured products

Incentive Programs—New and Existing Companies

Local programs

The California Coastal Rural Development Corporation operates a variety of small business loan programs, as well as Monterey's Micro-Business Loan Program. The Central Coast Small Business Development Center (SBDC) provides no-cost, hands-on technical assistance and support to small businesses on California's Central Coast. Confidential counseling, classes, workshops, seminars, and loan programs are available through the SBDC.

State programs

With the Manufacturers' Investment Credit, companies that purchase manufacturing or R&D equipment for use anywhere in California are allowed a tax credit equal to six percent of the costs paid or incurred for acquiring the property. Other incentives include the California research and development tax credit, which allows companies to receive a credit of 8 percent for qualified research expenses (research done in-house), and 12 percent for basic research payments (payments made in cash to an outside company). The California Association for Local Economic Development (CALED) offers conferences, workshops, an on-site Professional Advisory Service, technical assistance and problem solving.

Job training programs

The Private Industry Council (PIC) offers specialized services designed for laid off workers who have been displaced from their jobs due to plant closures or relocation. Programs for older workers, limited English speakers, offenders, physically handicapped youth, teen parents, and other at risk youth are also available. The city of Monterey can also provide information about agencies that assist international businesses with training employees. JobLINK of Monterey County provides employment and training opportunities and services to laid off workers, long-term unemployed, displaced homemakers, and persons over55. The California Employment Development Department offers computerized job matching and placement, job search workshops, job listings, a Job Club, information on unemployment insurance, and job training programs.

Development Projects

When a change in military needs led to the downsizing of Fort Ord in 1993, the 13,000 soldiers and family members who lived there were relocated. The city is making efforts to replace the lost revenue by redeveloping the area into an educational, residential, commercial and light industrial center. A Base Reuse Plan has been developed to guide the planning and implementation process through 2014. Plans include removing toxins from military use from the site and constructing housing at all income levels, making recreational improvements, and conserving a portion of the land for endangered species. Once the process is started, it is estimated that it will take five to seven years to complete the relocation, rehabilitation, hazard abatement, and demolition removal activities at the Fort. In 2005, the U. S. Army had finished a substantial amount of the clean-up, but more funds were needed to complete the project. The Defense Language Institute, the Naval Postgraduate School and the Coast Guard station now occupy 750 acres of the property, which has been annexed to the Presidio of Monterey. California State University at Monterey Bay and the Monterey Institute of International Studies have opened campuses there, as well as the University of California at Santa Cruz, with a new research center on the property. The remaining half of the property is being turned over to the U.S. Bureau of Land Management to manage as open spaces.

Monterey City Council approved a building permit for the construction of an IMAX theater in Cannery Row. Also on Cannery Row, plans call for a Monterey Peninsula Hotel. A new Public Service Center or City Hall project was also being considered in 2005.

Economic Development Information: California Coastal Rural Development Corp., 479 Pacific St., #5A, Monterey, CA 93940; telephone (831)641-0722; fax (831)641-0723. Central Coast Small Business Development Center at Cabrillo College, 6500 Soquel Drive, Aptos, CA 95003; telephone (831)479-6136

Labor Force and Employment Outlook

Monterey County's civilian labor force totaled 200,000 workers in 2002. The area employs both seasonal and year-round workers since the visitor industry accounts for such a large part of the economy. Despite seasonal fluctuations, the labor force grew 2 percent over 2001 figures. According to the Monterey Peninsula Chamber of Commerce, the ratio of people in the labor force and employment roles have remained constant since 1998. One challenge to attracting new employees to the city of Monterey has been its lack of affordable housing. Since the jobs fueled by the tourist industry in Monterey tend to be lower paying jobs, affordable housing is especially needed. In recent history, between9.4 and 10.4 percent of the population was unemployed. It reached 12.9 percent in December 2004.

The following is a summary of data regarding the Monterey area, 2003 annual averages.

Size of nonagricultural labor force: 130,000

Number of workers employed in . . .

natural resources and mining: 200

construction: 6,500

manufacturing: 7,700

trade, transportation and utilities: 25,200

information: 2,400

financial activities: 6,600

professional and business services: 14,400

educational and health services: 12,100

leisure and hospitality: 19,400

other services: 4,400

government: 31,000

Average hourly earnings of production workers employed in manufacturing: $15.50

Unemployment rate: 12.9% (December 2004)

Largest employers (Salinas Valley)	Number of employees
Dole Fresh Vegetables	4,700
County of Monterey	4,435
Tanimura and Antle Inc.	3,000
Naval Postgraduate School	2,600
Escamilla and Sons Inc., Spreckels	2,060
Salinas Valley Memorial Healthcare System	1,900
D'Arrigo Bros. Co. of CA	1,700
Fresh Express, Fresh Food	1,650
CDC Correctional Training Facility, Soledad	1,531
Household	1,526

Cost of Living

The following is a summary of data regarding several key cost of living factors for the Monterey area.

2004 (3rd Quarter) ACCRA Average House Price: $766,310 (San Jose metro)

2004 (3rd Quarter) ACCRA Cost of Living Index: 170.8 (San Jose metro) (U.S. average = 100.0)

State income tax rate: 1.0% to 9.3%

State sales tax rate: 6%

Local income tax rate: None

Local sales tax rate: 1.25% (county)

Property tax rate: 1% of assessed value

Economic Information: Monterey Peninsula Chamber of Commerce, 380 Alvarado St., Monterey, CA 93940; telephone (861)648-5360; fax (831) 649-3502; e-mail info @mpcc.com.