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The Big Picture San Diego Blog


Economic Drivers

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:

  1. Accel-RF Instruments Corporation
  2. Amaratek
  3. American Lithium Energy Corporation
  4. Coast Precision Enterprises, Inc.
  5. EpiSys Science, Inc.
  6. Fuse Integration, Inc.
  7. GET Engineering Corporation
  8. intelliSolutions, inc.
  9. Marine Group Boat Works, LLC
  10. Ocean Aero
  11. Planck Aerosystems
  12. Sidus Solutions
  13. Trabus Technologies
  14. VetPowered, LLC
  15. Vortex Engineering

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 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.
August 24, 2018

Every quarter San Diego Regional EDC analyzes key economic indicators that are important to understanding the regional economy and the region’s standing relative to the 25 most populous metropolitan areas in the U.S. This issue covers data from Q2 2018.  

Following seasonal declines in employment during Q1, San Diego, and the overwhelming majority of the most populous metros, experienced an increase in employment during Q2 2018. Welcoming recent graduates and ramping up for the summer season, the region added 16,500 jobs - a 1.1 percent increase in employment during the quarter. Compared to a year ago, nonfarm employment was up 22,500 jobs, or 1.5 percent.

San Diego’s unemployment rate remained below that state and national rates of 4.5 and 4.2 percent, respectively.

Key findings from the snapshot:

  • When compared to its regional neighbors, San Diego’s unemployment rate continued to fare better than both Riverside (4.7 percent) and Los Angeles (4.5 percent).
  • With the summer tourist season approaching, the leisure and hospitality sector recorded the largest quarterly gain, adding 6,300 jobs during Q2.
  • Year-over-year, the region’s median home price continued to climb, growing by 6.6 percent.
  • Compared to the same period a year ago, VC investment in the region has more than doubled. 

The Quarterly Economic Snapshot analyzes key economic indicators that are important to understanding the regional economy and the region’s standing relative to the 25 most populous metropolitan areas in the U.S. This releases includes data from April to June (Q2) 2018.

 

August 20, 2018

Last week, Inc. magazine released its annual Inc. 5000 list of fastest-growing companies. More than 120 companies in the San Diego metro made the list, including EDC investor Innovative Commercial Environments. Other EDC partners on the list include Fuse Integration, Cloudbeds (which recently inked a partnership with Airbnb), Passion Planner, and more.

Notably, San Diego-based Scientist.com made the top 10, with 15,267.8 percent revenue growth. Scientist is a B2B marketplace that connects major pharmaceutical companies and the National Institutes of Health with research scientists.

The Inc. 5000 list ranks companies by revenue growth from 2015 through 2017 for companies that are U.S.-based, privately-held, for profit, and independent with 2017 revenues greater than $2 million. The 126 San Diego companies on the list totaled more than $2.4 billion in annual revenue in 2017.

This list shows San Diego's businesses are gaining steam. While we're home to one percent of the nation's privately-held businesses, San Diego companies make up 2.5 percent of this year's Inc. 5000 list.

Click here to see the full Inc. 5000 list. 

August 17, 2018

Each month the California Employment Development Department (EDD) releases industry data for the prior month. This edition of San Diego’s Economic Pulse covers July 2018 data, including unemployment, new business establishments, and job postings.

Highlights include:

  • Data from the month of July reflect seasonal employment losses. The unemployment rate fell slightly during the month to 3.5 percent after a sharp spike in June.
  • Nonfarm employment fell by 14,400, or 1.0 percent, in July. Compared to year ago, total nonfarm employment is up 21,200, or 1.5 percent.
  • San Diego’s unemployment rate remains well below both the state rate of 4.4 percent and the national rate of 4.1 percent, both of which also saw small declines in July.
  • Nearly every jurisdiction saw declines in its unemployment rate in July. Only Solana Beach experienced no change in its unemployment rate of 1.5 percent.

Read the full Economic Pulse here.


July 20, 2018

Each month the California Employment Development Department (EDD) releases industry data for the prior month. This edition of San Diego’s Economic Pulse covers June 2018 data, including unemployment, new business establishments, and job postings.

Highlights include:

  • The region’s unemployment rose to 3.7 percent in June after several months of record lows.
  • Every jurisdiction saw an increase in the unemployment rate during the month of June. Six cities had increases of a full percentage point. 
  • Labor force grew, adding 5,200 workers during the month, up 0.3 percent. However the labor force is down 2,500 compared to a year ago.
  • Monthly employment trends changes appear to be countering trends of the past year. PST services continue to have the fastest year-over-year growth, up 4.9 percent.

Read the full Economic Pulse here.

 

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July 18, 2018

It's Comic-Con week, San Diego. Whether you’re one of the 135,000 attendees or you’re just heading downtown to people-watch, Comic-Con has the power to turn the mundane into the magical - if done right. The international convention has a $147.1 million regional economic impact, and spurs 57,7000 hotel room nights. And in an attempt to attract attendees from outside of the region to live and work here, San Diego: Life. Changing. is hosting a Comic-Contest on social media and is even setting up a skylight downtown. Location hint: it smells like chocolate and looks like a hipster's closet....  See below for a Comic-Con how-to guide.

