Study: San Diego’s Life Sciences cluster in the early stages of AI-ML boom

EDC study quantifies the impact of AI in region’s Life Sciences cluster

Today alongside underwriter Booz Allen Hamilton, San Diego Regional EDC released the fourth study in a series on the proliferation of Artificial Intelligence and Machine Learning (AI-ML) within San Diego County’s key economic clusters. “Diagnosing the Future: AI and San Diego’s Life Sciences Cluster” quantifies the economic impact of the region’s Life Sciences cluster and explores the proliferation of AI and ML technologies being used to diagnose disease and develop drugs, among other lifesaving products and solutions.

While the pandemic devastated many sectors of our economy, the Life Sciences cluster experienced a striking 11.2 percent job growth (51 percent over the last decade). The cluster boasts a $27 billion annual economic impact, with 1,800 Life Sciences firms employing more than 61,000 San Diegans—nearly three times as many Life Sciences jobs as the national average. Taking advantage of the region’s innovation ecosystem, San Diego’s Life Sciences cluster has increasingly integrated software and technology to maximize its impact, save time, and reduce costs.

Underwritten by Booz Allen Hamilton, the web-based study—lifesciences.sandiegoAI.org—includes company case studies on local use of AI-ML, San Diego’s standing relative to peer metros in AI-ML integration, a timeline on the history of Life Sciences in San Diego, and the business case for economic inclusion within the cluster, among other assessment.

“This series serves to spotlight the importance of AI-ML application within the region’s key industries, helping drive productivity, job growth, and scientific innovation here and around the globe. With so many Life Sciences companies yet to fully tap into AI-ML, the impact we are already seeing in San Diego is just beginning,” said Mark Cafferty, president and CEO, EDC. “As always, EDC is committed to helping these firms thrive, creating more quality jobs for San Diegans.”

KEY FINDINGS

  • San Diego is a top Life Sciences growth market among AI-ML peer metros. The region has nearly three times as many Life Sciences jobs as the national average and commanded more than 13 percent of domestic venture funding into the industry in 2021.
  • San Diego’s Life Sciences companies are in the early stages of AI-ML adoption, paving way for exponential impact. While several San Diego Life Sciences subindustries have leveraged AI-ML technology in significant ways, just 18 percent of local firms are engaging with AI-ML.
  • San Diego Life Sciences companies have an outsized appetite for AI-ML talent but lag peer metros in accessibility and compensation. Local Life Sciences employers’ hiring for AI-ML talent largely demand post-secondary education but offer relatively low advertised compensation as compared to peer metros, which hinders the ability to compete for talent.
  • San Diego’s AI-ML talent pool is active and growing. The region already has a strong and growing supply of more than 15,000 AI-ML professionals across all industries. Rising degree completions in interdisciplinary fields, alongside new programs dedicated to producing AI-ML talent promise to deepen the talent pool.

“Whether for venture capital investment, jobs, talent, or innovation, San Diego is an undeniable leader in Life Sciences—changing the way patients around the world experience healthcare,” said Jennie Brooks, Senior Vice President at Booz Allen Hamilton—board chair and underwriter of the EDC study series—and leader of the firm’s 1,200+ person San Diego office. “For less time and money, the integration of AI-ML can help firms further accelerate scientific discovery, but we need the talent to make it happen. While the Life Sciences proved resilient amid the pandemic, talent gaps are pervasive—with pay and access as the primary threats to our economic competitiveness.”

Life Sciences is an integral and rapidly growing piece of the San Diego regional economy. In 2021 alone, San Diego Life Sciences companies pulled in 13.1 percent of the $38.6 billion invested into Life Sciences nationwide. Supporting this growth, San Diego ranks fourth (4,300 in 2020) in Life Sciences degree completions among peer metros. Future and ongoing investment in Life Sciences companies and talent—most especially around compensation and accessibility—will ensure the longevity of this high impact industry and support its ability to compete.

“Our Informatics and Predictive Sciences team in San Diego is deploying AI-ML to accelerate the drug discovery process. These approaches benefit virtually every aspect of drug discovery from accelerating the rate at which our chemistry teams can optimize compounds, to allowing us to better predict which patient populations are most likely to benefit from a novel medicine. The objective is to enable BMS to bring successful and safe medications to patients faster by leveraging AI-ML,” said Neil Bence, Ph.D., Vice President of Oncology Discovery and San Diego Site Head, Bristol Myers Squibb

The study series is underwritten by Booz Allen Hamilton and produced by San Diego Regional EDC.  Learn more about EDC’s research here.

FULL STUDY AT LIFESCIENCES.SANDIEGOAI.ORG

Read the full AI series

Building the future: Manufacturing Month 2022

Blog brought to you by our friends at Walmart.

