Tag: Inclusive Growth

2019 in Review: Top 10 wins for EDC

By San Diego Regional EDC,

With and through our nearly 200 investors, EDC works to maximize San Diego’s economic prosperity and global competitiveness. This year, we helped companies grow, looked to new corners of our community for high-quality talent, and developed programs and initiatives to create a stronger region.

Through it all, EDC impacted 5,228 jobs and worked on 179 projects – supported by companies, investors, community partners, and more – on behalf of San Diego’s economy. While our work spans multiple industries and organizations, with various programs and goals, there’s an universal thread that ties it all together: build a more inclusive economy that benefits all San Diegans.

As we close out 2019 and another successful decade, let us recap our top 10 wins for San Diego…

  1. San Diego: Life. Changing.’s Just Say No to Winter campaign received national attention

Going into its fourth year, SD: Life. Changing. is our award-winning campaign that aims to attract and retain talent for our region. We kicked off 2019 with Just Say No to Winter, a transit and social media campaign that targeted STEM talent in Boston, Chicago, and New York during the peak of winter with information about career opportunities in San Diego. Thanks to this go-viral marketing push – and coverage in The New York Times, the nationally-syndicated program “The List,” and more – we saw 34X the ROI, 2.6 million social media impressions, and 36K video views.

  1. EDC received its largest grant in history, catalyzing Advancing San Diego

San Diego was one of five cities to receive a $3 million investment as part of JPMorgan Chase’s AdvancingCities Challenge, an initiative to drive inclusive growth and create greater economic opportunity across the U.S. This funding allowed EDC to form Advancing San Diego, which aims to cultivate a more inclusive economy by addressing regional talent shortages and strengthening relationships between businesses and education systems. The newly minted program is now contributing toward our Inclusive Growth regional goal of 20,000 skilled workers (degree or credential holders) in San Diego County by 2030.

  1. World Trade Center SD’s MetroConnect export assistance program had its best year yet

Made possible through a grant from JPMorgan Chase & Co., MetroConnect provides small- and medium-sized companies with the resources necessary to expand into global markets. During the 2018-19 program, companies in MetroConnect IV collectively generated a net increase of $69.6 million in export sales, signed 369 international contracts, and opened 10 new facilities overseas. Together, the 20 participating companies also created more than 100 jobs in San Diego – evidence that exporting supports the increase of jobs locally.

And, you’re in luck – Applications are now open for the 2020 cohort – MetorConnect V. Learn more and apply today (or pass it on to a business that might benefit).

  1. EDC fostered 3 regional goals for a more #inclusiveSD

While the growth of our innovation economy has created tremendous opportunity, it has also perpetuated systemic inequities. 2019 was all about elevating an inclusive economic development strategy – the lens in which EDC views all of its work – so that economic growth is seen and felt among the entire region. In order to effectively do this, EDC’s employer-led Inclusive Growth Steering Committee supported actionable recommendations and measurable targets for creating a San Diego that benefits all residents. By 2030:

Inclusive Growth goals

  1. With support from EDC, Cubic Corporation secured $8.5M in tax credits & broke ground on its new HQ

Cubic Corporation is a global company with clients on nearly every continent, yet it has called San Diego’s Kearny Mesa community home for 50 years. With assistance from EDC, Cubic secured a CalCompetes Tax Credit worth $8.5 million. This tax incentive allowed Cubic to break ground on its new San Diego HQ campus, and further reaffirm its investment to the region in the decades that follow. Here are a few words from Cubic Corporation on the support EDC provided:

“Since our founding in 1951, we have established strong roots in the San Diego community and it was very important for us to remain headquartered here. The San Diego Regional EDC was an integral resource for our redevelopment. They were able to strategically bring key partners together and secure incentives that best positioned us to redevelop our headquarters in the Kearny Mesa area.” – Anshooman Aga, executive vice president and CFO at Cubic Corporation

  1. EDC managed San Diego’s Integration Pilot Program (IPP), propelling 1,150+ successful missions

From monitoring coastal erosion to fighting wildfires, drones offer enormous social and environmental benefits. San Diego is currently one of 10 state, local, and tribal governments to participate in the Integration Pilot Program, which has allowed our region to be at the forefront of an industry that is expected to reach a $43 billion market value by 2024.

