Sacramento Economic History|
by Alex Cosper (9/13/15)
As of September 2015 not too much information can be found online in one place about
Sacramento's economic history, so I decided to write a piece about it, sharing a mix
of my memories and research. My observations as a local media figure might be of interest
to people who value the opinions of individuals whose careers have revolved around analyzing
culture from a commercial and artistic perspective. Having spent over a decade working in
radio in Sacramento, followed by years of online writing, which has included analyzing various
industries, gives me perspectives beyond the common person's anecdotal perspectives.
My family visited Downtown frequently, particularly the K Street Mall. Macy's was a major landmark,
as was Montgomery Ward, Weinstock's and Woolworth. The Community Center and The Hyatt had not been
built yet in the late sixties. The only real skyscraper in town then was what is now called The Citizen
Hotel, which was built in 1925. At the time it was the home of rock radio station 98.5 KZAP, which I was
not aware of until the late seventies.
In 1972 I became interested in politics as a fourth grader, without understanding much about deep
issues. But I learned all the U.S. presidents and started paying attention to elections. By 1974
I became interested in journalism and went on a tour with my mom, brothers and sisters at The Sacramento Bee.
I wanted to become a journalist but Watergate had turned me off by that summer, and my interests drifted
toward pop music. That was the beginning of my dream of working in the radio industry. What really sucked
me into the rotations of top 40 radio was the show American Top 40, counted down by Kasey Casem
on 1320 KCRA, the AM sister station of TV station Channel 3.
The weekly pop charts became the news that mattered to me the most. I noticed that I was one of the few
kids at school who knew about the charts, whereas almost everyone else just liked songs. I was compelled
to believe I had special insider knowledge of culture by knowing more about the commercial popularity
of music than my peers. As a grew up through high school I noticed the same pattern, that I was one of
the few people in my expanding circle that knew a lot about the music charts. What I wanted to get my
hands on were actual raw stats to find out how many units were selling of each single, but Billboard
did not report raw data.
In the summer of 1974 my mom, who enjoyed roller skating, took our family frequently to Fantasia Skate
Center on Arden Way. It was managed by Dan Benvenuti, a well known local conservative businessman. He
was so conservative he wouldn't let the DJ named Charlie play the 45 rpm record I brought in one day called
"Bad, Bad Leroy Brown" by Jim Croce because it had the word "damn" in it. I didn't know Mr. Benvenuti
personally, but my mom had frequent conversations with him at the rink. As a 12 year old child I was
pretty shy and was mostly scene but not heard much in public back then. One thing I distinctly remember
hearing Benvenuti tell an employee once was "I don't do business on the phone."
Even though my dream job was working at a radio station, or at least a roller rink as a DJ, my first
real job was a paper route for the Sacramento Bee in 1978. The job paid about $300 per month, in which
I had to collect money from each subscriber, then pay my route manager and keep the difference. The following
year I had dual routes, delivering both The Bee and its competitor, The Sacramento Union, which eventually
went out of business. The pay was about the same, but I made more from the Bee, because it had a larger
An Economics class at Rio Americano High School in 1979 opened my mind a lot about the system we live in
and basics about money and investing. I was exposed to the stock market, which I mostly found boring
at the time. It was one of those topics that no one I knew talked about. The part of economics that I
did find interesting that no one else seemed to find interesting was how people throw their money away
on products that were merely fashionable and ultimately disposable. I was fascinated by trends, not because
I wanted to conform to them, but to figure out why herds of people gravitated toward them. The class taught
me how advertising persuades people, but I seemed to be the only one interested in this concept. I had no
interest in being an advertiser, but wanted to understand how mind control manipulates the masses.
One thing I noticed throughout the 70s was that hit music stations like KROY and KNDE AM followed the
national charts fairly closely. I would go to music stores like Tower Records and pick up their playlists
and compare them with Billboard, only to find there wasn't much difference, other than both stations played
a few new records at a time that weren't on the national charts yet.
I finally got my dream job in the early 80s that helped earn money while I lived at home and went to
American River College then Sac State. In September 1982 I became a DJ at King's Skate Country near
Arden and Watt, the same roller rink then I went to as a kid that had been called Fantasia. I believe
Benvenuti still owned the building but leased it to Dan King, who had the Harney family manage it. The
job paid minimum wage, which back then was $3.35 per hour. At the time Sacramento still seemed, not
like a small town, but in between small and big. There was a sense that working for mom and pop owners
would someday pay off instead of "selling out" and working for a big corporation.
Looking back on that pay, I did some research
and found out that California raised minimum wage to that level in January 1981. Just a year earlier
minimum wage was raised from 2.90 to 3.10. It stayed at 3.35 until being raised to 4.25 in 1988, then 4.75 in
1996, before hitting 5.00 for the first time in 1997. By 2001 it was 6.25, then 6.75 the following year.
