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Big Picture San Diego Blog

March 22, 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 February 2019. Check out EDC's research bureau for more data and stats about San Diego's economy. 

Thank you to Manpower San Diego for making this possible.

Highlights include:

·         The region’s unemployment rate was 3.5 percent in February, down from a revised 3.8 percent in January, and unchanged from the year-ago estimate of 3.5 percent.

·         San Diego’s unemployment rate remains below both the state rate of 4.4 percent and the national rate of 4.1 percent.

·         The labor force grew by 3,700 workers during the month and is now up 24,600 compared to a year ago.

·         Total nonfarm employment is up 9,700 in February and up 19,900 over the year.

·         The largest employment gain over the year occurred in educational and healthcare services, which added 6,900 jobs. 

March 20, 2019

Duane Roth was a beloved San Diego community leader and friend. He knew San Diego was destined to do incredible things and pushed us every day to fulfill our potential. To honor his legacy, we created the Duane Roth Renaissance Award in 2014 to honor an organization whose work is creating outstanding inventions, innovations or breakthroughs that have changed and improved the world around us - the same way Duane looked to improve San Diego. 

We are deeply honored to announce ResMed as the 2019 Honoree of the Duane Roth Renaissance Award, presented by UC San Diego.

ResMed was founded in San Diego in 1989 and has become a world leader in cloud-connectable medical devices and software, transforming care for people with sleep apnea, COPD and other chronic diseases. Meanwhile, its comprehensive out-of-hospital software platforms support the professionals and caregivers who help people stay healthy in their home or care setting of their choice. ResMed has quickly become the gold standard in remote and self-monitoring software, with more than eight million patients worldwide remotely monitored by clinicians. Its monitoring tools are shown to increase patients’ therapy adherence rates and clinicians’ business efficiencies.
 
Revenues for ResMed's first fiscal year in 1990 were less than $1 million, and there were only 9 employees. Today, ResMed is an S&P 500 company with a market cap exceeding $10 billion and yearly revenues above $2 billion. It employs more than 6,000 people globally and operates in more than 120 countries.
 
Dedicating seven percent of annual revenue to research and development, ResMed is committed to advancing innovative technology in sleep and respiratory medicine, to commercializing innovative products that incorporate these technologies around the world, and exercising the highest standards of ethics and quality at all times.
 
Please join us at SeaWorld on May 2 to celebrate ResMed and more. Get your tickets.
 
 
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March 14, 2019

In a world where Internet-enabled devices have become embedded in everyday objects, the need for cybersecurity has never been more vital. San Diego's roots in wireless technology, combined with its top tier engineering talent and military presence, make it a fertile ground for cybersecurity talent. And that's exactly what EDC's most recent economic impact study found.

cybersecurity economic impact numbers in SD

Commissioned by San Diego Cyber Center of Excellence, a San Diego-based nonprofit organization dedicated to accelerating the region’s cyber economy, the study found that San Diego had more than 150 core cyber firms that employ 4,920 people in the region. The Navy’s Space and Naval Warfare Systems Command (SPAWAR) provides an additional3,530 jobs to San Diego’s cybersecurity industry. In total, there are 8,450 direct jobs – up 11 percent from 2016 (faster than the regional employment growth of 3 percent). 

"Too often San Diego worries about falling behind Silicon Valley or the East Coast, but this study conveys we have the talent and workforce to punch above our weight," said Rear Admiral (Ret), Ken Slaght, CCOE chair and president of Cyber Center of Excellence. "San Diego's premier educational institutions, existing industry base and robust federal assets, seed not only the cyber workforce but the innovation needed to protect our nation."

The study was launched at Qualcomm on March 13, and featured a keynote from Dr. John Zangardi, CIO at the U.S. Department of Homeland Security, as well as an in-depth look at the interactive research tool, presented by EDC's Research Director Kirby Brady.

View the interactive tool here.

March 12, 2019

With many economists forecasting an economic downturn in the years ahead, small businesses are often the most vulnerable to a changing economy. However, a new survey released by Innovate78 – a collaboration among Carlsbad, Escondido, Oceanside, San Marcos and Vista – found that small businesses are feeling optimistic about the future. In fact, 85 percent of small businesses along the 78 Corridor project financial growth over the next two years, demonstrating stability in San Diego’s North County.

