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January 22, 2019

Small businesses are the backbone of the San Diego economy, representing 98 percent of local businesses and employing roughly 59 percent of the workforce. According to a new study by San Diego Regional EDC, in partnership with the San Diego & Imperial Small Business Development Center, small businesses are one of the primary drivers of local economic growth, with 41 percent of the region’s small businesses intending to hire more employees in the next two years.

Based on a survey of more than 500 respondents, “An In-Depth Look at San Diego's Small Business Ecosystem” uncovers insight about the region’s small businesses – those with fewer than 100 employees – and quantifies the number of firms, workforce, demographic and industry breakdown, business outlook and more across San Diego and Imperial counties.

The study found 36 percent of small businesses are women-owned, 20 percent are minority-owned, and 10 percent are veteran-owned.

 “This study helps reinforce what we already know: San Diego’s small businesses are the cornerstone of our economy, employing nearly 700,000 San Diegans and driving innovation across the world,” said Kirby Brady, Research Director, San Diego Regional EDC.

Encompassing industries from healthcare, finance, food and beverage, education, construction and real estate, San Diego’s small businesses are driving the local economy – representing two-thirds of current regional employment.

KEY FINDINGS

  • Small businesses employ 697,000 workers, making up 59 percent of San Diego’s total workforce. 
  • 27 percent of the region’s workers are in businesses with fewer than 20 employees; while more than 64 percent of firms employ fewer than five people.
  • 69 percent of small businesses reported financial growth in the past two years.
  • 59 percent of the region’s small businesses have local customers.
  • Of firms surveyed, roughly 43 percent expect to grow in terms of workforce and 81 percent expect to grow in terms of financial performance.
  • The majority of companies who have been operating less than two years generate less than $100K in annual revenue, while more than half of established companies (10 years or longer) generate more than $1M in revenue annually.
  • Small business growth challenges:
    • Eighty-five percent of locally-serving small business said ‘sales and new business’ is a challenge, including 25 percent who said it is the most significant challenge.
    • Fourteen percent of small businesses said that ‘financial stability and cash flow’ is the most significant challenge.

“In order to better serve the needs of our small businesses and entrepreneurs, it’s important that we understand their perceptions and experiences," said Danny Fitzgerald, Associate Regional Director of San Diego & Imperial SBDC Network. “This study will enable us to create new and enhance existing programming to support small business growth across the region.”

Furthermore, with a commitment to lifting up San Diego small businesses, EDC has launched an Inclusive Growth initiative in order to develop measurable targets and actionable recommendations to promote small business growth, talent development and affordability.

The SBDC has become our trusted 'go to' resource for just about everything. They have connected us to the vast networks in San Diego that has brought us new customers and important industry connections. We wouldn't be where we are today without them,” said Nic Halverson, Founder/CEO of Waitz App.

The report was produced by San Diego Regional EDC, with support from the San Diego & Imperial Small Business Development Center. Read the full study here.

For more research from San Diego Regional EDC, visit sandiegobusiness.org/research-center.

 

January 18, 2019

Each month the California Employment Development Department (EDD) releases employment data for the prior month. This edition of San Diego's Economic Pulse covers December 2018. Check out EDC's research bureau for more data and stats about San Diego's economy. 

Highlights include:

  • The region’s unemployment rate was 3.2 percent in December, unchanged from a revised 3.2 percent in November, and below the year-ago estimate of 3.3 percent.
  • San Diego’s unemployment rate remains below both the state rate of 4.1 percent and the national rate of 3.7 percent.
  • The labor force shrunk by 3,000 workers during the month and is now up 37,100 compared to a year ago.
  • Total nonfarm employment is down 900 in December and up 28,400 over the year.
  • The largest employment gain over the year occurred in professional and business services, which added 12,600 jobs. Professional, scientific, and technical services were responsible for 46 percent of the increase – up 5,800 jobs.

 

San Diego's Economic Pulse - January 2019 from San Diego Regional EDC on Vimeo.