It jumped to 7.50 in 2007, followed by 8.00 in 2008, 9.00 in 2014 and 10.00 on January 1, 2016.
This data comes from the State of California Department of Industrial Relations.
I had already been doing "gigs" on the side with my own DJ equipment for high school dances and weddings,
starting in late 1980. I usually made $200 per gig. Other people I knew made as much as $500 per gig, which
I had thought was too high just for having fun.
By the time I graduated Sac State in 1984 with a B.A. in Communications, I thought of myself as a top authority
among local radio people who knew a lot about not just which songs were popular, but why they were popular.
KWOD 106.5 hired me after I completed an internship that I acquired through Sac State. In the 80s it seemed
like Sacramento was a happening place. I remember big parades and the J Street cruise Downtown, that
brought out a huge party scene. Drive-In movies were still a big thing back then.
There were roller rinks all over town back in the mid-80s, but they suddenly seemed to go from big to
sparse crowd around the time I shifted my career to radio. One explanation could be this was exactly
around the time that video games and home computers began to escalate in popularity. Another expanation could
be this was around the time hip hop was gaining momentum in popularity. In fact, I was amazed how much
the people who came to the rink didn't care much for rock and roll music anymore, except for speed skate.
Yet, everywhere you turned you'd see KZAP bumper stickers, as they were a rock station that dominated
the ratings at that time. Something was changing in our culture. Rockers were staying home more while
the party animals were more into hip hop and electronic dance music.
I was able to make a decent salary in radio during the 90s, or at least enough to pay for my own apartment.
I've always lived in a fairly decent place, whether it was an apartment or a room at a home. Owning a home
was never part of my plan, since I always wanted to be open to moving around in case a radio job came
up in another city. I lived at home through my college years so I didn't worry about rent for most of the 80s.
When I moved out in late 1989, I split a $600 apartment with a roommate at a fairly nice complex
on Royal Oaks Drive near Arden Fair.
At KWOD I learned a lot about advertising, which is how radio stations earn their revenue. Back in the
90s the average 60 second radio spot cost about $50, but during rates were negotiable and could be half
as low in some cases. Back then we dealt with a lot of local businesses, especially restaurants like Luah Garden.
We also ran a lot of night club, concerts and Tower Records ads. Movie theaters, clothing stores
and car washes were fairly common as well. The point was that it seemed a lot of mom and pop busineses
were thriving at that time.
I became fairly well known in town, at least among younger demographics. People seemed to recognize
my voice where I went, even without introducing myself. I often heard people ask "are you that guy on the radio?"
KWOD was independently owned. For awhile in the early 90s its finances were underwater due to low ratings,
but under my programming, our alternative rock format lifted the station from bottom of the ratings to
top five. It attracted more advertising and gradually brought the station back to profitability.
Then something radically changed in 1996. President Clinton signed the Telecom Act, which handed the
radio industry over to big corporations. The rules of media had changes as restrictions were lifted on
the number of media outlets a company could own. I left KWOD later that year for other reasons, which
had more to do with not wanting to conform to a more corporate presentation. I had prided myself on making
the station a winner using creative out-of-the-box thinking, whereas the owner wanted to go more generic
and follow more what big corporations were doing around the nation. I had helped several local bands,
particularly Cake, gain notoriety, and it was a let down for me to be expected to play "follow the industry."
At the time Sacramento still had a thriving night club scene and seemed like the place to be, especially
if you had an interest in music. I had a band at the time called The Beat Villains, and it still seemed
like music could be a big money maker. Tower Records was still huge at that time and there was no
indication at all that it was anywhere on the verge of collapse. It was the second biggest music retail
chain in the country at the time. My band didn't really take off, but we did get paid $275 for a Harlow's
gig in April 1997. It was pretty common in those days for local bands to make that kind of money then.
In the late nineties I worked at ETrade Securities in Rancho Cordova through a temp agency for awhile.
That was around the time the Dow hit 10,000 for the first time in the middle of the dotcom boom, which
include Etrade itself. Everywhere I turned people were building websites thinking they were going to
strike it rich. I learned quite a bit about the stock market and various industries from this experience, but I didn't want to work
for a stock broker the rest of my life.
I left Sacramento from 2000 to 2007, exploring other careers in other cities. I mainly worked as a club
and mobile DJ in the Bay Area for most of that time, but I was worked for several companies so that
I could learn new things. I was on the air at a San Francisco station called Energy 92.7 and then
on KRCK in Palm Springs. When I returned to Sacramento in 2007 I felt like a stranger in a ghost town.