This year, the program – managed by EDC in collaboration with the City of San Diego – achieved new milestones. Giving way for Uber Eats to soon deliver burgers and Chula Vista Police Department to send first responders via drones, IPP completed 1,150+ unmanned aircraft systems (UAS) missions.

  1. EDC produced 24 reports to help residents and businesses better understand San Diego’s economy

EDC provides research and data to local companies, site selectors, and civic leaders to help them make well-informed decisions about our economy. From monthly reports (and videos) that chart key economic indictors to customized economic impact reports for companies, EDC’s research helped the regional stakeholders better understand this place we call home.

 San Diego's Economic Pulse

  1. Innovate78 amplified its reach along the 78 Corridor, convening more than 500+ individuals

With companies like Viasat, Thermo Fisher Scientific, and a plethora of award-winning craft breweries, the 78 Corridor is hub for innovation. Thanks to the region’s Innovate78 program, managed in collaboration with EDC and the cities of Carlsbad, Escondido, Oceanside, San Marcos, Vista, more than 500 stakeholders (think: entrepreneurs, high-quality talent, startups, etc.) attended events held in North San Diego County.

  1. World Trade Center San Diego strengthened ties with BMW, IBM, and Siemens during Germany Trade Mission

The introduction of non-stop San Diego-Frankfurt service aboard Lufthansa and a shift in economic power resulting from Brexit meant that Germany was becoming an increasingly important trade and investment partner for San Diego…and WTCSD wanted to be out in front of it. WTCSD pulled together more than 20 San Diego-based business and civic leaders to participate in a four day trade mission to Munich and Frankfurt, Germany.

International partnerships take time, but based on initial meetings on the trade mission, San Diego has planted the seed for long-term relationships with major companies, including BMW, IBM, Siemens, Daimler, and more.

  1. …and, finally, EDC launched a new website

With support from investors and partners, we launched a new sandiegobusiness.org. Here, you’ll find detailed information on EDC programs & initiatives, how we work with companies, as well as information about the brands we manage, including World Trade Center San Diego, SD: Life. Changing., and Innovate78. The website is designed to be viewable on any device, so San Diego is always showcasing its best self.

Laptop displaying EDC website

Here’s to our nearly 200 investors for their unwavering support in creating a prosperous San Diego for the next decade.

 

Interested in supporting our work? Join us.

Invest in EDC

 

CSUSM recognized as leader in social mobility

By Bree Burris,

4 graduates in cap in gown from CSUSM looking at the camera

Since its founding in 1989, Cal State San Marcos (CSUSM) has put its commitment to social mobility at the forefront of its educational mission. The university’s dedication to economic opportunity was recognized this week when it was named among the nation’s leaders in social mobility.

The Social Mobility Index

CSUSM ranks 36th nationally out of almost 1,500 schools measured in the sixth annual Social Mobility Index (SMI) by CollegeNET.

The SMI focuses directly on the factors that enable economic mobility. The index is computed from five variables: published tuition, percentage of students whose families have incomes below $48,000 (slightly below the U.S. median), graduation rate, median salary approximately five years after graduation, and endowment size.

“Nationally, higher education is often called out for reinforcing inequality rather than closing socioeconomic gaps,” said EDC Board Member and CSUSM President Ellen Neufeldt “However, our rising SMI ranking embodies our collective efforts to serve any student who dreams of the opportunities that come with a college education as we help them reach their full potential.”

CSUSM improved its ranking in the SMI for the fourth consecutive year. The university ranked 74th in 2015, 62nd in 2016, 54th in 2017, and 52nd last year.

How CSUSM is creating a more inclusive San Diego

As EDC looks to create a more inclusive San Diego, CSUSM and other regional educational institutions are playing a pioneering role in San Diego’s strategy. Afterall, CSUSM is a crucial part of creating a sustainable talent pipeline. Nearly 80 percent of its graduates remain in the region following graduation. In 2018, the university opened its engineering program, creating a technical talent pipeline for companies such as Viasat and emerging regional startups.

CSUSM is trying to correct systematic inequities in that are often ever-present in the educational system. More than half (54 percent) of its graduates are first-generation bachelor’s degree recipients. Additionally, nearly half of its students qualify for Federal Pell Grants. In order to support students from all backgrounds, the university offers community-based learning opportunities, internships, undergraduate research opportunities and more to ensure student success.

Help us create a more inclusive San Diego.

