by Erik Bruvold
Wednesday, November 18, 2009
There are troubling signs that while the economy is rebounding, we may be facing a jobless recovery. Last week the presidents of the Federal Reserve Banks of San Francisco and Atlanta each suggested that unemployment will persist well into 2010. A recent public opinion poll by Hofsta University found that 3 out of 4 suburbanites had either themselves or knew someone who had lost their job during the recession. The Golden State is seeing unemployment higher than it has been in 26 years and almost every forecaster believes it will go higher. While some of the locally-tracked leading economic indicators are positive, help wanted ads and jobless claims continue to point downward.
In light of these troubling signs, the number one (and perhaps second and third) priority of leaders throughout San Diego County needs to be job creation.
At the top of the “to do” list is a full and comprehensive push to get local jurisdictions refocused on improving their business climate. During the recession of the early 1990’s the City of San Diego instituted Regulatory Relief Days where burdensome regulations were brought forward for elimination. There couldn’t be a better time for every city in the region o consider bringing an analogous program forward, charging the bureaucrats throughout the region to double their efforts to rethink rules and regulations.
This is an ongoing problem. During a recent visit to a retail center near my neighborhood I was excited to see a vacant store which was in the process of being renovated for a new tenant. In these troubled times, it was a positive and exciting development. But I also saw a city notice. It seemed that this new martial arts studio had to appear before a hearing officer before they could open up. Money that could have gone into hiring staff and marketing the enterprise was going to be spent down at City Hall filing paperwork, attending hearings, hiring professional advisors and going hat-in-hand to the bureaucrats for the permission to open a business. While I am sure the regulations seemed well intentioned when originally enacted, during a recession such red tape is ludicrous.
Similar penny-wise and pound-foolish thinking can be seen in the City of San Diego’s stubborn refusal to suspend its business license fees. When the courts deemed the City’s rental tax collection fee to be illegal, the right thing to do would have been to accept that the similar business license collection fee was also invalid and needed to be eliminated. Instead, the City decided to continue to collect it, delaying what seems like the inevitable court order to return the illegally collected revenues. While this fee isn’t going to be the make-or-break reason for businesses to expand in the region, its elimination would have sent a powerful signal that City Hall understands its first priority in these times is to get out of the way of private enterprises that might be looking to expand.
It is also clear that a recession with double digit unemployment is not the time to be imposing project labor agreements or upping the regulatory hurdles on those willing to build new hotels. Such flawed thinking flies in the face of one of the lessons that become clear last year. Investment flows are more global and interconnected than anytime in history. People are no longer talking about “decoupled” national economies. Instead, the past few months have made crystal clear that financial flows are moving at an ever increasing speed into (and out of) markets depending upon the rate of return. The lesson from 2008 should be that we must ELIMINATE red tape and regulations that make us less attractive to capital investments, not impose new burdens.
The City and region have done some good things. The effort to encourage the growth of companies in renewable energy industries could be an important driver of economic prosperity. The region has worked hard to win federal stimulus money for upgraded infrastructure. Regional leaders have, for the most part, stayed out of the way of the Department of Defense, whose spending has been a boon in these difficult economic times.
However, this recession has underscored the danger in thinking that San Diego is somehow “special.” Our blessed climate, intellectual firepower, and region’s natural beauty give us an advantage but in no way require that investment comes our ways. Our leaders need to send a signal that we are “open for business.” For tens of thousands of unemployed San Diegans, it is imperative.