January 8, 2019

In late November 2018, EDC released a new study, San Diego's Precision HealthEcosystem,” which explores the impact of the region’s precision health cluster and quantifies the number of firms, venture capital, and patents, as well the broader cluster across California. The web-based study  precisionhealthSD.org – includes a historic timeline, cluster map, local and state overviews, and a series of video testimonials from local business leaders at CBRE and Rady Children's Institute for Genomic Medicine.

Hear how precision medicine changed the lives of Baby Maverick and Bill Bacon below:

Precision Health: Baby Maverick's Story from San Diego Regional EDC on Vimeo.

 

Precision Health: Bill Bacon's Story from San Diego Regional EDC on Vimeo.

Learn more at precisionhealthSD.org and #precisionhealthSD. Executive summary available here.

January 7, 2019
This op-ed was originally published in the San Diego Union-Tribune, authored by Nikia Clarke, Cynthia Curiel, and Patricia Prado-Olmos.
 
As high school seniors throughout the country complete final exams and eagerly await college acceptance letters, only 37 percent of Hispanic and black students in San Diego will be college-ready when they finish high school. This lack of preparedness significantly affects San Diego’s competitiveness since these groups already represent a large (and growing) part of our population. And while talent attraction efforts are an important facet of economic growth, the nationwide competition for skilled talent combined with San Diego’s high cost of living make relocating talent from elsewhere increasingly difficult. Now more than ever, San Diego employers must focus on building a strong local talent pipeline, or we — as a region — simply won’t survive.
 
The success of San Diego’s innovation economy is inextricably linked to the region’s talent pool. In fact, projections indicate that San Diego will need to double its annual production of high-skilled college graduates by the year 2030 in order to meet the demands of the future economy, ultimately developing interventions that impact today’s seventh-graders. Though this can only happen through extensive systemic changes, we can rest assured knowing that we don’t have to look far to access a viable workforce. San Diego doesn’t have a talent supply problem; it has a talent development problem.
 
San Diego is home to a large pool of untapped talent that is vastly underrepresented in the innovation economy. Hispanics represent San Diego’s fastest growing population and will become the region’s largest demographic group by 2030; yet 85 percent of Hispanics in the region do not hold a bachelor’s degree. This presents an opportunity for employers to develop this local talent and create sustainable inflows of new employees directly from their surrounding communities.
 
To address these regional challenges, the San Diego Regional Economic Development Corp. (EDC) launched an Inclusive Growth initiative this year, and convened an employer-led steering committee to help develop and drive an agenda that maximizes economic growth through inclusion. Informing this work, EDC recently released an interactive web study — talent.inclusivesd.org — indicating that talent shortages pose a significant threat to San Diego’s economic sustainability.
 
The 40-company steering committee is encouraging other employers to focus efforts on talent development programs that directly equip the local workforce with the skills they seek in employees. The committee has endorsed “20,000 skilled workers by 2030” as a regional goal, along with a set of employer-focused recommendations around transparency, engagement and investment. These recommendations serve to build a platform in which people can track the region’s progress, as well as provide employers with programs they can adopt and implement at their own organizations.
 
As a key leader in EDC’s Inclusive Growth Steering Committee, defense technology company Northrop Grumman plans to pilot a talent pipeline program in 2019 that will link STEM education opportunities from K-12 through college. The company is creating a new pathway for high school students to obtain STEM-focused degrees through close collaboration with local community colleges and practical on-the-job experience. By helping reduce the barriers many face when considering college, Northrop seeks to empower students and their families to pursue both educational and career opportunities, while creating a sustainable source of high-skilled talent.
 
Cal State San Marcos, another steering committee leader, has collaborated with Northrop Grumman to ensure that local education systems and curriculum are equipping students with the skills required to fill these higher-paying jobs. Cal State San Marcos works closely with a range of industries to design academic programs connected to workforce needs, such as a master’s of science in cybersecurity and the university’s newly launched engineering program.
 