Learn more about EDC’s Inclusive growth work

Related EDC articles and research: 

Northrop Grumman pilots new student talent pipeline program in San Diego

By San Diego Regional EDC,

Inspired by the newly-minted Advancing San Diego initiative and the company’s involvement with EDC’s Inclusive Growth Steering Committee, Northrop Grumman Corporation launched a new talent pipeline program in San Diego that provides community college STEM students with paid, work-based learning opportunities and a pathway to qualification for careers in the aerospace and defense industries.

 

Since the program’s inception earlier this year, Northrop Grumman has partnered with MiraCosta College and Palomar College for the pilot phase of the program during the 2019-2020 school year and is exploring additional partnerships through the San Diego & Imperial Counties Community College Association (SDICCCA) for the 2020-2021 school year.

“Establishing a framework to collaborate with education systems is necessary for building a strong local talent pipeline and supports a long-term workforce planning strategy,” said Alfredo Ramirez, vice president, engineering, Northrop Grumman. “Our decision to develop a community college pilot fills a critical gap bridging K-12 and university programming, allowing us to reach and engage students in San Diego throughout their education journey.”

Check out the video below to see how Northrop Grumman’s program is building a better regional economy that benefits all San Diegans and directly supporting the goals set forth by EDC’s Inclusive Growth Steering Committee.

Looking to start your own talent pipeline program?

Learn more about advancing san diego

Will Apple’s investment help alleviate San Diego’s housing crisis?

By Bree Burris,

Recently, Apple committed $2.5 billion to combat the housing crisis in California. Apple might be headquartered in the Bay Area, but earlier this year, it announced it would be opening an office in San Diego to house 1,200 employees. So will Apple’s housing fund impact San Diego?

It might. The company has set aside a significant portion of its investment to create an affordable housing investment fund, help first-time homebuyers, support vulnerable populations, and more throughout the state.

Eduardo Velasquez, senior manager at EDC, spoke to ABC about why housing affordability matters to Apple and other regional employers.

 

Through EDC’s Inclusive Growth initiative, we are working with 20+ local employers to address San Diego’s affordability crisis and create 75,000 newly thriving households by 2030. Housing, as well as transportation and childcare costs, impact the region’s affordability.

Learn more about EDC’s Inclusive Growth work.

Future of Growth in San Diego: The Economic Case for Inclusion

By EDC Research,

Summary

The growth of San Diego’s innovation economy has made the region better educated and more prosperous than most other metros. However, this economic transformation presents new challenges for future growth. Changing skill requirements, a nationwide battle for talent, and a soaring cost of living are combining to form an unequivocal threat to our regional competitiveness. If unaddressed, San Diego will no longer be an attractive place to live and do business.

San Diego depends on a highly-educated workforce. However, talent shortages are likely to grow as demand for new skills accelerates and demographic gaps in educational attainment persist. The lack of quality jobs and a high cost of living further impact talent attraction and retention. For the region to remain competitive, an inclusive economic development strategy is needed. As part of San Diego’s Inclusive Growth Initiative, this research was produced by San Diego Regional EDC.

READ THE FULL REPORT

Leadership trip to Atlanta inspires new approaches to inclusion

By Kate Gallagher,

As a way to inspire new approaches to inclusive economic development, EDC organizes an annual leadership trip with its partners and stakeholders in a peer region facing similar challenges. This year, EDC led a delegation of more than 40 San Diegans to Atlanta, Georgia – a city with deep cultural and historical significance. After three full days of dialogue with some of Atlanta’s most progressive and impactful leaders, our group came home with three main takeaways.

1. The decisions we make today will have lasting impacts on future generations.
We started off the leadership trip the way EDC approaches everything we do: with research. We learned how Atlanta’s history of racial inequity directly impacted the way the city was developed. It affected where public transportation would run, where good schools were built, who received loans to buy a house or start new businesses, and much more. Rohit Malhotra of Center of Civic Innovation stated, “96% of people born poor in Atlanta will die poor in Atlanta.” The disparities facing Atlantans today are deeply rooted in the region’s history. And because it’s leaders are willing to take a honest look at that history, that they are able to bring about lasting change. This inspired thoughtful discussion on how San Diego’s own history has shaped the way our communities live today, and will hopefully lead to further investigation into our region’s past, so that we can create sustainable solutions for our future.