Manufacturing Month is a time to celebrate the industry’s impact and to inspire the next generation of skilled workers to grow their careers in modern manufacturing. With its highly-skilled workforce, robust training programs, and close proximity to Mexico, San Diego is a hub for advanced manufacturing, with nearly 3,583 firms currently supporting more than 114,000 jobs across the region.

Manufacturing in San Diego

By 2023, the U.S. will need to fill four million manufacturing jobs—a demand San Diego is particularly well-positioned to help meet. Between 2017 and 2021, San Diego’s manufacturing employment grew 5.5 percent compared to a nation-wide decrease of 0.9 percent. Even California experienced a net loss of overall manufacturing jobs during that same period (-2.0 percent).

The industry’s continued growth through the pandemic is driven by the resilient and advanced nature of San Diego’s manufacturing base, which uses innovative technology to improve products or processes. From craft beer to virtual reality technology, to shipbuilding and life-saving pharmaceuticals, manufacturing has long been a pillar of the region’s economy, with impact spanning far beyond San Diego.

Find manufacturing talent and jobs

Looking to build your manufacturing team? Advancing San Diego’s Preferred Providers of manufacturing talent is a great place to start. Preferred Providers are vetted education programs recognized by employers as delivering top-quality training for high-demand jobs across San Diego. Contact the Advancing San Diego team to get connected.

For seasoned manufacturing professionals looking for new opportunities, visit San Diego: Life. Changing.’s job board to explore open roles at some of San Diego’s top employers. And, sign up to receive some of San Diego’s coolest jobs delivered to you monthly through its newsletter, The Lead.

Grow your company

California’s Manufacturing Network (CMN), formed and led by CMTC, provides services exclusively to small and medium-sized manufacturers (SMMs) throughout California. The Network is a collaboration of more than 25 manufacturing-focused partners that deliver a broad range of technical assistance services to SMMs in both urban and rural areas. The Network’s mission is to generate a positive financial impact for manufacturers and the California economy.

Receive free to low-cost services through CMTC including supplier scouting services, accelerator programs, and general assistance.

Plus, contact the EDC team to get connected to the resources you need to thrive in San Diego, from strategic partnerships, to site expansion and selection services.

Data collected from Lightcast 2022 unless otherwise cited.

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Resources for recruiting and retaining talent in San Diego

Last edited November 2022

As of May 2022, there were 75,630 unique jobs posted in San Diego County, but only 42,100 unemployed San Diegans. Couple this talent shortage with unrealistic demands around compensation, benefits, and remote work, it’s fair to say we are living the most competitive battle for talent yet.

To meet employer demand, our region needs to double the number of post-secondary degree, certificate, or program completions per year. In particular, investing in Black and Hispanic youth would turn San Diego’s talent shortage into a surplus. More on Inclusive Growth here.

As part of our ongoing talent development efforts, EDC has compiled an ongoing hub of programs and initiatives below to help you fill your high-demand San Diego roles. Sign up for the talent newsletter for ongoing opportunities to participate in the development of our talent pipeline.

HIRE TALENT

SELL SAN DIEGO

UPSKILL EXISTING TALENT

BUILD YOUR PIPELINE

For more support, contact:

Taylor Dunne
Taylor Dunne

Sr. Manager, Talent Initiatives

Advancing San Diego, employers identify highest regional talent needs

Now in its sixth round, Advancing San Diego (ASD) addresses skilled talent shortages and increases diversity in high-growth, high-demand jobs. A program of EDC and key community partners, ASD leads employer collaboratives that recognize local training programs most effectively preparing San Diegans for quality jobs; pairing students of those programs with local employers for paid internships; and strengthening community partnerships to power San Diego’s talent pipeline of tomorrow. 

To help students build meaningful careers in local, high-demand jobs in key industries, ASD welcomed its Business and Manufacturing cohorts this year, pairing 48 student interns with 25 small companies, of which 19 were woman-, person of color-, veteran-, or disabled-owned. All of the 48 student interns were considered priority students, meaning they identified with a historically under-resourced population, are a first generation or community college student, or currently live or went to high school in a low income neighborhood of San Diego. 

ASD is currently convening employers from the Healthcare industry and has recognized seven programs as Preferred Providers for their work in training Medical Assistants. Students from those programs will be placed in internships beginning in early 2022. See the full network of Preferred Providers here

Advancing San Diego by the numbers, 2021

48

student interns placed

25

small companies paired with high-demand talent

99

job applications submitted on Career Exploration Day

A core part of this work includes direct collaboration with industry. ASD convened six working groups made up of industry leaders from San Diego companies including Northrop Grumman, Rady Children’s Hospital, and Takeda, among others, who together shared the most-needed roles in their firms by sector. Each of their findings were summarized in the talent demand reports below:

These reports serve to inform curriculum for universities and education programs to develop our regional talent pipeline.

Learn more and get involved here, or contact us!