Inclusive growth is not just about “doing the right thing” — it’s about economics, and making sure our community is set up for success. In 2019, EDC will continue to work with its steering committee to develop employer-focused recommendations around two other inclusive growth goals: equipping small businesses to compete and addressing the affordability crisis.
 
This process is complex and will take time; San Diego’s continued growth and success will largely depend on collaboration among companies, universities, philanthropic organizations and local government to ensure that inclusive growth practices are integrated into future decision-making. As a region, and especially as an economic development organization, if we are not doing this right, we should not be doing anything at all. Our hope is that when we tell San Diego’s story in the not-too-distant future, we can tell the story of a region that not only excels in technology and innovation, but also one that includes and uplifts all of its residents — a place where everyone can thrive, no matter your ZIP code.
 
Clarke is vice president of economic development at San Diego Regional Economic Development Corp. Curiel is vice president of communications at Northrop Grumman Corp., Aerospace Systems. Prado-Olmos is vice president of community engagement at Cal State San Marcos.
 
Follow along and learn more at InclusiveSD.org.
December 19, 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 Q3 2018.

Following an increase in employment in Q2, San Diego and 12 of the most populous metros, experienced a decline in total nonfarm employment in Q3. Winding down from the summer season, the region shed 4,700 jobs - a 0.3 percent decrease in employment during the quarter. Compared to a year ago, nonfarm employment was up 28,800 jobs, or 2 percent.

Meanwhile, San Diego’s unemployment rate was 3.2 percent in Q3, down from 3.7 percent in Q2.

Key findings from the snapshot:

  • San Diego closed Q3 with an unemployment rate of 3.2 percent and the tenth lowest among the 25 most populous metros.
  • With the summer tourist season coming to an end, the leisure and hospitality sector recorded the largest quarterly loss, shedding 2,300 jobs in Q3. Other contributors to quarterly employment loss were trade, transportation, and utilities, together losing 2,100 jobs. 
  • Year-over-year, the region’s median home price continued to climb, growing by 7.1 percent.
  • VC dollars in the region increased 63.5 percent compared to a year ago.

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 July to September (Q3) 2018.

November 29, 2018

San Diego is home to more than 350 precision health companies that hold 3,610 patents, according to a study released by yours truly: San Diego Regional EDC.  “San Diego's Precision Health Ecosystem” explores the impact of the region’s precision health cluster and quantifies the number of firms, venture capital and patents, as well the broader cluster across California.

The web-based study – precisionhealthSD.org – includes a historic timeline, cluster map, local and state overviews, and a series of video testimonials from local business leaders.

Large local companies like Illumina and Thermo Fisher Scientific, startups and small businesses like CureMatch, LunaDNA, and EpicentRX, as well as hospitals and research institutes are helping lead the charge in precision health and enabling people to live longer, healthier lives.

Using a person’s unique genes, medical history, and environment, the field of precision health seeks to customize effective therapies and disease treatment. More than genomics and pharmaceuticals, precision health also encompasses a wide range of related fields that allow for the collection, storage, analysis, and use of health data for more precise diagnosis of individual conditions and risk factors.

“From personalized cancer vaccines to record-breaking DNA sequencing of newborns, San Diego companies and research institutes are revolutionizing healthcare as we know it,” said Kirby Brady, research director, San Diego Regional EDC. “Consistently ranked among the top five cities for startups and life sciences, as well as the #1 region for genomics patents in the U.S., San Diego brings more to the table than its beaches – we are changing lives and curing disease from the offices and labs throughout the region.”

KEY FINDINGS

  • San Diego precision health companies secured $1.3 billion in venture capital in 2018, to date.
  • San Diego precision health companies hold 825 registered trademarks, and 3,610 patents.
  • San Diego is home to more than 350 precision health companies, 80 research institutions, 30 hospitals, and five universities.
  • Economic impact of precision health in California (2017):
    • 29,000 direct jobs
    • 99,000 total impacted jobs
    • $17 billion direct economic impact

Precision Health: Why San Diego from San Diego Regional EDC on Vimeo.