Everything had changed. The radio sounded terrible, as it did in other cities as well, because it had
become so nationalized with no hint of local flavor. Tower Records was gone, as it went bankrupt a year
earlier. It had gambled on global expansion with big loans from Wall Street that couldn't be repaid as iTunes and
box stores ate into Tower's revenue. Downtown didn't have the same vibe as the K Street mall and Old Sac
seemed deserted. Even when I went to the state fair at Cal Expo, despite big crowds, it didn't have the
same feel anymore, as if it were no longer a community, just a market of strangers.
The owner of the Sacramento Bee, McClatchy Newspapers, one of the most successful entities in local history, tried to be like Tower and
decide to purchase the Knight Ridder chain to become the biggest newspaper chain in the country backfired.
Newspapers by then were going out of style quickly as the masses were now getting their news free online.
And so the Bee had to downsize by physically shrinking its paper.
As I stayed in Sacrmento for the next six years before moving on again, I watched the music scene
deteriorate with less places to play. Talking with musicians, it seemed there weren't many bands making
money from gigs anymore. It was more play for exposure scenarios. On top of all that, the real estate
market had collapsed, along with the broader market. I later learned from a Sac State official's business video that
about a third of Sacramento's workforce was in the government sector, which made perfect sense. Due to
government downsizing as a result of the budget deficits, many people were out of work.
Sacramento turned out to be one of the most devastated markets in the country as its unemployment level
skyrocketed by 2008. Other factors played into the city's spirit being demolished. The closing of
Mather Air Force Base did not help, reducing jobs by the thousands, leading to a depressed Rancho Cordova
economy. As much as I was for military downsizing, I can see how this move without a plan to replace all
those jobs was devastating. I watched Raley's close down on Folsom Boulevard only to be replaced a national
company that turned it into a big empty unpopular store. Raley's didn't want to renew its union contracts
with workers. Interestingly, head of the chain Joyce Raley Teel had once become the city's only billionaire
but fell off the list of Fortune Magazine's billionaires for awhile during the recession.
Studying the history of Sacramento's housing prices on various real estate prices, turned out to be similar
to comparing national pop music with local radio stations growning up. It was a similar graph comparing
national and local figures. The market trickled up in the late 80s, stayed stagnant throughout the 90s,
then went on a crazed boom from 2000 to 2005, when median home prices peaked at $392,750 before tumbling
like a house of cards to $220,000 by 2008, while unemployment was rising quickly. The housing market
bottomed out in 2011 and since has made a moderate recovery.
Sacramento County's unemployment rate got as high as 13% in 2011, which was about 3% higher than the
worst national figures throughout the aftermath of the market collapse. It finally dropped below double
digits in 2013, but only because of lots of low paying restaurant and service jobs. Unemployment stayed
high through 2014 and finally fell below 7% in 2015. It had been just as high in the first half of the
nineties, but was relatively low in the latter part of the decade.
Everything has a domino effect when a chunk of people get thrown on the street either because of
government downsizing, coporate downsizing or jobs getting sent overseas due to cheaper labor. On top of
all this was the big mortgage industry scam that involved unqualified candidates to get home loans as
a result of the Bush Administration's "American Dream Act of 2002." This law opened the floodgates to almost
anyone buying a home even with bad credit. It led to a scheme set up by mortgage companies in which mortgages
would be flipped to other companies a few years after the purchase, except at much high interest rates.
As the economy soured and unemployment started to skyrocket in 2008, many homeowners could no longer afford
to make their mortgage payments.
Sacramento ended up having one of the highest foreclosure rates in the country. The nation's top mortgage
lender, Countywide Financial, was acquired by Bank of America, which ended up agreeing to paying multi-billion
dollar fraud settlements due to Countrywide's "robo-signing" frenzy in which their lenders fraudulently
authorized many unqualified loans. Depite President Obama's Financial Reform Act of 2010, many big banking
schemes continued to control and disrupt the housing market. Big banks intentionally kept hundreds of foreclosures off
the market in order to reduce inventory stats as a way to artificially walk up home prices again after they crashed.
I saw foreclosure signs everywhere when I did door-to-door appointment setting for a solar company
throughout 2008. I wanted to try out working for the solar industry because of my environmental views,
so I worked for an independent solar company mainly as its web developer, but I also made money on the
side getting homeowners to sign up for solar water heating systems that were partly subsidized by the
federal government and SMUD. Even so, many homeowners told me "I've maxed out my credit" or "I'm upside down
on my mortgage." I visited neighborhoods all over town and kept hearing the same reasons why people couldn't afford
to pay $50 a month for five years, even if they had access to financing.
In my final few years in Sacramento I worked as a manager at a few different hotels. I got to count the
money at the end of the night. Both hotels were deep in debt,
as business was slow even in what used to be the busy summer months. Both hotels, I was told by co-workers, paid Mexican immigrants
(who barely spoke English) under the table money below minimum wage to be housekeepers.