Taylor Dunne
Taylor Dunne

Sr. Manager, Talent Initiatives


Study: AI helps catalyze 10% employment growth in San Diego Transportation cluster through the pandemic

San Diego Regional EDC study quantifies the impact of AI in region’s Transportation cluster

Today, alongside Booz Allen Hamilton, San Diego Regional EDC released the third study in a series on the proliferation of Artificial Intelligence (AI) and Machine Learning (ML) within San Diego County’s key economic clusters. “Mobilizing the Future: AI and San Diego’s Transportation Cluster” quantifies the economic impact of the region’s Transportation cluster and explores how AI and ML technologies have helped position San Diego as a global trade hub.

While people begin to get more comfortable with the notion of autonomous-driving cars, San Diego is deploying AI and ML in Transportation even beyond consumer use. One in three Transportation and related Manufacturing companies in San Diego are either developing or adopting AI and ML technologies, thus achieving levels of precision and accuracy otherwise unattainable by humans. This is measurably higher than the average engagement rate of 25 percent across all industries.

Local startups like Airspace and Boxton are enabling the shipment of goods in the quickest, most cost effective way; large firms Lytx® and TuSimple are improving safety in transportation; established brands Cubic and SANDAG are streamlining travel and commutes for individuals; and defense contractors BAE Systems and General Dynamics NASSCO are mobilizing troops and supplies to drive mission success and safety.

Underwritten by Booz Allen Hamilton, the web-based study—transportation.sandiegoAI.org—includes video case studies on local Transportation companies, details on the $11 billion economic impact of the Transportation cluster including interactive data visuals, and demonstrates overall how the region’s rapid adoption of AI in Transportation has helped propel San Diego into the global magnet it is today.

“San Diego is home to some of the most innovative and influential Transportation technology companies in the world. The rapid development and adoption of AI in Transportation has uniquely positioned the region as a leader in solving global challenges such as climate change and supply chain disruptions brought about by the pandemic,” said Eduardo Velasquez, Research Director at San Diego Regional EDC.

KEY FINDINGS

  • San Diego’s Transportation cluster is big and growing. The cluster supports more than 90,000 local jobs and contributes $11 billion to the regional economy each year. Despite the pandemic, employment in the cluster has increased 10 percent during the last five years.
  • AI and ML in transportation is much more than just autonomous vehicles. Local developers are creating AI- and ML-based solutions to optimize shipping routes, automate and secure mass-transit fare collection systems, improve safety on roadways, and achieve extreme precision in the manufacturing of ships and aircraft.
  • The Transportation cluster drives global connectivity and competitiveness. These innovations bring enormous economic benefit to the region, including advanced manufacturing jobs, while propelling San Diego’s role in the global marketplace.

“It is important to remember that transportation in San Diego includes not only our personal vehicles, but also a globally connected market supported by an international border crossing, a shipping port, and an international airport,” said Joe Rohner, Director of Artificial Intelligence at Booz Allen Hamilton and leader of the firm’s West Coast AI business. “The study series continues to illustrate how the implementation of AI and ML technologies across diverse industries is perpetuating San Diego’s leadership in tackling global challenges. Booz Allen is ready to engage with our region’s leaders and industry partners to support this work.” Booz Allen employs approximately 1,400 professionals in San Diego, working on cybersecurity, analytics, engineering, and IT modernization.

Transportation is a key and rapidly growing piece of the San Diego regional economy. While employment in all other sectors contracted 2.3 percent since 2016, Transportation employment saw 10 percent growth even amid the coronavirus pandemic. This includes Transportation Manufacturing, Logistics and Freight, Passenger Transportation including Mass Transit, and Other Transportation Services. Importantly, each Transportation job creates another job in other local industries; this means 4,000 more jobs have been created elsewhere in the economy due to Transportation’s 10 percent growth over the last five years.

“At Lytx, we combine video telematics with machine vision (MV), AI, and driving data to help solve the transportation industry’s most critical problems, like distracted driving. We pioneered the use of MV + AI in fleet management solutions, and we firmly believe in this powerful technology’s ability to empower drivers, protect fleets, and create safer roadways—in San Diego and around the world,” said Rajesh Rudraradhya, Chief Technology Officer at Lytx. “The latest report in the series by EDC reinforces the importance of implementing advanced technologies such as AI and the increasing need for companies like ours to continue to innovate and improve outcomes in this space; doing so fuels regional growth while also increasing driver safety.”

With this growth, and a unique convergence of public and private entities, among other factors, San Diego’s Transportation cluster is leading in the global fight against climate change and supply chain disruption.

The study series is underwritten by Booz Allen Hamilton and produced by San Diego Regional EDC. This report was sponsored by Northrop Grumman and Lytx.