The report was produced by San Diego Regional EDC, and sponsored by Alexandria Real Estate Equities, Inc., CBRE, Kaiser Permanente, PricewaterhouseCoopers and Scripps Research.

Read the full study at precisionhealthSD.org, or the print version hereFor more research from San Diego Regional EDC, visit sandiegobusiness.org/research-center.

November 16, 2018

Each month the California Employment Development Department (EDD) releases employment data for the prior month. This edition of San Diego's Economic Pulse covers October 2018. Check out EDC's research bureau for more data & stats about San Diego's economy. 

October highlights:

  • The region’s unemployment rate was 3.3 percent in October, up from a revised 3.2 percent in September, and below the year-ago estimate of 3.6 percent.
  • San Diego’s unemployment rate remains below both the state rate of 4.0 percent and the national rate of 3.5 percent.
  • The labor force grew by 9,100 workers during the month and is now up 25,300 compared to a year ago.
  • Total nonfarm employment is up 10,700 in October and up 26,000 over the year.
  • The largest employment gain over the year occurred in professional and business services, which added 16,400 jobs. Professional, scientific, and technical services were responsible for 60 percent of the increase – up 9,700 jobs.


October 5, 2018

Each year, EDC carefully selects a peer metro for our annual Best Practices Leadership Trip – a chance for EDC and a group of key partners and stakeholders to learn from another region facing challenges similar to our own. The decision to go to Indianapolis this year was not a hard one. We were drawn to Indy not just as a fellow participant in the Brookings Inclusive Economic Development Learning Lab last year, but because of its regional approach to inclusive growth that has catalyzed since. We were further intrigued by Indy’s unique talent attraction and retention programs and its many collaborative efforts across government, business, and philanthropy. Over three days, our group of nearly 30 San Diegans was welcomed by Indy’s civic leaders who highlighted local programs, projects, and initiatives. Ultimately, our goal of the Leadership Trip is to inspire fresh approaches to our own challenges and opportunities at home.

A two-sided economy: The Indy Chamber kicked-off our visit with an overview of the economic disparities facing Indianapolis. Similar to EDC, the Indy Chamber led its region through the Brookings Institution Inclusive Growth Learning Lab designed to help economic development organizations (EDOs) build a data-driven platform that articulates the economic case (and imperative) for inclusion. Since the lab, the Indy Chamber has disseminated the Indy narrative throughout town, with many civic leaders referencing its findings throughout our visit. While Indianapolis bodes well on measures affordability, job growth, and entrepreneurship, it is also the 6th most economically segregated region in the U.S., with limited opportunities for upward mobility for individuals born into poverty. The impacts of automation exacerbate economic segregation and poverty in Indianapolis, which lost more than 20 percent of its manufacturing workforce over the last decade. In facing these realities, civic leaders have enacted new measures to increase job preparedness, homeownership, and overall economic security for Indianapolis residents.

The Cook Medical “unicorn”: In a particularly moving presentation, Pete Yonkman, president of Cook Medical, shared an incredible benefit that his company offers employees who wish to advance their educational goals. With more than 12,000 employees worldwide, Cook is a privately-held medical device manufacturer headquartered in Indiana with facilities in six countries, including K-Tube Technologies in Poway. Through a program called “My Cook Pathway,” Cook eliminated its high school diploma requirement for entry-level manufacturing positions in 2017. High-potential individuals without a high school degree are hired to work at Cook in the mornings before spending the afternoon studying for their GED. During the seven weeks it takes to earn their high school equivalency (HSE), Cook pays employees full-time wages and associated fees. Furthermore, Cook has partnered with the local Ivy Tech Community College to expand the program for employees interested in AA degrees or certificate programs, fronting registration fees and associated expenses and providing guidance on the financial aid process. After overwhelming response from its employees, Cook has since expanded the program even further. Now, Cook employees can get an HSE through a Master’s degree leveraging the My Cook Pathway program. Before introducing this program, fewer than 65 employees took advantage of education reimbursement. Two years later, more than 1,000 employees are enrolled. By leveraging various state and federal funding streams that support employee education, Cook offers this benefit to its employees for less than $2,000 per employee. When Cook leadership eliminated its high school diploma requirement, they decided they wouldn’t sit back and wait for highly educated employees to show up at their door. Now, they are active participants in preparing Indiana’s future workforce, with resumes flooding their doors and employee retention rates on the rise.