2. Transportation can either exacerbate or alleviate existing problems.
Perhaps the biggest historic factor inhibiting Atlantan’s economic prosperity is access to transportation.  Because the city was designed to separate black and white populations, many low-income areas of the region simply do not have access to good jobs and affordable housing. In reference to predicting economic and health outcomes for Atlantans, Carol Naughton of Purpose Built Communities shared that “zip code impacts more than genetic code.” To combat this, organizations like Purpose Built Communities, TransFormation Alliance, and Historic District Development Corporation formed and work together to create an infrastructure that will support healthy, sustainable, and affordable communities. Thanks to their support and a transformational vision for redevelopment by Ryan Gravel, the Atlanta BeltLine was created to connect disparate neighborhoods and is drastically changing the way people live. That kind of positive peer pressure is what is bringing about change unlike anything the city of Atlanta has ever seen before. People who were previously displaced from quality jobs and access to transportation can now walk or bike to the grocery store to buy healthy food for their families. They can walk to a quality job that pays enough to support themselves. The thoughtful collaboration between these entities shows us that this level of systems change is, in fact, possible when organizations work together to take action.

3. It’s critical for younger generations to see themselves in leadership roles.
Inside the historic International Martin Luther King Jr. Chapel at Morehouse College, we heard about the importance of talent development investments from members of the Atlanta University Center Consortium. As Spellman College President Mary Schmidt Campbell eloquently said, “when students are affirmed, they do better.” Organizations like Cristo Rey Atlanta High School, a private school for underserved students who don’t pay tuition, help students and their families with hands-on college preparation, like the college application process. Interim President Camille Naughton said, “It’s barriers like filling out a FAFSA application that keeps students out of college – not intellect or lack of desire.” Clearly, the education systems in Atlanta understand that a bright future in Atlanta largely depends on significant investment in its students today. We also heard from Brookings Institution Fellow Rodney Sampson, who co-founded the Opportunity Hub (OHUBS) to eliminate barriers for minority tech founders. Rodney believes that building an inclusive economic ecosystem starts with early exposure to innovation and socialization. He said, “When you’re exposed to innovative ecosystems, the trajectory of your ability to acquire wealth changes.” Through organizations like these, students and young entrepreneurs see that they’re worth investing in. They see themselves as a leader, who can take action and make an impact.

From hearing about innovative talent development strategies and inclusive entrepreneurial ecosystems at Morehouse College, to walking along the Atlanta BeltLine that is radically changing the connectivity of Atlantas’s neighborhoods, our group gained invaluable insights that spurred thoughtful conversations about creating a better San Diego that works for all. The transformation in Atlanta was palpable. After immersing ourselves in its rich history and hearing first-hand experiences from Atlanta’s civic, education, and business leaders, one thing is clear: our inclusive growth work in San Diego is far from over, but we’re on the right path.

Atlanta Group

This trip was made possible through generous support from Southwest Airlines and Cox Communications.

To learn more about EDC’s Inclusive Growth effort, visit inclusiveSD.org or follow along on social media at #inclusiveSD.

San Diego employers commit to addressing the region’s affordability crisis

By San Diego Regional EDC,

In an effort to address San Diego’s soaring cost of living, San Diego Regional EDC and its Inclusive Growth Steering Committee of 40 employers officially endorsed a regional goal to create 75,000 newly thriving households by 2030. Driven by the findings in EDC’s latest study release, this regional goal and accompanying set of recommendations aim to address key factors (housing, transportation, and childcare) impacting San Diego’s affordability crisis – the last of three main goals of a regional Inclusive Growth agenda.

“While San Diego’s affordability crisis impacts everyone in the region, it has a disproportionate and devastating impact on African American and Hispanic communities,” said Mark Cafferty, president and CEO, San Diego Regional EDC. “The lack of affordable housing is a significant part of the problem, but those impacted are also the same residents who are dealing with the longest commute times, childcare deficits, limited connectivity to public transportation, and other barriers that make access to high-wage, high-skilled jobs particularly more difficult and burdensome.”

ADDRESSING SAN DIEGO’S AFFORDABILITY CRISIS
In its new study, EDC found that the majority of household incomes in San Diego do not meet the region’s expected cost of living ($96,000 annually for owner-occupied households and $61,000 annually for renter-occupied households). The cost of housing – twice the average among U.S. metros – is the primary driver of the region’s growing cost of living, pushing residents further away from job centers and resulting in longer commute times and increased cost of transportation.