“Most small business owners are so busy running their companies, that they don't have time to step back and leverage the resources available to them,” said Michelle Geller, Economic Development Manager for the City of Escondido. “As part of Innovate78, we are taking a collaborative, data-driven approach to understand their business’ needs. Using the data from this study, we will be able to better collaborate with regional partners to ensure these businesses remain viable and a key economic engine in North County.”

The Small Business Ecosystem Along the 78 Corridor” surveyed 164 small businesses – firms with fewer than 100 employees – as a way to uncover insight and gain a deeper understanding of small business perceptions of the regional business climate.

According to EMSI, small businesses make up 98 percent of the 78 Corridor’s businesses – mirroring the broader San Diego region.

KEY FINDINGS:

  • Businesses are growing.  Over the next two years, 85 percent expect to grow in terms of financial performance.
  • Companies have a focus on local customers. In total, 69 percent said their customers were primarily in Southern California, whereas only 7 percent said their customers were primarily international.
  • Job growth will continue to be fueled by small businesses. Over the next two years, 45 percent of 78 Corridor small businesses project employment growth, while only 6 percent say they will have fewer employees.
  • Generating new sales is the biggest need for small business owners. A majority –88 percent – of small businesses said sales/new business was a challenge. As a way to generate sales, survey respondents identified ‘marketing’ as their highest future priority. 
  •  Connecting to resources is imperative. Small business identified needing assistance with financing, marketing and business development. However, many cited a lack of knowledge of available resource providers, like municipalities, economic development organizations, and chambers of commerce.

 “A quick glance at the data confirms that small businesses are a key driver for our economy. But when you dig a little deeper, you uncover trends that are key to understanding the 78 Corridor’s competitive advantage,” said Kirby Brady, director of research at EDC and the author of this study. “The study shows that small businesses along the 78 Corridor are both profitable and resilient.”

The study concluded that 73 percent of Innovate78 small businesses reported financial growth in the past two years, and 62 percent of businesses have been operating for more than five years, a metric often associated with resiliency. According to the Small Business Administration, nearly 50 percent of small businesses fail before the five-year mark. While not a direct comparison, this data suggests that small businesses along the 78 Corridor are outlasting U.S. small businesses.  

CHALLENGES AHEAD:

While Innovate78 businesses are faring well collectively, many challenges remain. With the 78 Corridor’s December 2018 unemployment rate at 3.2 percent, finding skilled talent is increasingly difficult – a trend many rapidly growing regions across the country are facing.

 “From hiring to finding new customers, I face many challenges on a day-to-day basis that I did not anticipate before starting my own business,” said Jiang Fan, president of Carlsbad-based American Lithium Energy. “While these are trials that many small business owners face, I believe that because of the 78 Corridor’s unique access to both San Diego and Orange County’s labor market, as well as the abundant resources the cities offer, that there’s never been a better time to own a small business on the 78 Corridor.”

If you are a business along the 78 Corridor and are looking to connect with available resources, please visit Innovate78’s resource page and/or contact your city’s economic development department directly.

Read the study here.

 

March 6, 2019

Mayor Kevin L. Faulconer, Apple Vice President Kristina Raspe and regional leaders announced today that the technology company will increase its employment in San Diego by an additional 20 percent over previously announced numbers.

Apple now plans to add 1,200 employees in San Diego within the next three years, with almost 200 of those employees in place by the end of the year. As part of a nationwide expansion, Apple announced in December that it would establish a new site and job opportunities in San Diego.

“Apple has been a part of San Diego for nearly 20 years through our retail presence and small, fast-growing teams – and with this new investment we are proud to play an even greater part in the city’s future,” said Tim Cook, Apple CEO. “You don’t have to try too hard to convince people that San Diego is a great place to live, work and do business, and we’re confident our employees will have a great home among the community there.”

Apple cited San Diego’s successful efforts to diversify its economy, incubate new industries, broaden its talent pool, build partnerships between academia and the business community, and maintain a superb quality of life as reasons for its expansion to America’s Finest City.