Read the full study at transportation.sandiegoAI.org

Read the full AI series

What we learned at Career Exploration Day 2021

San Diego’s economy, made up of innovative companies doing life-changing work, is fueled by skilled talent. Each job in the innovation economy supports another two jobs in the region, allowing for San Diego’s rapid economic growth despite a global pandemic. However, future growth is threatened by barriers to quality employment that many San Diegans face. Changing skill requirements, existing demographic gaps in educational attainment, and a nationwide battle for talent, coupled with a soaring cost of living, continue to threaten San Diego’s competitiveness as a region.

As we work to get San Diego’s recovery right and build a more equitable, inclusive region, EDC’s Advancing San Diego (ASD) program aims to better prepare San Diegans for quality jobs, and expand access to diverse, qualified talent for San Diego companies. As part of this work, ASD hosted its second annual Career Exploration Day and Virtual Career Fair. Sponsored by Qualcomm Incorporated, the virtual event served to connect students from all over San Diego County, who are enrolled in employer-verified training programs, with opportunities across a diverse range of industries and professions. Via an online platform, ASD connected nearly 100 local students with 22 companies including startups Smartville and Flock Freight, established firms Booz Allen Hamilton and San Diego Gas & Electric, and many more. In the day-long event, students and employers had the opportunity to network and interview, share job opportunities, and listen in on career exploration panels with professionals in high-demand roles and industries.

“At Qualcomm, we’re looking to expand our recruitment of diverse talent while cultivating new opportunities to hire locally”, said Heather Ace, Chief Human Resources Officer at Qualcomm Incorporated. “Career Exploration Day offers us the opportunity to both connect with potential local candidates and support the broader talent development efforts being driven by the EDC here in San Diego.”

ICYMI, we’ve compiled for advice for students from the event

1. Be a chameleon; learn to adapt:

COVID-19 has made one thing clear: Your plans may change. Different externalities will force you to change your strategies and the way you work. Take this opportunity to learn to be adaptable; this will help you be successful into the future.

As Sharp Healthcare’s Talent Acquisition Specialist Jason Pijapaert shared in the Healthcare and Life Sciences panel, “Being able to roll with the punches and having the ability to work collaboratively with a diverse group of people that have different mindsets, expertise, and opinions is vital in any workplace. Being adaptable to your environment and the different challenges that you will inevitably be presented with will allow you to grow and be better at what you do.”

2. Consider opportunities to say “Yes”:

Now, we’re not talking about taking on unimaginable workloads or saying yes beyond your boundaries. Instead, we mean saying yes to new opportunities, yes to learning new things, yes to working with a different team, yes to taking risks.

Lalitta Ghandikota, Senior Director of Talent at Element Biosciences, shared in the Healthcare and Life Sciences panel the key to her success has been saying yes to every opportunity. In the beginning, it may seem like you know nothing about what you just got yourself into, but those will be the times when you will have the most fun growing and learning. “I always say that the time in your career where you are having the most fun is also probably when you are most terrified,” she said.

3. Take time to learn: 

With millions of websites and video tutorials available, taking the time to learn a new skill or improve an existing one will give you an important advantage when looking for a job or an internship.

Dr. Michael Alston, Senior Staff Engineer at Qualcomm Technologies, Inc., says our most valuable employees innovate in ways that increase the productivity of other employees or create new products or services. On the Engineering and Manufacturing panel, he shared, “for students, websites like code.org (which teaches computational thinking), and Python.org (a versatile, widely-used coding language) are great platforms for building skills useful for innovation.”

4. Don’t forget about soft skills:

While hard skills like coding or data mining are crucial for certain roles, leveraging your soft skills can help you stand out. The ability to manage your time effectively, think critically about a problem, absorb constructive criticism, communicate effectively both internally and externally, and collaborate across teams is just as valuable as knowing a particular programming language.

Regardless of your industry or position, you’ll always need to work effectively with people of different backgrounds and skills to get a project done well. Leverage these skills when you’re speaking with recruiters to showcase a different facet of professional strength.

What now?

  • Interested in careers in key industry sectors? Visit ASD’s Preferred Provider Map where you can find leading training programs that have been certified by employers.
    • Looking to join our network of Preferred Providers? Sign up to get updates on ASD’s future talent pipeline management work.
  • Looking for skilled local talent? Contact Taylor Dunne, Talent Initiatives Manager, and we will help you get in touch with San Diego’s skilled talent pool.
  • Check out jobs at Qualcomm and many other local firms hiring across San Diego.
  • Learn more at AdvancingSD.org

8 reasons we love things #MadeInSD

San Diego is home to a vibrant manufacturing cluster that spans many industries, including defense, shipbuilding, medical devices, cleantech, craft brewing, and sports and active lifestyle. And thanks to a highly-skilled workforce, robust training programs, and close proximity to Mexico, the San Diego region boasts nearly 3,150 manufacturing companies currently supporting more than 108,000 jobs. More on the industry here.