Additional key findings include:
• Affordability: San Diego is 47 percent more expensive than the average U.S. metro.
• Housing: Half of all homeowners do not earn enough to cover their cost of living, and nearly 60 percent of all renters fall thousands of dollars short each year.
• Transportation: The average household spends more than $14,000 on transportation and travels nearly 20,000 miles over the course of a year.
• Childcare: There are now nearly twice as many children under the age of six with working parents as there are licensed childcare spaces available.

With the fifth highest median home price, staggering commute times for its poorest residents, and substantial childcare shortages, San Diego’s high cost of living not only impacts the region’s existing workforce, but also the pipeline of future talent.

“It is becoming more challenging to recruit talent from out of the San Diego region because San Diego is not an affordable place to live.  This is especially true in higher education where many competitors for talent are in low-cost college towns,” said Thom Harpole, human resources director, San Diego State University. “Salary and benefits packages alone are not adequate to address the problem.  Affordability in San Diego must be addressed to ensure the health of our communities and the success of our organizations in delivering on their missions.”

If the region’s housing, transportation, and childcare costs continue to rise at this rate, San Diego will no longer be an attractive place to live or work. To address this affordability crisis, the Inclusive Growth Steering Committee has endorsed a regional goal of creating 75,000 newly thriving households by 2030. To meet this new regional goal, San Diego must increase the proportion of households that can afford the region’s true cost of living from 47 percent to 55 percent. This means more housing, more transportation options, and more childcare. It also means growing household incomes through the local development of skilled workers and creation of more quality jobs.

“San Diego’s cost of living significantly impacts our ability to attract and retain talent from other destinations,” said Clifford “Rip” Rippetoe, president and CEO, San Diego Convention Center Corporation. “We need to be creative to compete.  We work to make sure that all of our employees have the opportunity to thrive in San Diego.”

The Inclusive Growth Steering Committee has recommended that employers support the regional goal through the following actions:
1. Transparency – understand the impacts that lack of affordability has on existing workforce and talent pipeline.
2. Engagement – participate in public policy dialogue around infrastructure development to address the region’s affordability challenges.
3. Investment – invest in programs and projects that help ameliorate cost of living pressures on workforce.

Employers that have officially endorsed this goal and recommendations include San Diego State University, San Diego Convention Center, Booz Allen Hamilton, Cox Communications, Northrop Grumman, and more. For a complete list of employers committed to this effort, visit the new interactive web study.

EDC’S INCLUSIVE GROWTH INITIATIVE
In 2018, EDC launched a data-driven, employer-led initiative focused on promoting inclusive growth as an economic imperative. Together with its Inclusive Growth Steering Committee, EDC has set collaborative regional goals, endorsed actionable recommendations for accomplishing them, and will continue to monitor its regional progress towards building a strong local talent pipeline, equipping small businesses to compete, and addressing San Diego’s affordability crisis.

For more information about the Inclusive Growth initiative, visit inclusiveSD.org. Join the conversation at #inclusiveSD.

View the full interactive web study release: Addressing San Diego’s Affordability Crisis.

San Diego launches new initiative to look inward to address regional talent shortages

By Nickie Peña,

Advancing San Diego

In an effort to provide residents with increased access to high-demand jobs, San Diego Regional EDC launched Advancing San Diego, a $3 million local investment initiative underwritten by JPMorgan Chase. The program will align industries with economic development, workforce development and education systems.

“Talented and skilled workers are integral for a strong economy,” said Mark Cafferty, president & CEO at San Diego Regional EDC. “With and through our program partners and stakeholders, we are establishing a first-of-its-kind, employer-led initiative that will measure and aggregate workforce needs while also indentifying solutions that align and strengthen our local education systems. We need to ensure that the benefits of our region’s growing innovation economy are reaching all San Diegans.”

Advancing San Diego will establish nine working groups that are designed to give employers a collective voice about talent needs in priority industries, ranging from software and technology to marketing, healthcare and more. In the first report, 17 participating employers expressed a projected need for more than 7,200 additional software-related positions over the next three years.

The Advancing San Diego initiative
In April 2019, San Diego was one of five cities to receive a $3 million investment as part of JPMorgan Chase’s AdvancingCities Challenge, an initiative to drive inclusive growth and create greater economic opportunity across the U.S. Advancing San Diego is a collaborative program by San Diego Regional Economic Development Corporation, the City of San Diego, San Diego Workforce Partnership, United Way of San Diego, and San Diego & Imperial Counties Community College Association (SDICCCA).