“There isn’t a city in the U.S. that can offer the talent, infrastructure and community that San Diego can,” said Mayor Faulconer. “I invited Apple to increase its growth in San Diego, and on behalf of a grateful city we’re delighted they accepted our invitation. Apple’s inventions have literally changed the world, revolutionizing how we communicate, create, do business and learn. As Apple continues to innovate and introduce new products, we will be proud to say that San Diego is a part of it.”

Apple and Mayor Faulconer met over recent weeks to discuss the company’s growth plans.

“We were excited to announce in December that we planned to grow our presence here and add one thousand jobs, and then Mayor Faulconer and members of his team very thoughtfully and convincingly walked us through everything the San Diego region has to offer,” said Kristina Raspe, Apple Vice President of Global Real Estate and Facilities. “So we went back and sharpened our pencils and increased our investment.”

San Diego will become a principle engineering hub for Apple with new positions distributed across a number of specialty engineering fields, to include both hardware and software technologies. While Apple hasn’t yet settled on a location, plans are also underway to develop a campus that will feature hundreds of thousands of square feet of office, lab and research space. 

"Apple - with its vision, its brand and its products - could make a home anywhere across the globe,” said San Diego Regional Economic Development Corporation Chair Janice Brown. “By selecting San Diego, they are showing that they value a place that prioritizes a rich talent pool, inclusive economy, and commitment to changing the world for the better."

In addition to its corporate and retail presence, Apple’s app ecosystem contributes to the San Diego economy. App developers who call San Diego home create products that reach customers around the world.

“Apple’s decision to increase the company’s presence in San Diego is a testament to the strong, talented workforce and intellectual capital we have in the region,” said Jerry Sanders, President and CEO of the San Diego Regional Chamber of Commerce. “We look forward to the opportunities this investment brings for our entire region and the role San Diego will play in the future of Apple.”

Apple Fashion Valley, opened in 2001, was the company’s 21st store in the world. Apple currently employs 600 retail employees at its five stores in the region.

The company’s local teams over the years have helped support a number of organizations in San Diego, including the Jacobs & Cushman San Diego Food Bank, Make-A-Wish San Diego, San Diego Humane Society, American Cancer Society, Zoological Society of San Diego, Cards for Kidz NFP, Braille Institute San Diego Center, and Challenged Athletes Foundation. 

 

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February 28, 2019

This week, WTC San Diego teamed up with Elaine Harwell, senior counsel at Procopio, to host a roundtable on a topic that has generated much confusion, interest, and anxiety over the past year – data privacy.

In May 2018, the European Union’s first-of-its-kind data privacy law, the General Data Protection Regulation (GDPR), went into effect. With limited case law to aid in its interpretation, companies and regulators alike have since scrambled to ensure compliance and avoid penalties such as the $57 million fine levied on Google by France’s top data privacy agency.

The GDPR also propelled data privacy laws in other parts of the world. Last June, Governor Brown signed the California Consumer Privacy Act (CCPA) of 2018, cementing into state law many of the general tenets from Europe’s GDPR. These include the right to know what personal information is being collected and with whom it is being shared, as well as the right to have personal information deleted from company databases. GDPR and CCPA share the objectives of increasing transparency, broadening existing definitions of data processing, and encouraging business behavior that prioritizes data security. At least 24 states in the U.S. now have laws that address the data security practices of private sector entities. This is a new reality, and for companies of any size, developing and maintaining a data privacy framework needs to be a priority.

For updates on upcoming workshops and events, you can subscribe to WTC San Diego’s newsletters or follow us on Twitter. If you are a company looking to grow your exports and international presence, also check out WTC San Diego’s flagship export assistance program – MetroConnect

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February 25, 2019

This blog post originally appeared on Innovate78's blog. Managed by EDC, Innovate78 is the collaborative outcome of five cities - Carlsbad, Escondido, Oceanside, San Marcos and Vista - coming together with a shared vision to boost economic prosperity along the 78 Corridor. 

