Stop Subsidizing Economic Doom

By | Published in voiceofsandiego.org | March 10, 2008 |

Now is the time to plan a San Diego beyond a recession.

San Diegans are having a tough time making ends meet. The cost of living in San Diego is increasing faster than wages. Today, a single adult needs at least $28,510 a year for basic essentials and a two-adult working family with two children needs $71,385 for basic expenses including childcare.

Falling employment, stagnant wages, uncontrolled debt and slack consumer confidence are afflicting San Diego as much, if not more than, the rest of the nation. San Diego has the lowest average wage per job, when adjusted for the cost of living, among comparable metro areas in the United States. San Diego wages also have the lowest purchasing power, given local costs. In this context, low-wage workers are most vulnerable since they often lack a cushion of savings.

As San Diego braces for recession-like economic conditions, we need to step back and reevaluate our failed economic development strategy from the past decade. Our vision for San Diego beyond the recession should be one of stable employment providing decent wages and healthcare coverage. To build a strong local economy, San Diegans need to be self-sufficient, adaptive, educated and trained, and they need institutional protections to maintain a decent standard of living.

The region’s biggest economic stimulus package lies in the earnings of all San Diegans. For their hard work, people expect to earn enough to at least cover food, housing, gas, childcare and medicine.

There are innumerable ways in which local governments can influence the livelihood of workers. Sandag found that, since 1990, the local economy has created eight times more low-wage jobs than high-paying jobs. This structural imbalance is not just the voodoo of some invisible hand, but a product of decades of land-use and public policy decisions that have bled the work force through neglect.

According to a recent voiceofsandiego.org article:

Marney Cox, chief economist for SANDAG, called the imbalance a “significant problem” and marveled that job-creation ratio doesn’t stop the region from wooing new hotel and visitororiented development without seriously investing in the things that would draw better-paying jobs.

We need strong safeguards that protect our workers’ ability to earn the American Dream.  The following are possible solutions to brace ourselves in a faltering economy.

1) Economic impacts of land-use decisions should be evaluated. There are employment, business and tax impacts each time a development project is approved. Municipalities and the county draw templates for future employment by designating which land will be used for which purpose.  Every land-use decision makes a statement about the kind of society we will become.

When lawmakers approve new developments, they’re setting a precedent for the way the economy will be structured. Instead of passively accepting the plans of developers for new hotels and tourist attractions, the region’s leaders should consider how the land could be used to foster better jobs.

Every responsible business measures the impacts of its decisions on its bottom line; why shouldn’t the city of San Diego?

2) Public investments should target better quality jobs for local residents. One of the most significant drivers of the local economy is government spending, be it building roads and energy infrastructure, firefighting, or teaching at public schools. To be strategic in lifting the local workforce, public spending has to be in tune with long-term sustainability and economic development. When local residents are employed on projects funded by local taxpayers, the money circulates and multiplies within the community. Taxpayer dollars should keep good jobs local.

3) Government should stop subsidizing businesses that pay poorly. Taxpayer dollars should not be spent on projects without a thorough analysis of the return on investment. There are hidden costs to any project.

Our lowest-paying industry is leisure and hospitality, which employs more than 150,000 people in San Diego County and pays an average annual wage of only $21,632, including tips and gratuities. More than half the workers in this industry are either completely uninsured or rely on government health insurance programs.

Subsidies or “economic development incentives” are, simply put, taxpayer giveaways to businesses that are unable to survive in the free market. We pamper those businesses, hide their subsidies within obscure legislation, and sometimes forget they have grown up and don’t need our support. For example, it’s not publicly known which businesses get enterprise zone subsidies (your $$) in San Diego.

4) Public policy should encourage sustainable business development. Our energy independence will to a great extent determine our future quality of life. Clean energy technology will ensure that San Diego remains a picture-perfect postcard setting that has attracted the best talent in the country.

Green-collar jobs are the prevailing mantra to solve both our energy needs and our livelihood. Moreover, investment in small business incubators to match local talents will encourage local entrepreneurship and public-private partnerships.

The city of San Diego is expected to approve an Economic Prosperity Element of its General Plan today.

Later this month, the Sandag board of directors will approve the Regional Economic Prosperity Strategy. Weak recommendations that focus on business needs and ignore residents do not bring prosperity to all. If the region is to prosper, the challenges faced by our workforce must be addressed.

If we want economic prosperity for working San Diegans, we must ring the bell, not bury it.

Murtaza Baxamusa is the director of policy and research for the Center on Policy Initiatives and is on the Advisory Committee of Sandag’s Regional Economic Prosperity Strategy, and a Board member of the San Diego City-County Reinvestment Task-force