In celebration of National Manufacturing Day 2021, here are just a few reasons everyone can benefit from the goods/services made in San Diego:

1. To up our sports game

Skateboarding, surfing, biking, golfing…you can do it all with San Diego’s best sports tech.

Check out: Solid Surfboards, Xterra Skate, Juiced Bikes, ElliptiGO, Callaway GolfTaylorMade Golf

2. To set trends

It’s easy to support San Diego manufacturing and set trends, with companies like Nixon, Pura Vida, and Knockaround designing fashion-forward accessories.

Check out: Nixon, Blenders, Knockaround, Allett, Pura Vida

3. To enjoy the outdoors

It’s hard not to spend time outdoors when you live in year-round sunshine. Luckily, San Diego companies have you covered, whether you need to capture your adventures on camera or protect your skin for a day in the sun.

Check out: GoPro, CoolaSun BumAmavara Skincare, Lotus Sustainables

4. To improve our homes

One product, dozens of uses… San Diego manufacturers like WD-40 and Dr. Bronner’s are big believers in efficiency when it comes to household products.

Check out: WD-40Dr. Bronner’s

5. To make music

San Diego manufacturing is music to our ears with beautifully crafted guitars and banjos made right here in our own backyard.

Check out: Taylor Guitars, Deering Banjos

6. To help planet Earth

With San Diego’s proximity to beautiful beaches, mountains, and parks, our companies know how important it is to care for our planet through thoughtful sustainable products.

Check out: Lotus Sustainables, Verity Case

7. To taste something delicious

San Diego knows how to deliver on taste, whether you’re in the mood for craft beer or something sweet. Though North County leads the way with its many breweries and Bitchin’ Sauce, there are plenty of treats to go around no matter where you are in the region.

Check out: Stone Brewing, Bitchin’ Sauce, Suja Juice, White Labs, Modern Times, GelatoLove, Maya’s Cookies, The Mulk

8. To make the world a healthier place

From research to medical device manufacturing, San Diego is a thriving hub for biotech in all its forms. Device companies like BD and Illumina are leading the way when it comes to both preventative health and effective care.

Check out: BDIllumina, DermTech, NuVasive, Thermo Fisher Scientific, Dexcom

More on manufacturing:

Does your San Diego manufacturing company need help finding resources, or just want to know more about San Diego’s thriving manufacturing scene? Click here to learn more, and get in touch with EDC for custom help

More on MFG Day 2021

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San Diego’s Changing Business Landscape: Companies struggle to keep up with resurgent growth

Welcome to the fourth edition in EDC’s Changing Business Landscape Series, which will be published bi-monthly in the San Diego Business Journal and here on our blog. If you missed them, check out the March, May, and July editions.

Surveying the changing business landscape in San Diego

The COVID-19 pandemic has impacted every facet of life, including how businesses operate. Companies in every industry are rapidly re-evaluating how they do business, changing the way they interact with customers, manage supply chains and where their employees are physically located. This has massive immediate and long-term implications for San Diego’s workforce and job composition, as well as regional land use decisions and infrastructure investment.

To identify evolving trends in local business needs and operations, ensuring their ability to grow and thrive in the region, San Diego Regional EDC is surveying nearly 200 companies in the region’s key industries on a rolling basis throughout 2021 to monitor and report shifts in their priorities and strategies. In addition, EDC constructed the San Diego Business Recovery Index (BRI)—a sentiment index to measure companies’ perceptions of current conditions, as well as expectations for the future across several factors such as business development, employment, and commercial real estate needs. (An index value >50 reflects expansion, and a value <50 reflects contraction. More information on the index and how it is calculated is available here.)

These insights will help inform long-term economic development priorities around talent recruitment and retention, quality job creation and infrastructure development. Companies are surveyed on several topics, with varying emphases in each wave.

Here are three key findings from the fourth wave of surveying conducted in August 2021:

  1. Life Sciences companies struggle to keep pace. Employers reported higher earnings and headcount but also increased difficulty attracting and retaining talent
  1. Supply chain disruptions hurt business development. The more profound impact of prolonged supply chain issues may be on San Diego business operations not local consumers.
  1. Remote work is driving companies to scale down office space. Life Sciences and Manufacturing are the exception, where rising sales and increased staffing will require companies to add space.

The BRI slid 8.4 points in August to settle at 55.3 after coming in at a solid 63.7 in June. August’s read suggests that the recovery could be slowing and reflects deteriorating views of present business conditions and slightly less upbeat expectations for the next six to 12 months.

All but two subindex values declined in August. The renewed challenges faced by businesses led many to temper their future expectations somewhat, though the expectations subindex remained comfortably in expansionary territory at 61.8. While companies still anticipate an improving local economy over the next six to 12 months, the economic expectations subindex for six months out fell 16.4 points from 83.2 in June to 66.8 in August. Meanwhile, the subindex for economic conditions 12 months out fell 15.3 points from an exuberant 92.0 to a more measured but still optimistic value of 76.7.