How to Comic-Con

  1. Don’t be afraid to walk. All of downtown San Diego will be jam-PACKED with cool activations on buildings, buses, trolleys, street corners, our sunny skies, and bars/restaurants galore. Parking far away might not be such a bad thing.
  2. Download Ace Parking app. If you’re one of the many people who weren’t quick enough to get the sold-out Comic-Con parking spaces, you can download the free Ace Parking app to see where all of the available public parking spots are at. Thursday morning is usually the most challenging time for parking, since many people will be trying to navigate around downtown for the first time. Just be patient and embrace it.
  3. Or take the Trolley. The SDCCU Stadium (Formerly Qualcomm Stadium) is an easy and convenient alternative to braving downtown in a car.  For the small price of a trolley ticket, you can park and enjoy a ride to and from downtown, most likely seated next to your favorite superhero and villain.
  4. Wear comfortable close-toed shoes and socks. We get it. It’s San Diego, and people wear flip-flops here. But Comic-Con draws thousands of people into downtown San Diego. That means the streets, sidewalks, and any other surface will be taken up by people walking every which way. You are most likely to get stomped on and/or will be walking a couple miles. Wear your comfy shoes and you’ll be thankful later.
  5. Embrace the lines. Lines are everywhere. For the panels, the crazy cool photo ops, and especially at all of the nearby restaurants and bars. It’s okay, just hop in and know that whatever you’re waiting for will be worth it. The people-watching alone will surely set your spirits back up.
  6. Know your way around. A lot of time can be wasted by trying to navigate around the crowds. Don’t be that lost soul, desperately in need of an iced coffee but can’t figure out where to get it. Do your homework to know where you’d want to get food/drinks from and where they are located in downtown. Also note that Harbor Drive will be closed for the first time this year. The Convention Center put together some helpful maps, so you don’t drive around like a newb.
  7. Have fun! This is a time for you to explore everything nerdy with people all around who share that same passion. From comics to tabletop games to movies to books, it has everything. Talk to people in lines, make friends. Who knows, you could meet your new BFF...or roommate for when you finally take the San Diego plunge.

The fun doesn't have to end with Comic-Con. Enter the #ComicContest

We've teamed up with local illustrator Jon Condry (@joncondry) to develop custom-made pins, in the spirit of San Diego: Life. Changing.  So head to IDW Publishing's booth #2743 (did you know they were a San Diego-based company?) to collect one. And keep a lookout for San Diego: Life. Changing.'s street team (@bernoraptor & @bree_burris) this weekend for another shot. Follow @SDlifechanging on Twitter, where they'll keep you up-to-date on their location.  Then, once you have your hands on one of these exclusive pins, head over to our one of our social channels - @SDlifechanging in case you were wondering - and post it. Check out sandiegolifechanging.org/comiccontest/ for more details and info. And check out #ComicContest to see some posts.

And if you want to start your job search today, head over to the company map to learn about some of our companies that are hiring.

Good luck, and don't forget your sunscreen.

July 13, 2018

San Marcos-based MetroConnect company Ocean Reef Group proves just what we mean by San Diego: Life. Changing. 

When twelve Thai boys and their soccer coach were trapped in a partly flooded cave, the diving equipment company quietly stepped in behind the headlines. On its own accord, Ocean Reef shipped thousands of dollars worth of full-face dive masks to Thailand to be worn by the young boys as they escaped the cave. After a two-week ordeal, all team members survived and were successfully extricated. This is how #SDlifechanging gets to work.

More details here.

July 6, 2018

The California Competes Tax Credit (CCTC) is an income tax credit program available to California businesses expanding or relocating to the state of California. Negotiated by the Governor’s Office of Business and Economic Development (GO-Biz), the California Competes Tax Credit program has awarded more than $600 million in credits to nearly 1,000 California companies since the program’s inception in 2014. In FY17-18 round alone, the state granted more than $194 million in credits.

Each year, the state grants a series of tax credit awards over three rounds: November, April, and June. The completion of the June 2018 round marked the end of the FY17-18 program. Throughout the three rounds of FY17-18, credits were awarded to more than 182 California companies, which are projected to create more than 15,000 jobs and invest more than $2 billion in the state over the next five years.

In the FY17-18 program, 33 San Diego companies were awarded more than $24.4 million in tax credits for the creation of 1,900 new jobs and investments totaling $151 million in San Diego. Compared to other metros in California, San Diego claimed more than 33 percent of the total credits for the fiscal year, the second highest amount of credits in the State.

Businesses are separated into small and large business categories, and more small businesses in San Diego won credits than large. Throughout the fiscal year, 17 small businesses were awarded more than $6 million in tax credits. These small companies will create nearly 300 new jobs and invest $60 million into the local economy over the next five years. More than 22 percent of credits in the small business category we’re awarded to San Diego companies.

One of those small business recipients in the latest round, Urban Translations, was awarded $750,000 in credits for commitments to create 61 new jobs and invest $144,000 in San Diego, with consulting provided by EDC and WTC San Diego. Based in Point Loma, Urban Translations is a local startup that creates digital, interactive menus for the hospitality industry - available in any language. The company recently landed partnerships with Samsung and Google, positioning the company for rapid growth. Samantha Urban, the company’s CEO, intends to leverage savings from the Tax Credit program to convert many of her part-time employees to full time positions to support long-term growth in San Diego.

The next application round for the California Competes Tax Credit program will open Friday, July 30. For more information regarding the California Competes Tax Credit program or with assistance on your application, contact Jesse Gipe, senior economic development manager, EDC.