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‘Smart’ Businesses Progressing Toward Inclusivity

To stay competitive in the global marketplace, San Diego County businesses, educators and other stakeholders in the region need to step up and look at ways to stay on top of hiring needs of the future – and that means a push toward more inclusive development.

“Smart economic development is inclusive economic development,” say the members of the San Diego Regional Economic Development Corporation.

The SDEDC is a nonprofit, independently funded group that mobilizes business, government and civic leaders around strategies that best position San Diego County for investment and talent.

A study and report released by the group in April details the must-haves for inclusive economic development across the county. The SDEDC is eyeing the creation of new, quality jobs, supporting minority students’ education needs and addressing the skyrocketing cost of housing.

Eduardo Velasquez, SDEDC’s senior director of research and economic development, said that “in order for San Diego as a region to remain competitive in the future, we have a major moral imperative for inclusion. We have to pay attention it.”

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Velasquez said that addressing the challenges confronting San Diego County will require effort from both the public and private sectors.

 

Policymakers and business leaders must do their part to ensure that San Diego cultivates and retains the talent needed for the region to compete on a global stage.

“To drive meaningful economic change, a diverse set of stakeholders must step up or the issues facing our economy—talent shortages, skills gaps, and a soaring cost of living—will further challenge San Diego’s economic competitiveness,” said Julian Parra, business banking region executive at Bank of America and SDEDC board chair.

The SDEDC report said that rapidly rising home prices – up more than 30 percent in the last two years – along with the loss in jobs have resulted in almost 11,000 fewer thriving households in 2020 than there were in 2017.

The region lost 3,200 licensed childcare facilities due to business closures amid the pandemic.

 

Rising costs and access to childcare, transportation and broadband, which it reports is disproportionately felt by people of color, will leave businesses unable to retain or recruit talent from outside of the region.

The group’s 2022 analysis is a follow-up to a pre-COVID-19 Inclusive Growth Initiative begun in 2018 – a partnership between SDEDC and the think tank Brookings Institution.

 

The initiative looks at quality jobs, skilled talent and thriving households – and how to get to those “three main building blocks” – with inclusive growth goals for a strong economy by 2030.

Pointing Toward 2030 Goals

The updated goals as laid out by the SDEDC in the April report:

 

Small businesses must provide 50,000 new, quality jobs – those that pay a minimum of $44,000 a year with healthcare benefits.

San Diego educators must focus on developing local talent to meet the demands of the region’s innovation-related industries, working to increase the number of post-secondary education degrees or credentials so that 20,000 skilled workers per year enter the workforce.

Ensuring that San Diegans have affordable places to live, looking toward the creation of 75,000 newly thriving households.

 

The report said that with a median household income of $79,673, most households in the region aren’t thriving – meaning their incomes are insufficient to enjoy the full quality of life that San Diego has to offer. An owner-occupied household must earn at least $122,412, and a renter-occupied household must earn at least $79,608 to be considered “thriving.”

In 2018, Mark Cafferty, president and CEO of the SDEDC said, “San Diego has an inclusion problem that cannot be ignored. Small businesses cannot compete with larger corporations, while one million people cannot afford to live here. This initiative is a call to action for San Diego’s employers – we must come together to bridge the gaps in our economy.”

That still holds true today – and has been exacerbated since the pandemic’s 2020 start. “(The) analysis underscores the significant impact of the pandemic on San Diego’s under resourced communities and small businesses,” Parra said.

Among the SDEDC’s findings was that while the number of quality jobs in the region increased over the past five years, the disparity between quality jobs in small firms compared to large firms grew.

The losses of jobs in 2020 from pandemic fallout were principally concentrated in lower paying jobs at small businesses, especially those held by people of color, the report said, while meanwhile, larger firms added quality jobs in haste.

Small Companies Need Some Help

 

To compete for talent, small businesses need new, reliable customers. San Diego’s large buyers can support quality job growth and ensure supply chain resilience by spending more with small, local businesses, the report said.

“We need to help grow those businesses so they can create new jobs and offer more competitiveness in the marketplace,” Parra said.

The SDEDC said that San Diego is globally recognized as a life sciences and tech hub, leading in jobs in medical device manufacturing, genomics, cybersecurity wireless communications and more, and that local firms have seen record inflows of venture capital in sciences and technology.

The industries that produce these life-changing and life-saving products and services, collectively known as San Diego’s “innovation cluster,” account for 10 percent of all jobs. But while its growing innovation-centered economy has made San Diego more prosperous than other regions and led it out of the COVID-19-spurred economic recession, that field remains largely inaccessible to the fastest-growing segment of the region, the Hispanic population.

The report said that since 2016, all job growth has been in positions that require some form of degree or credential acquired through post-secondary education. Looking forward, it is projected that 84 percent of new jobs created between now and 2030 will also require post-secondary education.

A large concern was within the Hispanic population of the county. While that group represents 1/3 of San Diego’s total population, it comprises only 15 percent of degree holders. The report also said that while nearly half of the region’s middle school students are Hispanic, that group is statistically the least prepared for the jobs of the future.

The report suggested that to address employers’ hiring challenges long-term, the region should invest in college readiness for more students, and that includes hiring from San Diego County’s community college system.

“We need to develop local talent, support educational to all students, not just ones in certain ZIP codes,” Parra said.

The housing dynamic across all ZIP codes in San Diego County is also multifaceted and not always well understood, according to Halé Richardson, vice president at HomeFed Corporation and SDEDC board member.

Components of housing developments for healthy communities include following mandates to allocate space for parks, the cost of infrastructure and accessibility to transportation. Those needs are not always part of the conversation, she said.

“Part of the challenge in trying to address housing needs in the county is not just the cost of houses,” Richardson said. “As a society, we’re not recognizing all of the costs that go into housing. There are broad dynamics that we have to have a very honest conversation about.”

She said she was also concerned about the amount of developers and home builders that have left the area after coming up against laws and exposure to lawsuits that have been stumbling blocks to growth – and fewer available homes means higher prices for homebuyers.

“Fifteen years ago there were about 20 different builders, now there are less than a handful,” Richardson said.

San Diego Regional Economic Development Corp.

FOUNDED: 1965

PRESIDENT AND CEO: Mark Cafferty

HEADQUARTERS: Downtown San Diego

BUSINESS: Nonprofit

BUDGET: $4 million

EMPLOYEES: 23

WEBSITE: www.sandiegobusiness.org

CONTACT: (619) 615-2974

NOTABLE: SDEDC’s full report on inclusive economic development can be accessed at http://progress.inclusivesd.org/

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