Life Sciences companies struggle to keep pace

Employers surveyed reported an acceleration in hiring; the first time the employment subindex moved into expansionary territory. While this is welcome news, employers also reported increased difficulty hiring new workers. Though much attention has been given to the suggestion that extended unemployment benefits are keeping the unemployed from returning to work, the data doesn’t seem to support it. In fact, many of the pre-pandemic hiring trends have persisted and the industries having the hardest time filling jobs are those that are high-skill and high-paying. There were more than 118,000 unique job postings across the region during the month of August. The top job posting industries fall into the Tech and Life Sciences clusters and the most posted occupation was Software Developer (yet again).

San Diego Life Sciences companies have been struggling to add talent fast enough. These companies have been at the forefront of developing treatments and producing medical devices aimed at combatting COVID-19. As such, they have grown rapidly, drawing more than $9 billion in venture capital funding since the pandemic began. While Life Sciences companies reported higher revenues, earnings and employment relative to before the pandemic began, they also report the greatest difficulties filling new positions, keeping their highly in-demand talent from competitors, and dealing with suppliers and vendors. Despite these challenges, most have great expectations for the year ahead, with plans for increasing staff, their physical footprint and remote work capabilities.

Supply chain disruptions hurt business development

One of the longest lasting impacts of the pandemic has been on global supply chains. Companies across the country remain light on inventory even as demand for goods from furniture and clothing to recreational goods and electric bicycles has jumped. In San Diego, consumer spending is now up 11 percent compared to February 2020 before any COVID-related shutdowns began. Many consumer goods are manufactured overseas, and as the Delta variant has spread in many parts of Asia, production has slowed or even halted. While supply chain disruptions may be affecting what San Diegans can buy and the prices they will pay, the more profound impact may be in what San Diego companies can sell and to whom.

Across all industries, San Diego companies noted continuing difficulties with managing suppliers and vendors. From Aerospace and Manufacturing to Software and Life Sciences, supply chain struggles have become more disruptive throughout the summer months. Upstream labor shortages have reduced production, port and travel delays led to late or canceled shipments, and the unavailability of microchips and plastics prevented companies from delivering finished goods and even services. This may help explain that while revenues and earnings are up, new business development is becoming increasingly difficult for companies surveyed, with the subsegment BRI falling sharply into contractionary territory of 36.1 in August from 51.7 in June.

These delays and disruptions not only hurt the companies that depend on raw materials and intermediate goods, they also directly impact the more than 54,000 people employed in San Diego’s Transportation and Logistics value chain. Furthermore, supply chain disruptions to San Diego companies hinders their ability to serve customers across the world. San Diego is a top 10 services-exporting metro, specializing in Professional, Scientific, and Technical Services like Research and Development (R&D), Cybersecurity, Engineering, and Software. These industries have massive impacts on the local economy with each 100 direct jobs supporting 200 more elsewhere in the region.

Remote work is driving companies to scale down office space

After more than 18 months of remote work, with multiple fits and starts to get back into the office, many companies are coming to terms with some form of permanent remote work for their staff. The high levels of efficiency gains reported in the June survey has since subsided but remain net positive and strongly so. Employers are not necessarily looking to further expand their remote work capabilities or adopt new technologies for remote work, but many report a high desire among their workforce to maintain remote work options. Several reports from across the country and industry show that workers are primarily interested in flexible work arrangements that allow them to go into the office as needed while being able to manage their personal lives and avoid unnecessary commutes when possible. This flexibility is especially important to working parents facing unpredictable school and daycare disruptions as the Delta variant causes classrooms to temporarily shut down, sending their children back home.

With fewer workers in the office full time, more companies are making the decision to reduce their physical footprint. Many Technology and Software companies report difficulty justifying large, empty offices and thus plan to scale down significantly over the next year. Even companies in Education and Healthcare, that serve customers in-person, are moving back-office workers to either hybrid or fully remote work environments.

However, there are still companies looking to add space. These are mostly concentrated in Life Sciences and Manufacturing, where strong sales and increased hiring require more room to accommodate this growth. While many of these companies indicated plans to add office space, even more need industrial and lab space for R&D. Currently, there is almost 7.7 million square feet of industrial and flex space available and nearly 19 million square feet of office available across the region. The growing needs of companies suggests the balance may need to shift in the other direction.

Whether pharmaceuticals or beer, San Diego companies have long produced the things that make life more comfortable and more enjoyable. These companies also drive economic growth in our region. It is important that they have the assets they need, both in terms of physical infrastructure and skilled talent, to grow and thrive in San Diego.

Stay tuned for more on San Diego’s changing business landscape. EDC will be back every other month with more trends and insights. For more data and analysis visit our research page.

