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Thursday, Mar 28, 2024
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EARNING POWER

The region’s life science and technology industries are continuing to see sustained growth, according to a recent jobs report. It’s a welcome trend that economists say could strengthen San Diego’s resilience during tough economic times, though concerns remain about a widening wage gap.

“We’ve been able to put ourselves at the forefront of some of the key technological innovations and trends that will shape the coming years and generate future employment,” said Alan Gin, an economics professor at the University of San Diego. “I’m talking about things like biotechnology, telecommunications, security and green technology. Now we’re adding ‘blue industries’ and strengthening San Diego in terms of maritime industries.”

San Diego’s labor market has grown considerably over the last few years, with the professional, scientific and technical (PST) services sectors seeing remarkable growth and climbing wages, according to U.S. Census Bureau data compiled by the San Diego Regional Economic Development Corp. Employment in biotechnology, biomedical products, clean-tech and information technology all fall within these sectors.

Employment in San Diego’s PST sectors grew by 6.6 percent since last January, compared with the national average growth rate of only 2.3 percent. The industry has been a bright spot among employment data for years, accounting for nearly 20 percent of all job growth in San Diego from 2010 to 2014, according to Census Bureau data compiled by the EDC.

More impressive than jobs added to the region is how quickly wages are climbing in these sectors. Wages for the PST industries grew 35 percent in the past four years, with an average annual wage of $112,152. In comparison, health care, which accounted for more than a third of all local job growth and more than half of middle-wage jobs added in the region, grew only 5 percent over the same period with an average salary of $51,036.

The highest-paying industries in the region — utilities, finance, PST services, information and manufacturing — are also the ones seeing bigger and bigger paychecks each year. Low-wage industries have either grown at less than half the rate of high-wage industries, or remained stagnant.

Spending Habits

It may be a good sign that the region’s high-paying industries are experiencing accelerated wage growth. Some would even argue that it is economically favorable if the highest wages are growing the fastest, as that means the amount of money available to spend in the region is increasing.

But Michael Combs, the research manager for the San Diego EDC, said there’s more to consider.

For example, high-paying jobs require advanced technical skills and education — requirements that many residents may not have, Combs said. If low-income residents continue to have stagnant wages, then they won’t add any purchasing power to the region.

“People who make lower wages are shown to have higher marginal propensities to consume,” Combs said in an email. “Meaning, if they make $4,000 more per year, they’re more likely to spend that extra money than the high-wage earner who may just save or invest the money elsewhere, which won’t really benefit the local economy through increased spending.”

Falling Into the Gap

Gin, the USD economics professor, said the widening wage gap is unsustainable.

“That’s one of the biggest problems, not only with San Diego’s economy, but with the U.S. economy overall,” Gin said. “The middle class helps support the rest of the economy when they have enough money to engage in things like home ownership, vacation and putting their kids through college. They provide jobs and stimulate the economy for everybody. In the past, a high school diploma was enough to get into the middle class. You could get a manufacturing job that offered benefits, unions and high wages, but didn’t require a college degree. But we’ve lost a huge number of those jobs to overseas. We’ve shifted to an information economy instead.”

Gin added that raising the minimum wage could soften the negative economic impact of the growing income gap.

While most of the country — San Diego included — struggles to adapt to the effects of globalization, the local innovation clusters may carry the region through to a new normal.

San Diego’s institutions, universities and businesses — along with the enviable weather — have attracted an arsenal of human capital to the city over the past decade.

The More Millennials the Merrier

A recent study written by Joe Cortright, an economist and director of the West Coast think-tank City Observatory, looked at the migration patterns of educated young workers. He found that their migration patterns are a key indicator of a city’s economic future.

“These mobile young workers are neither more nor less important than other Americans,” Cortright said. “But economically, their movement is an important signal of which places are best positioned to flourish in the years ahead.”

According to Cortright’s study, San Diego is one of the most competitive regions in the nation for attracting and retaining a young and educated talent pool. San Diego saw a disproportionately larger increase in educated young adults ages 25-34 than the overall population. From 2000 to 2012, the number of educated millennials grew 43 percent in the San Diego metro area, which includes coastal and inland North County.

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