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San Diego Businesses Point To Looming Economic ‘Pain Points’

San Diego Businesses Point To Looming Economic 'Pain Points'


Nikia Clarke, vice president for economic development, San Diego Regional Economic Development Corporation



"Future of Grown in San Diego: The Economic Case for Inclusion"

"Future of Grown in San Diego: The Economic Case for Inclusion"

A report from the San Diego Regional Economic Development Corporation outlining three "pain points" in San Diego's economy.

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By most measures, San Diego’s economy is strong. Unemployment remains low, housing values have surged since the Great Recession and the region is attracting new startups. But that innovation economy is widening San Diego’s economic inequalities and creating “pain points” that could stymie future growth, according to the San Diego Regional Economic Development Corporation.

Those looming problems are a significant racial disparity in high school and college graduation rates; low wages paid by small businesses, which make up the bulk of San Diego companies; and a high cost of living that makes San Diego unaffordable for 1 million residents.

The EDC is a nonprofit that promotes San Diego to businesses and its board is made up of executives from some of the area’s biggest employers. If these issues aren’t addressed, San Diego will no longer be “an attractive place to live and do business,” the group warned last month. Nikia Clarke, the EDC’s vice president for economic development, says that’s a worst-case scenario.

“From a border town to a Navy town during World War II that was a hub for naval technology, to an engineering hub, to today a life sciences and innovation powerhouse, we’ve been able to be successful because we’ve been able to react and respond to the ways in which the global economy is changing,” Clarke said. “And that transformation is not over, it’s accelerating. So it behooves us as San Diegans to look at how those changes are going to impact our economy and be proactive.”

The EDC released some data on the problems last month. Hispanics are the fastest growing racial demographic in San Diego and will make up 40 percent of the region’s population by 2030, more than any other group. But 34 percent of Hispanics do not finish high school, compared to 12 percent of whites; only 15 percent graduate college, compared to 49 percent of whites.

“The fastest growing population is statistically the least prepared for high-skilled, high-wage jobs,” the EDC wrote in its report.

The EDC also found that small businesses pay up to 20 percent lower wages compared to the regional average salary; the biggest corporations pay 45 percent more than the average. But San Diego has fewer big businesses compared to its peers. Businesses with fewer than 100 employees make up 98 percent of all companies in the region. That makes it harder for those small firms to compete with the few big companies in San Diego for top talent and depresses overall wages.

And as for the 1 million people who cannot afford to live in San Diego, the figure is based on a study from the Center on Policy Initiatives.

“One million San Diegans, working families, are unable to afford the basic needs to live in the region. That includes mortgage and/or rent, childcare, food and housing,” Clarke said. “That’s fully a third of our population.

Clarke says that the business community will need to pitch in to devise solutions for these three “pain points.” The EDC will continue to study the issues throughout the year.

“Phase two is about building the kind of infrastructure regionally to drive forward an action plan,” Clarke said. “Our research team will be probing further and make actionable recommendations.”

KPBS Midday Edition will be focusing on the EDC’s study throughout the week and will speak with Clarke on Monday. We’ll hear about the impact of small businesses on San Diego’s income inequality on Tuesday.

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