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The Big Picture San Diego Blog


September 2018

September 21, 2018

San Diego’s Economic Pulse uses data to tell a story about our regional economy. This issue covers data from August 2018. Check out EDC's research bureau for more data & stats about San Diego's economy. 

Monthly Employment Change by Sector
 

 

 


 

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September 19, 2018

Originally published in The Wall Street Journal.
 
Among the 50 largest metros in the U.S., San Diego ranked the highest in the nation for median household income growth. This is largely due to its abundant supply of booming tech and biotech companies, like Amazon and Sony, willing to pay big bucks for top talent. Read more in The Wall Street Journal article below.
 
If the U.S. economy is on fire, California is its white hot center.
 
Of the 50 largest metros, five of the 10 with the biggest income gains are located in California, where a diverse economy has been adding jobs across industries including construction, tourism and technology. No other state had more than one region in the top ten.
 
According to census data, the San Diego area, fueled by high-paying job growth in telecoms and biotech, gained most among the 50. Median annual household income rose 5.4% in 2017 to $76,207. The Silicon Valley area, including San Jose, Sunnyvale and Santa Clara, followed closely with a 4.6% rise in median income to $117,474.
 
With most of California’s major cities at or near full employment, there are more jobs than job seekers in some sectors and that has driven up wages, economists said. Very high incomes in some of the state’s dominant sectors, including technology, have also pulled up the median.
 
“We don’t have slack in many of our labor markets in California and so you get wage increases,” said Jerry Nickelsburg, a senior economist at the University of California-Los Angeles.
 
California’s economy, which grew 3% in 2017, has in recent years outpaced growth in the overall nation. It now ranks as the fifth-largest economy in the world, surpassing the United Kingdom last year.
 
Still, a high cost of living driven by surging housing costs has raised concerns about the sustainability of the state’s growth and whether most residents are benefiting from it. California has the highest home prices of any state and nearly 30% of renters here pay more than half of their income toward rent, according to recent data from the state’s housing department. By some measures that account for cost of living, the state has the highest poverty rate in the country.
 
“As economic development professionals, we celebrate reports like this, but we also know if you dig further into the numbers...there is more work to be done,” said Erik Caldwell, Economic Development Director for the city of San Diego. He said his city’s historic industry clusters were having a new growth spurt, driving up incomes.
 
The tech boom is even helping to boost California regions beyond the coastal meccas where such businesses are based. Median income in the so-called Inland Empire, which includes Riverside, San Bernardino and Ontario, rose 4.3%, the third-biggest gain in California and No. 6 among the 50 largest metro areas, to $61,994.
 
One of the top distribution hubs in North America, the Inland Empire has benefited tremendously from the growth in e-commerce. Amazon.com Inc. has some fulfillment centers there.
 
Christopher Thornberg, founder of Los Angeles-based research group Beacon Economics, said the Inland Empire economy was “on fire,” though he noted that residents who commute to nearby Los Angeles or elsewhere were likely pulling up the median household income.
 
Median income growth in the Los Angeles area ranked just below the Inland Empire, rising 4% last year to $69,992.
September 12, 2018

Today, Propel San Diego partners – San Diego Military Advisory Council (SDMAC) and San Diego Regional EDC – unveiled 15 companies selected to participate in the Defense Innovation Voucher program (DIVx). DIVx is a comprehensive business initiative designed to build resiliency in small, local defense companies and help them find pathways to diversify their revenue. 

San Diego is home to the largest concentration of military assets in the world and the largest federal military workforce in the country. When considering the overall ripple effects of the defense cluster in San Diego, about 22 percent of San Diego’s gross regional product (GRP) is the result of defense-related spending. But the breadth and depth of defense activity stretches far beyond military bases and naval ships; from telecomm to robotics, aerospace to cybersecurity, San Diego’s defense cluster is the driving force behind the region’s innovation economy.

According to EDC’s recently released report, Mapping San Diego’s Defense Ecosystem, 40 percent of the companies registered in San Diego County as defense contractors employ five people or less. Propel San Diego’s DIVx program serves to help those small defense companies build resiliency and sustainability through times of fluctuation in defense spending.

“Like many local industries, San Diego’s defense supply chain is mostly made up of small businesses, with 89 percent of firms employing less than 50 people. As federal funds continue to fluctuate in defense spending, small business that often rely on one to two large contracts, are at risk,” said Nikia Clarke, VP of economic development, San Diego Regional EDC. “The newly launched DIVx program is designed to help these companies diversify their revenue and become more resilient, thus increasing their ability to withstand fluctuations in DoD spending and downturns in our economy.”