A map of the region’s unique coworking spaces. (Courtesy of: Snazzy Maps and Rising Tide Partners) In addition to being home to many innovative companies, the 78 Corridor also houses a number of coworking spaces that contribute to the success of the local startup scene as well as the entire community. 

In addition to coworking spaces, another resource available to the region is Startup78, which is an initiative of Innovate78 and San Diego Regional EDC to unite and amplify the resources available to entrepreneurs along the 78 Corridor with the goal of helping startups scale to become long-term, viable businesses that support our economy.

All five Innovate78 cities (Carlsbad, Escondido, Oceanside, San Marcos, and Vista) are home to a number of coworking spaces that each boast unique offerings and amenities. Many people come to work in these spaces for the networking opportunities and oftentimes, find their other co-founder while working on separate projects. Professionals have many different spaces to choose from along the corridor, allowing them to work close to home and contribute to the local economy.

Read the full blog post on Innovate78.com to learn about each of the five cities' co-working offerings.

 

 

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January 29, 2019

In 2018, San Diego saw nearly 84,000 unique job postings for STEM-related occupations (EMSI, Job Posting Analytics). While tech heavyweights such as Illumina, Viasat, and now Apple all cite talent as a major reason for their San Diego presence, the region must continuously strive to attract, retain, and develop skilled workers to remain competitive.

As part of San Diego: Life. Changing. – EDC’s talent attraction and retention program – we have launched the ‘Just Say No to Winter’ campaign. The campaign targets three markets – Boston, Chicago, and New York – in the throes of winter via video, subway (Boston T), and social media advertising.

In an attempt to bring top-tier STEM talent to San Diego to fill open positions at the region’s many tech and life sciences companies, the campaign juxtaposes San Diego’s (nearly) year-round sunshine with the harsh winters in markets across the country, while also communicating the focus on the mission-driven companies that call this place home. More at justsaynotowinter.com.

Just Say No To Winter. from San Diego on Vimeo.

EDC is running the campaign in coordination with its Inclusive Growth initiative, which seeks to find employer-driven strategies to build a stronger local talent pipeline, help small businesses compete and address affordability issues in San Diego.

Ad on Boston T (red and orange lines)

January 24, 2019

As part of EDC's Inclusive Growth initiative, we're gathering best practices to help uncover unique approaches to inclusion that can be replicated or scaled locally - including actions from employers and regions outside of San Diego. We hope that sharing these best practices will help inspire San Diego companies/organizations to take on their own. Read The New York Times article below to learn how Microsoft is contributing to affordable housing in the Seattle area:

SEATTLE — The Seattle area, home to both Microsoft and Amazon, is a potent symbol of the affordable housing crisis that has followed the explosive growth of tech hubs. Now Microsoft, arguing that the industry has an interest and responsibility to help people left behind in communities transformed by the boom, is putting up $500 million to help address the problem.

Microsoft’s money represents the most ambitious effort by a tech company to directly address the inequality that has spread in areas where the industry is concentrated, particularly on the West Coast. It will fund construction for homes affordable not only to the company’s own non-tech workers, but also for teachers, firefighters and other middle- and low-income residents.

Microsoft’s move comes less than a year after Amazon successfully pushed to block a new tax in Seattle that would have made large businesses pay a per-employee tax to fund homeless services and the construction of affordable housing. The company said the tax created a disincentive to create jobs. Microsoft, which is based in nearby Redmond, Wash., and has few employees who work in the city, did not take a position on the tax.

The debate about the rapid growth of the tech industry and the inequality that often follows has spilled across the country, particularly as Amazon, with billions of taxpayer subsidies, announced plans to build major campuses in Long Island City, Queens, and Arlington, Va., that would employ a total of at least 50,000 people. In New York, elected officials and residents have raised concerns that Amazon has not made commitments to support affordable housing.

Microsoft has been at the vanguard of warning about the potential negative effects of technology, like privacy or the unintended consequences of artificial intelligence. Executives hope the housing efforts will spur other companies to follow its lead.

“We believe everybody has a role to play, and everybody needs to play their role,” said Brad Smith, Microsoft’s president and chief legal officer.