As San Diego’s economy continues to expand, employers are seeing an increased demand for skilled workers. While San Diego strives to attract and retain talent, it must also look inward to build a workforce that meets demands for current and future jobs. EDC and its Inclusive Growth Steering Committee of 40 employers have endorsed a regional goal to double the number of skilled workers produced in San Diego County to 20,000 per year by 2030. This requires strong, effective learning programs offered by community colleges and other education institutions.

The goals of Advancing San Diego are to:

  • Engage employers in a structured process to collectively communicate talent needs
  • Identify education programs that are aligned with industry needs
  • Increase the pool of diverse, skilled talent in San Diego
  • Expand access to talent pipelines for small companies

“By 2020, nearly two of every three jobs in the U.S. will require a credential or degree, and currently, 90 percent of our students remain in San Diego after graduation,” said Dr. Sunita “Sunny” Cooke, superintendent & president at MiraCosta Community College District. “Community colleges play a critical role in creating a diverse talent pipeline for the region. The Advancing San Diego program willhelp connect the work occurring within local community colleges to ensure we offer innovative curricula that support employer needs and include opportunities for students to apply their learning in workplace settings so graduates are ready for employment.”

Education systems that are aligned with results set forth by the working groups will be listed as ‘preferred providers’ by Advancing San Diego. This designation rewards higher education students with priority access to work-based learning and engagement opportunities via networking events, career and internship fairs, and local company tours. To learn more and become a ‘preferred provider,’ educators are encouraged to apply at advancingSD.org.

Additionally, businesses with fewer than 100 employees make up 98 percent of San Diego firms, and on average, are challenged to compete with larger employer wages. As part of EDC’s inclusive growth strategy, more than 35 employers (and counting) have endorsed a regional goal to create 50,000 new quality jobs within small businesses by 2030. To further engage small businesses, nearly half of the funding for Advancing San Diego will be used to subsidize internships within small businesses and offer additional services that support student success in the workplace.

“Start-ups like LunaPBC are rich with mission, purpose, and the opportunity for personal and professional growth,” said Dawn Barry, co-founder & president at LunaPBC. “Unlike large employers, startups are often lower on salary, but offer exciting equity and the opportunity to experience first-hand what it’s like to build an enterprise. When large employers work together with smaller employers, and pursue partnerships with incubators and accelerators, higher education and regional development teams, we strengthen our collective visiblity as a region for career development.”

Report: Demand for Software Talent and Criteria for ‘Preferred Providers’
Working group members were asked to provide hiring projections along with skills and competency requirements for critical jobs, in order to identify programs that align with industry needs. Collectively, these results were compiled into the Demand for Software Talent Report and will create a criteria for ‘preferred providers’ of software – a designation by employers that demonstrates an education program is providing adequate training for software engineers.

Companies that contributed to this report represent industries with the highest proportion of software talent in San Diego, including tech, life sciences, healthcare and defense. Based on the participation of 17 employers who collectively employ approximately 53,000 people and share a need for software talent, this report indicates the working group is projected to hire more than 7,220 additional software professionals over three years.

Additional key findings include:

  • Software engineers accounted for the highest future hiring demand among all software occupations in working group companies, making up 53 percent of total projections
  • Entry-level software engineers represent the highest hiring need of any position at any level
  • Collectively, the working group projects they will hire more than 1,700 entry-level software engineers over the next three years
  • Approximately 44 percent of working group employers require a bachelors degree for entry-level software engineers

Through the Advancing San Diego collaboration, San Diego strives to cultivate a more inclusive economy, as this initiative will look inward to address regional talent shortages and strengthen the relationship between employers and education systems.

For more information about the new Advancing San Diego initiative, future working groups, or to be listed as a ‘preferred provider, visit advancingSD.org. Follow along and join the conversation at #advancingSD.

View the full interactive web report—“San Diego’s Demand for Software Talent Report”—here.

Inclusive Growth Best Practices: Microsoft pledges $500M for affordable housing

By San Diego Regional EDC,

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.

A 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.”

Leadership trip to Indy spotlights best practices in inclusion

By San Diego Regional EDC,

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.