Connecting Talent: Through its lauded statewide community college system and multiple universities, Indianapolis is well positioned to produce the workforce its economy needs, but the Midwestern city risks losing talent to the “lure of the coasts.” Jason Kloth, CEO of Ascend Indiana, is front and center on a statewide effort to retain talent by increasing employer access to qualified workers while supporting the residents of Indiana in their pursuit of a meaningful career. After serving in many leadership positions for Teach for America, Kloth led the City of Indianapolis Office of Education Innovation (OEI) as the deputy mayor of education under Mayor Greg Ballard. Kloth is the mastermind behind Ascend, a nonprofit focused on creating a stronger alignment between the supply of skilled talent and demand from employers in Central Indiana. Ascend has raised more than $10 million to support its work. The organization provides strategic consulting services to help high-growth companies identify, evaluate, and secure education partners to deliver a custom talent pipeline, usually in less than a year. In a recent project with medical device giant Roche, Ascend partnered with the University of Indianapolis to address the company’s shortage of technicians fueled by increased retirement turnover. The result was a work-ready pipeline of 25 skilled, entry-level professionals in less than 12 months. Ascend has also created a next-level, cloud-based platform called “the Ascend Network” that matches qualified talent from 14 higher education institutions to positions at more than 70 large companies. The platform has helped place more than 400 individuals in Indiana. Through its experienced team of recruiters and matching algorithms, Ascend ensures high quality candidates and speeds up the hiring process for both individuals and companies. Needless to say, our group was astonished.

Before returning home, many members of our San Diego group continued onto Washington D.C. for a day at the Brookings Institution. The group was welcomed by Amy Liu, vice president and director of the Brookings Metropolitan Program, before Brookings fellows facilitated a series of discussions on how and why other metros are approaching inclusive growth to help us think more broadly about strategies for succeeding in a rapidly-changing economy.

 San Diego’s Progress

After spending much of 2017 deepening our understanding of regional challenges facing San Diego, EDC has spent 2018 assembling an employer-led steering committee to build an inclusive growth agenda that benefits more people, companies and communities. Guided by the findings of a recent EDC study, EDC’s Inclusive Growth Steering Committee recently endorsed a regional goal to double the number of skilled workers produced in San Diego County to 20,000 per year by 2030. To support this goal, the committee developed recommendations around transparency, engagement, and investment for employers to adopt and implement within their own organizations. EDC continues to work with the steering committee to set goals and recommendations for employer engagement around our other two pillars of inclusive growth; small business competitiveness and addressing affordability.

Before Indy, we traveled to Nashville and Louisville, smaller regions confronting deeply entrenched histories of racial segregation and poverty. Indianapolis is home to one of the largest endowments in the country and would not be where it is today without the investment of the Lilly family. Each metro is unique in its history, resources, and politics, and will inevitably need to craft an inclusive economic development strategy that works for their community based on their particular circumstance. However, inclusive growth as both an economic and moral imperative is a sentiment that permeates among more and more leaders nationwide.

Regardless of how different our circumstance may be from Nashville, Louisville, or Indianapolis, the authenticity that is threaded throughout our visits each year encourages an honest dialogue among our San Diego delegation, leading to a heightened sense of unity in purpose and mission amongst our investors and newer partners. There is much to be done, but EDC and our stakeholders are committed to this work. It will remain driven by collaboration, coordination, and honesty. EDC’s mission is to maximize the region’s economic prosperity and global competitiveness. To live up to that mission, our economic development strategies must promote growth through inclusion.

Learn more at inclusiveSD.org.

The trip was made possible by the generous support of Southwest Airlines.

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
 

 

 


 

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.