The company’s strong finances, a sign of its resurgence under Satya Nadella as chief executive, have given it resources to deploy, Mr. Smith said. In October, the company reported net income of $8.8 billion in its most recent quarter, up 34 percent, and it had almost $136 billion in cash and short-term investments on its balance sheet. The company’s stock has risen steadily under Mr. Nadella, and Microsoft is now valued at over $800 billion.

A number of other tech businesses have tried to address the homeless crisis. Amazon’s chief executive, Jeff Bezos, has supported homeless service providers through his personal foundation, and the Salesforce chief executive, Marc Benioff, helped fund a proposition in San Francisco to tax businesses to pay for homeless services. Voters approved the tax in November, rejecting opposition from some tech leaders, including Twitter’s chief executive, Jack Dorsey.

Others plan to build housing for their own employees. Such housing may help with demand, but it has also reinforced the impression that the companies are focused too closely on their own backyards.

“This is long-range thinking by a company that has been around for a long time, and plans to be around for a long time,” said Margaret O’Mara, a professor at the University of Washington who studies the history of tech companies.

Microsoft began researching the region’s housing last summer, after the nasty tax fight in Seattle and around a peak of the housing market. The company analyzed data and hired a consultant to decide how to focus its work. The area’s home prices have almost doubled in the past eight years, and Mr. Smith said he learned that “the region has counterintuitively done less to build middle-income housing than low-income housing, especially in the suburbs.”

That squeeze hits a range of workers. “Of course, we have lots of software engineers, but the reality is that a lot of people work for Microsoft. Cafeteria workers, shuttle drivers,” Mr. Nadella said this week at a meeting with editors at the company’s headquarters. “It is a supply problem, a market failure.”

Microsoft plans to lend $225 million at subsidized rates to preserve and build middle-income housing in six cities near its Redmond headquarters. It will put an additional $250 million into low-income housing across the region. Some of those loans may be made through the federal programs that provide tax breaks for low-income housing.

The company plans to invest the money within three years, and expects most of it to go to Seattle’s suburbs.

The loans could go to private or nonprofit developers, or to governmental groups like the King County Housing Authority. As the loans are repaid, Mr. Smith said, Microsoft plans to lend the money out again to support additional projects.

The remaining $25 million will be grants to local organizations that work with the homeless, including legal aid for people fighting eviction. The Seattle Times reported Wednesday that if the $500 million were put into one project, it would create only about 1,000 units, so instead Microsoft will most likely put smaller amounts in many projects to help build “tens of thousands of units.”

The initial reaction to the company’s announcement was positive.

“There is almost no level of housing that isn’t direly needed,” said Claudia Balducci, a member of the King County Council who helps lead the Regional Affordable Housing Task Force.

report in December by the task force said that the region needs 156,000 more affordable housing units, and will need 88,000 more units by 2040 to accommodate future growth.

A growing body of research has tied the lack of affordable housing to increasing homelessness. A December study from the real estate website Zillow said that was particularly true when households pay more than a third of their income in rent. The New York, Boston, Los Angeles, San Francisco and Seattle regions — the country’s largest tech hubs — have all already crossed that threshold.

“The idea that you can live in your bubble and put your fingers in your ears just doesn’t work anymore,” said Steve Schwartz, head of public affairs at Tableau Software, which is based in Seattle.

Amazon in recent years has worked closely with Mary’s Place, a homeless shelter for women and children in Seattle, and is integrating a shelter for about 65 families into one of its new buildings. Amazon has paid tens of millions of dollars to the city’s affordable housing trust fund as fees to build in the core of Seattle.

Amazon declined to comment.

Google supported the City of Mountain View’s plan to add 10,000 housing units in an area it’s developing, with 20 percent designated for lower-income residents. And Facebook has planned to build 1,500 apartments near its Menlo Park headquarters, with 15 percent to be affordable.

Microsoft has begun a major overhaul of its main campus in Redmond, committing billions of dollars in renovations and connecting it to a light rail station under construction. The company helped finance a successful campaign for voters to approve more property taxes to pay for transportation. This new investment in housing takes its commitments a step further.

“This is where Microsoft is going to be, and the region needs to work,” Ms. Balducci said. “I don’t think this is wholly altruism.”

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.