Take the next survey here

This research is made possible by:

San Diego’s Data Bites: September 2021

Presented by Meyers Nave, this edition of San Diego’s Data Bites covers August 2021, with data on employment and more insights about the region’s economy at this moment in time. Check out EDC’s Research Bureau for even more data and stats about San Diego.

KEY TAKEAWAYS

  1. San Diego establishments added a less-than-stellar 5,300 jobs in August, undoing July’s seasonal loss. Gains were concentrated in Construction and Government as teachers and school staff were brought back onto payrolls in preparation for kids’ return to the classroom.
  1. The unemployment rate dipped to 6.6 percent in August from July’s 6.9 percent. However, this was due to 11,800 people leaving the workforce, not job gains.
  1. August’s employment report provides more evidence that emergency federal unemployment insurance (UI) benefits are not sidelining workers, contrary to popular belief. Yet the data do point to another potential reason: workers are refusing to return because of the risk of exposure to COVID amid low pay and no healthcare benefits.

The data

San Diego companies added an underwhelming 5,300 jobs in August, while the exit of 11,800 workers lowered the unemployment rate to 6.6 percent from July’s 6.9 percent. August’s jobs build erases July’s loss, but the region still lags behind the national jobs recovery. Just over half of the jobs shed during the pandemic have been recovered locally, compared with about 80 percent nationwide.

Public agencies led the charge in August, adding 3,500 positions as teachers and school staff were brought back onto payrolls as kids prepared to return to the classroom. Construction came in at a close second, adding 3,400 jobs last month. However, Leisure and Hospitality, which has led job gains for nearly all of the recovery, added just 2,000 payrolls, potentially reflecting a change in preferences and attitudes among workers (more on that below). Transportation, Warehousing, and Professional and Business Services added another 600 jobs combined.

Gains in those industries were partially offset by losses in Other Services (gyms, salons, building and grounds maintenance, etc.), Finance, Wholesale Trade, Manufacturing, Retail, Healthcare, and private Educational Services.

Exposure, health insurance, and the jobs recovery

August’s employment report provides more evidence that UI benefits are not sidelining workers, contrary to popular belief. The line of thinking has been that an extra $300 per week in federal UI benefits is substantial enough for lower-paid workers in service industries to not return to the workforce. However, those emergency UI benefits terminate in early September, so the expectation would be for thousands of idle workers to return as the UI windfall is rolled off ahead of that.

To be sure, $300 per week amounts to just less than half of the gross pay received by workers in San Diego’s Leisure and Hospitality sector. Yet, Leisure and Hospitality establishments added a mere 2,000 net positions last month with another 33,200 jobs yet to be recovered.

The data may not support the notion that UI benefits are keeping workers home, but they do point to another potential reason: workers are refusing to return because of the risk of exposure to COVID amid low pay and no healthcare benefits. San Diego COVID cases, including the Delta and Mu variants, have fallen since peaking in mid-August, thanks to the County’s high vaccination rate, but they nonetheless remain higher than levels seen in May and June of this year. Many workers in lower-paying, public-facing positions may have therefore concluded that going back to work at $15 per hour isn’t worth the risk of exposure, even if it means forfeiting an extra $1,200 per month in federal UI benefits.

The San Diego region is yet to recoup 107,900 jobs lost during the pandemic, 60 percent of which are in industries that are either public-facing or have limited capacity for social distancing, such as Leisure and Hospitality, Retail, Education, and Manufacturing. However, most of these industries are closing in on pre-pandemic employment levels, while Leisure and Hospitality is not.

A combination of steady job growth and the rollout of health insurance mandates through the Affordable Care Act significantly reduced the number of uninsured San Diegans during the 2010s. Even with the expansion of insurance coverage, however, EDC estimates that anywhere from 11,000 to 17,000 people have been left without any health benefits since February 2020 as their jobs evaporated or they left the labor force.

Worse, many can’t even rely on getting jobs for health coverage. Nearly 10 percent of employed people in San Diego still lack any sort of health insurance; that number jumps to 16 percent for food preparation and serving-related positions at restaurants and bars and climbs as high as 29 percent for building and grounds maintenance positions. But those figures also include public insurance. Excluding public insurance options, some 54 percent of food prep workers and servers and 60 percent of building and grounds workers receive no health insurance through their employer or union.

Estimates for average hospital costs associated with COVID-19 treatment range from $30,000 to $50,000. A Kaiser Family Foundation study also found that 72 percent of major health insurance plans across the U.S. have already stopped full coverage of COVID-related treatments, and that will increase to 93 percent by year-end. Meanwhile, the average annual salary for food prep workers and servers in San Diego is $29,500. Hence, being infected by COVID or one of its variants could easily spell financial ruin for these workers even if they already have health coverage. Faced with those statistics, it would be more financially irresponsible to return to work than to stay home and wait out the recent spate of COVID infections.

