San Diego has been remarkably successful in developing high-tech regional innovation clusters by systematically promoting the growth of small, entrepreneurial companies, making it a model for other regions across the US, as well as overseas. The focus on creating new jobs in high-tech industries is at the heart of regional growth strategies developed by the San Diego Regional Economic Development Corporation and the San Diego Association of Governments. Those strategies assume that job growth in high-tech clusters will have a multiplier effect on the region’s economy.

Support for new firms and industries has been spearheaded by CONNECT, an organization formed in 1985 at UC San Diego that brought together researchers, entrepreneurs, and investors to turn promising research ideas into viable products. CONNECT spawned many of San Diego’s technology and life science companies that were formed during the 1990s. It was also the catalyst for the formation of industry associations in mature clusters including biotechnology (Biocom), wireless communication (CommNexus), and software (the Software Industry Council). Recently, CONNECT launched new industry associations focused on clean tech and sports innovation.

However, after 25 years of remarkable success in spawning new high-tech companies, jobs in the high-tech clusters still only account for 11 percent of overall employment in the region. One reason is because the new entrepreneurial ventures that are the focus of these efforts typically do not require many entry-level employees except scientists, and when their products reach the late stage of development, commercialization tends to take place elsewhere. As a result, the high-tech sectors have not created the middle-income jobs that were expected.

Another reason is because the region has had such remarkable success in growing a strong tourism and convention cluster that pays relatively low wages. In fact, for every job created since 1990 with wages in the top one third of total earnings, the region has created eight jobs in the bottom one-third. The result has been an “hour glass” profile in the economy, with some high-paying jobs at the top, a lot of low-paying jobs at the bottom, and small and shrinking number of jobs in the middle.

This uneven job growth has been accompanied by a widening gap between the wages received at the high and low ends of the pay scale, and by a relatively high rate of inflation, primarily due to the rise in home prices and rents. These factors have combined to slow growth in the region’s standard of living, which has not kept pace with the national average.

The San Diego Workforce Partnership estimates that an individual needs to earn around $34,000 a year to meet their basic needs in San Diego, but 37 percent of the workforce is in jobs that pay less than that amount. Moreover, all but one of the fastest-growing occupations in the region pay less than that amount, so it’s unlikely that the region will be able to grow its way out of this dilemma without significantly altering its pattern of job growth.

There is some promising movement in that direction. CONNECT is organizing a manufacturing cluster to support early stage manufacturing of prototypes and new products. And the sub-regional EDCs are stepping up their efforts to support existing manufacturing firms.

In addition, the region recently launched the EDGE initiative, which will provide education, training and placement services in the growing biofuels industry to unemployed and incumbent workers within San Diego and the Imperial Valley. Program curriculum has been carefully constructed with input from industry partners to ensure that these sectors needs are met with highly skilled workers. The EDGE initiative is a public-private partnership that includes: CleanTECH San Diego, BIOCOM, BIOCOM Institute, San Diego Regional EDC, Imperial Valley EDC, San Diego Center for Algae Biotechnology, UCSD, UCSD Extension, San Diego State University, San Diego Workforce Partnership, and MiraCosta College.

There is a similar initiative under way to support growth in the healthcare IT arena. The San Diego Regional Economic Development Corp., UC San Diego Extension, and the San Diego Workforce Partnership have been collaborating to develop a growth strategy for the region’s cluster of healthcare information technology companies. Researchers at UC San Diego Extension have been conducting interviews with health IT industry leaders and surveying health IT employers. The data collected is intended to help determine the cluster’s potential, identify important issues, trends, and key economic and legislative factors that drive growth of the sector. The San Diego Workforce Partnership has provided $400,000 to UC San Diego Extension to create a new HIT program to train individuals for emerging jobs such as healthcare integration engineer, healthcare systems analyst, clinical IT consultant, and technology support specialist.

In addition, the Cali-Baja Mega-Region Initiative is supporting efforts by adjoining Imperial County to expand their alternative energy sector. After long delays, construction has finally begun on a power line linking Imperial and San Diego Counties, which will make it possible for businesses in San Diego to expand by tapping into the considerable solar, biomass and geothermal resources in Imperial County next door.

The Mega-Region Initiative is working with key leaders in Imperial County to fully exploit that potential, with a particular focus on putting an infrastructure in place to prepare the workforce for the new jobs they anticipate. They are using AWI funds to develop a machinist-training program as a first step in that process.

There are also efforts under way to help move low-wage workers into better-paying jobs in San Diego County. The Workforce Partnership is partnering with the San Diego Workforce Funders Collaborative (SDWFC) to expand opportunities for low-wage workers to pursue higher-paying jobs within the biotech and healthcare sectors. They are using AWI funds to support a training program for medical assistants in partnership with North County Health Services. Recently, the SDWFC was awarded a Social Innovation Fund matching grant for $397k through the National Fund for Workforce Solutions to expand that program.