San Diego has enjoyed relatively strong economic prosperity over the past decade and a half, as the local economy diversified and maintained relatively healthy and steady employment growth. Indeed, it can be argued that San Diego has been among the nation’s strongest economies during this period, while other areas of California and the U.S. endured significant economic struggles.
San Diego’s modern diversified economic base is rooted in our historic primary industry drivers of manufacturing, defense, and tourism. Alongside these pillars of strength are new knowledge-based, technology-focused industries in sectors of telecommunications, electronics, computers, software, and biotechnology. The successful transformation of the local economic base has caught the attention of the rest of the nation and world, who oftentimes come to San Diego not only to learn about and see if they can replicate, but sometimes steal, from our successes.
Because San Diego is no longer a cul-de-sac largely removed from or independent from the rest of the nation, we are increasingly enmeshed in the world marketplace. There is no time to rest upon laurels of previous success, and we must continually invest and equip ourselves to compete in the global economy. There are warning signs of clouds on the horizon. The San Diego Association of Governments (SANDAG) recently released a strategic assessment study, the Regional Economic Prosperity Strategy, that provides a framework for evaluating the region’s economic health. Benchmarking the San Diego economy against similarly sized and competitive regions, the study found certain measures of our economic prosperity are not keeping pace with major competitors.
SANDAG is particularly concerned that the rate of wage growth (adjusted for inflation) in the region has lagged behind the rest of the state and the nation. So whereas real wages in San Diego remain 2.7 percent lower than in 1970, real wages in California are up 12.3 percent and in the nation by 17.5 percent. It should be noted, however, that while this gap is of concern, it is primarily due to the fact that inflation has been much higher in San Diego than most other places and wages failed to keep pace. Indeed, if one examines wage trends over just the past decade, San Diego is actually outperforming both the state and nation. San Diego’s quality of living has been primarily hampered by high increases in cost of living, the most significant of which is the high cost of housing.
Nevertheless, the ultimate conclusion drawn by the SANDAG study is sound – to ensure our continued high quality of life, more needs to be done to increase real wages and ensure more San Diegans are benefiting from regional economic growth. Indeed, as pointed out by the study, there has been a disproportionate creation of low-wage paying jobs to high paying jobs in San Diego over the past 20 years.
From these observations, the report goes on to suggest that the region could do more to strengthen our abilities to compete in the increasingly global market place. The study’s authors write, “our region competes against other regions worldwide, and whether we succeed or fail will largely depend on our public investments and policy priorities regarding human and physical infrastructure, interregional cooperation, and the ability of the nation and our region to engage in free trade.”
The Strategy’s recommended actions call for infrastructure investments and public policy support to strengthen the region’s economic foundation. The Prosperity Strategy provides ten strategic goals, 27 recommended actions, and identifies existing agencies and organizations to implement the goals and carry out the actions.
Among the most crucial recommendations is the need to further invest in the infrastructure that facilitates the region’s international trade, including the need to expand the region’s airport capacity and the infrastructure that speeds cross-border movement. As we have noted in this column in the past, San Diego’s economic fate is increasingly tied to our ability to move goods and people around the world and to leverage the economic activity that is going on in Northern Baja.
Also highlighted in the SANDAG report is the need to secure an adequate, reliable, and reasonably priced supply of energy and water that is absolutely essential for the region’s long-term health. Recognition of San Diego’s limited natural land resources needs to be balanced among industrial, residential, and public uses, which is essential to maintain both long-term prosperity and a high quality of living.
Other key recommendations include the importance of workforce development, reducing public costs imposed on businesses, and ensuring public expenditures are efficiently and effectively implemented. These goals are vital to ensure industry and economic prosperity continue in San Diego.
These strategies, along with the activities recently unfolded by the San Diego Regional Economic Development Corporation (EDC) “Partnership for the Global Economy” bring the issues necessary to maintain San Diego’s continued evolvement and progression moving forward to economic prosperity. These proposals and mandates are not without challenges and will likely encounter some opposition. As the study’s authors note, “during discussions over economic growth, tension generally surfaces over the trade-off between the investments required to achieve long-term, broad-based prosperity, and dealing with the short-term needs of our citizens.” But at a time when the region faces unprecedented challenges and when there are warning signs on the horizon it is critical that the community of business, government, and citizens join in making the investments necessary now that will preserve and enhance San Diego’s economic competitive well-being and high quality of life.
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