What We Mean When We Talk About San Diego's Innovation Economy | Voice of San Diego

Business

What We Mean When We Talk About San Diego's Innovation Economy

A report from Connect, a group that boosts local innovation and entrepreneurs, found technology jobs on the rise in the past year.

Mayor Kevin Faulconer and other city leaders often tout San Diego’s so-called innovation economy — but just what that encompasses isn’t always so clear.

Tech and innovation jobs get referenced interchangeably, just like startups and small businesses often are.

Sometimes they’re the same thing. Sometimes they’re not.

But a report on San Diego’s so-called innovation economy footprint, a twice-a-year endeavor by Connect, a regional group that aims to promote and create technology-tied companies, provides a snapshot of what the popular “innovation economy” tag means.

Not all the companies included in the report or in discussions about San Diego’s business climate are necessarily directly tied to new inventions and ideas, though many are. The statistics Connect pulled for its report come from the state Employment Development Department, the National Institutes of Health and the federal Patent and Trademark Office, among other sources. They offer a window into several categories of new tech companies and their employees but they don’t reveal whether all the companies are producing new things.

Connect and other local economic-development leaders use “innovation economy” as an umbrella term to capture businesses focused on everything from biotech and environmental applications to defense and wireless communications. They’re also interchangeably referred to as tech companies.

The mayor and Connect CEO Greg McKee described 2013 as a banner year for new San Diego tech companies, jobs and innovations at a Monday press conference celebrating the release of the Connect report.

San Diego added 412 new technology businesses in 2013, about 30 percent more new companies than it’s welcomed annually since 2011. The sector also saw more than 1,200 new jobs, according to the Connect report.

That made San Diego the fourth-ranked California county for such growth last year.

Graphic courtesy of Connect
Graphic courtesy of Connect

So how many tech or innovation economy companies does San Diego have?

Connect found more than 6,646, and they and other businesses employed more than 143,400 tech workers as of the fourth quarter of 2013.

That equates to 11 percent of San Diego County employment, though technology companies – which do everything from produce new medical treatments to create phone apps – make up 21 percent of the county payroll. That jibes with the region’s burgeoning hourglass economy, which has meant San Diego’s most significant job growth has come in sectors that pay either a lot or a little.

But Faulconer and McKee said Monday that adding more tech jobs will mean more middle-class jobs, too.

The Connect report estimates every tech job results in another 1.6 jobs in the region that support it and if tech companies make it big, Faulconer said, they’ll add more workers to help produce their wares.

That, of course, would require that those companies stay here once they start producing goods on a larger scale. A recent joint Chamber of Commerce-Tax Foundation report found manufacturers pay larger effective tax rates than research and development facilities, a reality that partly explains why some companies start up in San Diego and then expand elsewhere once they want to produce more goods.

But San Diego’s tech footprint appears to be flourishing.

Here’s a breakdown of employment here, with software workers and consultants leading the way.

Graphic courtesy of Connect
Graphic courtesy of Connect

Connect found many of these tech workers are making more than double the average county wage for non-tech employees. That’s about $48,000.

Graphic courtesy of Connect
Graphic courtesy of Connect

The biotech industry, specifically, is bringing in lots of outside money.

San Diego County collected $960 million in National Institutes of Health grants last year, an 11 percent increase over the previous year. That made the region the top recipient of such funds in the state.

The feds also issued lots of patents to San Diegans last year. The region was the third-ranked county in the state for patents granted.

Faulconer sees business subsidies and cutting red tape as the best ways to keep the numbers ticking up.

He’s pushed for a review of the Development Services Department processes to help businesses looking to build or expand, and wants to allow more city business to be conducted online. He’s also offered subsidies to two breweries and Illumina, a genomic sequencing firm.

Faulconer told Voice of San Diego he’s a “big believer in incentives,” which he considers a win-win for the city and the companies that receive them, which means San Diegans will likely see more rebate-type deals in the future.

Tech companies are especially likely to get them because the city’s latest economic development strategy emphasizes the importance of manufacturing and innovation businesses.

This is part of our quest digging into the difficulties – real or perceived – of doing business in San Diego. Check out the previous story in our series, Why Some Companies Land in San Diego, and the next, Which San Diegans Are Getting Paid More, in 3 Charts.

What do you think?
Loading