This pilot program will offer complimentary consulting services and curriculum to improve the competitiveness of small defense companies, selected through a competitive needs-based selection process. The program will help companies compete for government or defense contracts and/or explore pivoting products and services to commercial markets.

The DIVx program will provide services in these three specific areas:

1. Direct Assistance: EDC has identified qualified consultants who will provide $15,000 in complimentary consulting services in one of the following categories: marketing, accounting compliance, certifications (SDVOSB, AS9100, AS5553, ISO 9001, etc.), lean supply chain and additive manufacturing tools, and strategic planning.

2. Boot Camp: Enrollment in a six-month long course designed to provide best practices to company leadership on strategies to improve company competitiveness.

3. DIVx Grand Prize Competition: This competition will award a company based off their level of engagement in these activities and progress towards their goals with an additional $25,000 to work with one of the pre-approved contractors to perform new work with the company.

Partnering in the DIVx program as the key underwriter is Booz Allen Hamilton, a leader in the defense consulting industry.

Propel San Diego is a partnership of six key organizations: East County Economic Development Council, South County Economic Development Council, San Diego Workforce Partnership, San Diego Military Advisory Council, San Diego Regional Economic Development Corporation, and the City of San Diego. Each of these organizations are also working on specific business support programs to create a more robust defense ecosystem here in San Diego.

For more information about the DIVx program please visit SDMAC.org/propelsandiego.

The 2018 DIVx companies are as follows:

This project is funded in whole or in part with Community Economic Adjustment Assistance for Reductions in Defense Industry Employment funds provided by the U.S. Department of Defense - Office of Economic Adjustment to the City of San Diego.

 

September 6, 2018

In an effort to build a more inclusive economy, San Diego Regional EDC and its Inclusive Growth Steering Committee of 40 employers officially endorsed a regional goal to double the number of skilled workers produced in San Diego County to 20,000 per year by 2030, as well as a set of recommendations, to develop a stronger local talent pipeline – the first of three main goals of EDC’s Inclusive Growth initiative.

“We have untapped talent all throughout San Diego County, especially in our Latino communities,” said Dr. Patricia Prado-Olmos, vice president of community engagement, California State University San Marcos, and Inclusive Growth Steering Committee member. “When higher education and companies come together to provide our traditionally underserved populations with the education, training, and development they need to qualify for highly-skilled and high-paying jobs, we are able to create a better San Diego where everyone can thrive.”

BUILDING THE TALENT PIPELINE
Amid a nationwide battle for skilled talent, San Diego must also look inward and focus on building a stronger talent pipeline locally to sustain its growth. Earlier this year, EDC released research that shows the region’s largest and fastest growing population (Hispanics) is statistically the least prepared for high-skilled high-wage jobs, with 85 percent without a bachelor’s degree.

In its latest study release, EDC found that there are more than 100 key occupations in the region with shortages in skilled labor, many of which fuel San Diego’s innovation economy. Projections show an estimated 20,000 job openings per year in these same occupations, which means that San Diego’s current talent supply falls short in meeting anticipated skilled labor demands of tomorrow’s economy. The study also found that San Diego’s current innovation economy does not reflect the region’s population, as the Hispanic population is glaringly underrepresented at only 17 percent. Guided by the findings of this study and input from expert advisors, EDC’s Inclusive Growth Steering Committee—comprised of 40 regional employers—has endorsed a regional goal to double the number of skilled workers produced in San Diego County to 20,000 per year by 2030.

Companies that have officially endorsed this regional target include Northrop Grumman, Qualcomm, Brown Law Group, Thermo Fisher Scientific, Cox Communications, ResMed, Cubic Transportation Systems, and more. For a complete list of employers committed to this effort, visit the interactive web study online.

To further support this goal, the Inclusive Growth Steering Committee has also developed the following recommendations for employers to adopt and implement at their organizations:

  1. Transparency – provide EDC with anonymized data on workforce demographics to benchmark and track over time. Understanding the composition of the region’s largest employers will provide insight into where the region stands at present and how much progress is being made over time.
  2. Engagement – participate in direct student-workplace exposure programs that directly engage the students aimed to prepare for high-skilled work in 2030. Providing K-12 students with opportunities to visualize themselves in the roles that the regional economy needs them to fill.
  3. Investment – invest in post-secondary educational programs resulting in qualified talent at respective workplace.

“Latinos are the most underrepresented group across innovation companies in San Diego,” said Cynthia Curiel, vice president of communications, Northrop Grumman, and Inclusive Growth Steering Committee member. “We are in a war for talent, and recruiting from outside the region isn’t enough. By investing in building our local workforce, we can fill jobs and lift communities that are currently underrepresented in San Diego’s innovation economy.“

EDC and the Inclusive Growth Steering Committee strongly encourage other regional employers to adopt these recommendations and actively promote inclusion at their respective workplaces.