Taken together, it’s safe to assume that many lower-paid service workers in public-facing jobs may not return anytime soon until the benefits clearly outweigh the risk. This puts low-margin local businesses in service industries in a precarious position: either lure workers back with higher pay and/or benefits and pass on the additional costs to customers, or run the risk of operating at less than 100 percent capacity, which would crimp revenues and also hurt bottom lines.

Regardless of the answer to that question, these data underscore the desperate need for more quality jobs in the area, particularly at smaller companies, if we ever hope to restore a sense of normalcy in the job market going forward. Humans may be creatures of habit, but large-scale economic displacement has a way of fundamentally altering our preferences and routines. The pandemic-fueled recession last year has almost certainly led workers to place greater importance on their personal safety and health than before, and employers will need to adapt in order to attract and retain talent.

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Advancing San Diego Company Spotlight: Misadventure & Co.

The Advancing San Diego (ASD) Internship Program launched in Summer 2020 in a remote-capacity amid the COVID-19 pandemic and aims to provide up to 100 San Diego-based employers with fully subsidized interns. This program targets small employers with 100 employees or less, which comprise 98 percent of all businesses in San Diego, employ nearly two thirds of San Diegans, and account for 70 percent of job growth. A key issue for these companies has been a lack of time and resources to recruit the skilled talent necessary to continue their growth.

As students close out their Spring business internship experiences, EDC has rolled out this blog series to highlight the innovative local companies that comprise the third cohort of the program, and the interns they hosted. To date, ASD has placed 93 student-interns in local businesses, with $455,000 in total wages and support services paid. 

In this edition, we sat down with Romi Rossel, Content Marketing Manager at Misadventure & Co., a leading provider of vodka production and sustainability.

Read on for more about ASD intern host Misadventure & Co.

Romi Rossel, with Advancing San Diego interns, Andreapaola Loda (right) and Michelle Bodi (left).

Tell us about your company.

Misadventure & Co. is the world’s first carbon negative distillery, and the first and only to upcycle excess baked goods into an award winning spirit. Our vodka is smooth and upcycled certified. The best part? Consumers get to help save the world just by having a drink! Our tasting room and production facility are located in Vista, and we are known for our delicious craft cocktails, sustainable vodka, and wonderful atmosphere.

Why was your company founded?  

It all started in 2013 with a chance meeting at a North County San Diego bar between the two founders. Whit Rigali, the bartender, wanted to create local craft spirits as tools for other bartenders. Sam Chereskin, the Agricultural Economist, wanted to find ways to improve food systems and show that doing good can also be viable. Their conversation over a glass of whiskey led to the creation of Misadventure & Co. Our vodka is not just a product of four years of R&D, but lessons learned through the San Diego brewing and distilling communities, and our wonderful friends and family. We desire to make quality spirits and create them sustainably. With food waste prevention being the number one solution to climate change, we are focusing on educating our community on finding creative ways to help the environment, and choosing products that can help make the world a better place.

What does growth look like over the next few years?

We are excited to further develop both our hospitality and distribution channels. Increasing our production would allow us to make a bigger positive impact on the environment.

How has your company pivoted as a result of COVID-19?

As a result of the pandemic, we expanded our forecasting capabilities beyond traditional weather variables like temperature and relative humidity, as we were involved in a project in collaboration with NASA scientists to understand the effects of COVID-19 in the upcoming forest fire season. Further, Misadventure pivoted into producing hand sanitizer to support the uptick in sanitation needs amid pandemic. That experience not only allowed us to stay in business through 2020, but also opened up a whole different set of possibilities for us. We realized that we are not only a distillery producing high quality spirits, but also a sustainable ethanol manufacturer that can be used in many other industries from food production to cosmetics.

Tell us about your experience building a small business/startup in San Diego. 

We have been extremely lucky to work with other amazing organizations and companies that support what we do. San Diego has a very tight sustainable community as well as a great distilling and brewing community that encourages collaboration and assistance. CAL Recycle has been extremely helpful in providing grants to fund pieces of equipment that have helped us increase and improve our production. We also love working with other anti-food waste organizations such as Kitchens for Good and Oceanside Kitchen Collaborative, and we are proud to say we are founding members of the new nonprofit organization Sustainability is Sexy.

The most special thing about the San Diego business community is that is a very collaborative community. There is always a genuine interest from people to help each other and grow together, especially when it comes to making positive changes in the world.

How did you find out ASD and how has your experience been? Tell us a little bit about your interns and the value they bring.

We found out about ASD through a contact at California Manufacturing Technology Consulting (CMTC) who shared the internship opportunity with us. Our interns provided strong support for our marketing campaigns by doing market research that allowed us to grow our social media presence and bring more foot traffic to our tasting room.

Learn more about Advancing San Diego and our internship program.

Company contact info and additional information:

  • Website: misadventure.co
  • Social Media: @misadventureco
  • Email: info@misadventure.co

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