I later learned
from one of the hotel owners that about 75% of all American hotels are owned by families from India, including
big name hotels, which are really just franchises, the same way a lot of fast food restaurants are
indepedently owned but pay franchise fees to use the globally-known business name and its products.
Hotel investments are attractive to these families who take minimal risks since hotels are partly subsidized
by local governments that collect taxes off rooms. After ten year management agreements are up,
if the property isn't profitable, one family just flips it to another from India in the tight circle
of about three dozen families that control the majority of the industry.
General managers at hotels made decent salaries. I didn't really want to move that high up
the hotel ladder because it wasn't my career goal and I didn't want to deal too much with law enforcement.
Hotel managers, as I had to do occasionally, dealt with cops on issues about tracking down hookers and crooks,
but normally it was about credit card fraud. Rancho Cordova's economy was so butchered in the 2006-2011 period
that the city's law enforcement shut down at night and the County took over. I just didn't want to become a
low paid cop. Pay me five times the money and I might have thought about it, since it involved putting my life on the line.
The cheap security cameras didn't even work well and neither did the locks on the glass door lobby.
I quit the hotel business at the end of 2011 to focus on my own business full-time, which was writing
and web development. One of my clients was an established property manager and real estate agent, who I had known for years.
Business wasn't exactly booming for him, as several of his properties were vacant. Other clients seemed
to be in the same situation in other industries. It seemed a lot of businesses wanted my services but
didn't want to pay much so I became very selective about clients, until I finally realized Sacramento just
doesn't have that many opportunities even for a well known radio personality like myself.
Sacramento radio had been taken over mostly by three big corporations that were each millions in debt.
In the case of Clear Channel, the biggest national radio chain, they were billions in debt. As a result,
the radio industry kept downsizing, so there were fewer and fewer opportunities for radio jobs, except
sales, which I didn't want to do. I already knew that radio advertising doesn't work unless you do a ton
of it. Most small businesses can't afford to gamble with money on radio advertising, and the ones that
do can drain their budgets quickly without seeing any return on investment. Radio advertising had become
dominated by companies like Budweiser, which was by the way, billions in debt.
As I stood on Arden Way staring at all the memories of what used to be, I came to the conclusion that
the big money game was what destroyed our local culture. Weinstock's used to be a regional department store
chain all over town, but fell victim to debt and went out of business in the 90s. Linens N' Things and other
box stores in the area were closing down. Circuit City across from Arden Fair went belly up, partly because
of its mixed up marketing and partly because it hired anybody who would work for low pay instead of people
with product knowledge.
At one time there were many local businesses on Arden Way, including the roller rink where I worked, which
had become a bingo center. Several restaurants like Pizza & Pipes were gone. About the only regional businesses
that seemed alive anymore were Jimboy's Tacos and Dimple Records and Books. Dimple, a family-owned business,
stayed true to the traditional business model of building one store at a time instead of trying to go for
global expanision on big loans. In the 80s, Arden Way was a happening thriving place to be with plenty
of things to do. Now it had the same ghost town feel as Downtown, where Westfield Mall investors made
their exit after seeing the mall rack up too much debt.
What I noticed by late 2013 as I left for Reno then San Diego, was that Sacramento just didn't have much
of a local identity anymore except for parts of Midtown. The mom and pop town that I grew up in was
now a vast corporate wasteland of empty strip malls and national logos everywhere. Many of the local
establishments I had known for years had gone out of business. Could it be they had no easy way of
promoting themselves anymore now that radio advertising was dominated by corporations and was
unaffordabile to local businesses?
Even rock star Sammy Hagar couldn't find a way to make money with his restaurant/night club
Sammy's Rockin' Island Bar and Grill in Roseville. He had to close it down for a second time
in February 2015 due to lack of business. So is rock and roll really dead or is it just the way
it's promoted? Maybe people don't have money to throw away anymore on music so they just stay
home and listen to music for free on YouTube.
If I were to fix Sacramento's economy, I'd go about it the way Mayor Kevin Johnson wants to do it but
apparently can't get the support from city and county officials. I'd encourage green tech companies
to come to town and create lots of jobs. The solar industry is booming in California and Sacramento is
the perfect place to be the epicenter of this revolution. It's also a city surrounded by farms while
the organic industry is booming nationally. I would run Monsanto and their creepy chemicals out of
town and make Sacramento a center for the organic industry, using the most efficient hydroponic methods
that conserve water, using no pesticides while creating maximum yield.
I'd also encourage smaller tech companies from Silicon Valley to make Sacramento their new home
and spread the word that it's a city that embraces innovation. Whatever reasons Sacramento's failed
leaders (not the Mayor, but the other leaders holding the city back) want to stay trapped in the
past, they need to open their minds and start planning for the 21st century.