BUILDING A STRONGER SAN DIEGO: EDC’S INCLUSIVE GROWTH INITIATIVE

Like many of its metro counterparts, San Diego has its fair share of economic challenges. While its innovation economy continues to grow and bring in much wealth and opportunity to the region, it also leaves many San Diegans unable to afford the rising cost of living.

To help sustain San Diego’s future growth, EDC launched a data-driven initiative focused on promoting inclusive growth as an economic imperative, emphasizing that San Diego employers must take active measures to promote inclusion, or the region will no longer be able to compete.

Together with its Inclusive Growth Steering Committee, EDC aims to set regional targets and release actionable recommendations for three main goals: build a strong local talent pool; equip small businesses to compete; and address the affordability crisis.

“The regional economy is changing rapidly, and we must be inclusive to succeed and compete,” said Mark Cafferty, president and CEO, San Diego Regional EDC. “For EDC, this means changing the economic development discussion to be talent-centric and inclusive in nature. These recommendations represent the first step in our regional employers’ commitment to developing local talent and preparing a workforce that is diverse, ambitious, and capable of meeting the demands of our growing economy.”

Over the next several months, EDC will continue to establish regional targets and recommendations for its other two goals. EDC will also support employers by facilitating the collection of data for quick, consistent reporting and serving as a liaison between employers and various community partners to expand reach and increase exposure of scalable programs.

For more information about the Inclusive Growth initiative, visit inclusiveSD.org.

Follow along on social media with #inclusiveSD

View the full interactive web study release – “Building San Diego’s Talent Pipeline” – here.

September 4, 2018

Authored by Kirby Brady and Janice Brown, "Water Investments Fuel Our Growing Economy" was originally published on San Diego Business Journal.
 
While it may seem both obvious and subtle, San Diego County’s thriving $220 billion economy and quality of life is made possible by a safe and reliable water supply. Every day, water is delivered to 1.1 million households and 98,000 businesses throughout the region.
 
Water also drives the iconic industries that make San Diego County truly San Diego — craft brewing, tourism, manufacturing, life sciences and agriculture, among others.
 
But how is San Diego County fueled by water in a region that only receives 10 inches of rain each year? 
 
It’s possible because of the significant regional water reliability and infrastructure investments made by the San Diego County Water Authority and its 24 member agencies. Over the past two decades, the Water Authority has invested more than $2.4 billion into projects that drive our region’s economy and protect our access to clean water for generations to come. These direct investments have resulted in a total economic impact of $4.8 billion and support nearly 1,500 jobs annually.
 
Desalination Plant
These investments resulted in the construction of new water infrastructure projects, which ripple benefits throughout our economy. These include the Claude “Bud” Lewis Desalination Plant in Carlsbad, the nation’s largest desalination plant, and the San Vicente Dam Raise, the tallest dam raise of its type in the world.
 
The benefits of these investments are underscored in San Diego Regional Economic Development Corp.’s new study, “The Importance of Water Reliability to San Diego’s Economy,” which highlights striking positive economic impacts for our region.
 
Infrastructure Investments
Water supplies support $482 million in regional sales of goods and services every day. That’s the economic equivalent of nearly three Comic-Cons each day. Without access to a reliable water supply, local businesses would not be able to provide services or goods that help advance our regional economy.
 
Every $1 invested in water infrastructure results in a $1.80 increase in the region’s gross regional product. Investing in infrastructure is investing in the regional economy. That’s why some of our favorite products are able to call San Diego County home. This region is home to more than 130 brew houses and 3,150 manufacturing companies thanks to the safe and reliable water supply.
 
Water infrastructure investments impact local jobs. Capital improvement projects that result from investments support jobs in many industries including construction, architecture, and engineering — even restaurant and retail.
 
Growing the Innovation Economy
Water drives our renowned innovation economy. Groundbreaking discoveries are taking place right here in San Diego County, and we’re proud of the accomplishments San Diegans make every day. Aerospace, technology and life sciences are just some of the industries that depend on the infrastructure necessary to store, move, treat and deliver water. Not only are these industries changing the way the world works, but they produce products and support sales crucial to San Diego County’s economy.
 
Our region’s economic future depends on continued access to safe and reliable water. With more than 500,000 residents expected to move to the San Diego region by 2035, maintaining access to clean water is as important for the future as it is today. Though our region has limited water resources due to low rainfall, we can rest assured that the water infrastructure investments made by the San Diego County Water Authority and its member agencies will continue to support San Diego County’s thriving economy.
 
Read the full study here.
 
Janice Brown of the Brown Law Group is chair of San Diego Regional EDC. Kirby Brady is research director of San Diego Regional EDC.