by Steve Francis
Thursday, June 18, 2009
This week, a respected economic institution forecast a “continued rough ride” for the California economy through the latter half of 2009, underscoring the need to bolster the ranks of our contracting local workforce. Studying thoughtfully how other large cities are fostering industry growth in these difficult times can help San Diego officials retain and refine our region's critical competitive edge for the long-term.
The UCLA Anderson Forecast, a panel of economic experts, announced this Tuesday that as the dreary national economy slowly shifts out of “intensive care,” and sluggishly advances though to 2011, the Golden State is not likely to hasten its own recovery at a faster pace. Little economic growth is expected for the remaining months of the year, and total employment will shrink by 3.5% at year's end. This projection came at the dismay of many in the real estate, retail and construction industries, who are desperately seeking new indicators that will encourage the deepening flow of vital investment capital and greater consumer spending. To put our abysmal state of affairs into perspective, the April 2009 statewide 11% unemployment rate was an 82 percent increase from the same time in 2008, a figure which is likely to stay high due to probable massive reductions on the state government payroll. Though San Diego County's 9.1% unemployment rate may be lower than the state rate, and slightly less than the previous recorded month (9.5%), it belies the staggering loss of 45,200 jobs over the last twelve reporting months and the 2.7% shrinkage in the county workforce. Businessmen and women intuitively understand the challenges a souring economy can bring to balance profits and retain workers; thankfully, so do San Diego's elected officials, who have admirably reached out to the corporate world to develop new growth strategies.
This year, San Diego City Hall has worked with businesses to develop a forward-looking citywide job creation plan, and has been instrumental in advancing proposed public works projects (such as the Convention Center expansion) that may create thousands of construction jobs. Other municipalities in our region have crafted partnerships with their respective chambers of commerce to aid vulnerable enterprises; the cities of Poway and Escondido have launched “shop local” campaigns to encourage residents to shop within city limits, and Chula Vista has co-hosted a small business seminar series that has covered topics of entrepreneurial interest. Lacking the political pull of larger metropolitan areas such as Los Angeles and Chicago, San Diego can’t expect a federal bailout with stimulus dollars – much of which is more than a year away from distribution – so our homegrown efforts must overcome the unique economic impediments facing our community.
In comparison, San Diego is a low tax region when it comes to business operations; we largely lack the gross receipts taxes, utility surcharges and high hotel taxes common among the state's ten largest cities. What economic challenges we do face are within our regulatory environment, which too often dissuade corporate growth and development, and our high land costs, which keep some price-sensitive industries and start-up companies at bay. State law significantly constrains what municipalities in our region can and can not do when it comes to fiscal and budgetary affairs. But with public-private cooperation, existing government resources can be strategically utilized to protect and grow emerging industries, and legal changes can be sought that ease the regulatory environment upon already struggling start-up enterprises. One key policy brief this year points the way to new approaches to job creation that can prepare San Diego for the challenges ahead in the globalized, rapidly-changing New Economy.
This spring, NUSI Senior Policy Analyst Vince Vasquez’s policy paper “Responding to the Recession” identified dozens of job creation ideas emanating from the nation's larger dynamic cities, many of which face similar growth constraints as our region. Relatively costless, each promise to help cities more successfully deal with the recession and emerge from it more competitive and economically stronger. Most cities sought innovative fiscally-friendly strategies to enhance core industries along with their job creation plans, such as New York City’s plans to create an “entrepreneur boot camp” for laid-off financial service workers, and the Seattle City Council’s steps to protect industrial zoned areas from retail encroachment. Others, however, took the opportunity to grow fledgling sectors and diversify their local economies.
Upon taking office in January 2007, San Jose Mayor Chuck Reed challenged his city to become the world capital for the clean tech industry, and has taken numerous steps that reflect this ambitious goal. In particular, he has set a goal of creating 25,000 clean technology jobs in his Bay Area metropolis, and his office has co-hosted two Clean Tech Legislative Summits, bringing together government, entrepreneurs and industry leaders to discuss industry challenges and prospects for future opportunities. The most recent December 2008 summit produced a two-year “Clean Tech Legislative Agenda,” which details 32 recommendations to changes in federal, state, and local public policy to improve clean-tech growth. These recommendations include establishing national and regional green building standards, and expanding federal tax credits related to renewable energy. By giving San Jose leaders a single advocacy plan for growing clean tech locally, the city is able to speak with one voice in Silicon Valley, Sacramento and D.C., a powerful and more successful way to achieve common objectives. Reed has already started the process by recommending key redevelopment agency investments this year in a number of industry-specific programs, including $2.5 million for a “Clean Tech Jobs Investment Fund,” as well as $2.5 million for a fund focused on financing equipment and redevelopment for emerging technology companies.
If San Jose can be innovative in its approach to economic development, then why not San Diego? Our region has more than 140 clean tech companies, and can equally benefit from a unified game plan for job growth and industry entrepreneurialism. Diversifying our economy, which is principally concentrated in tourism and national defense, can improve our ability to weather future financial and market calamites. Entrepreneurs, especially those in the high-tech sector, have been historically disengaged from the policy debates and regulatory battles in the Beltway and the State Capitol; consider Google’s D.C. lobbying arm only emerged four years ago. Our community leaders have already taken the first steps towards securing our economic recovery today by working with senior, high-profile business leaders – now let’s think of new ways we can build consensus and all be public advocates for the new industries and start-up companies that need the most support.