Saturday, April 17, 2010
THE RECESSION’S IMPACT ON SAN DIEGO’S TECHNOLOGY INDUSTRIES
KEY HIGHLIGHTS
San Diego’s Technology-focused companies have fared much better during the downturn than other parts of the regional economy.
The biotechnology, software and technical consulting sectors have actually seen modest growth in employment since Q2 2008.
The largest declines were in computers/electronics (-8.0%), communications (-6.2%), and defense and transportation (-5.6%).
Background and Details
Since Q2 2008 the San Diego economy has experienced one of its most severe recessions since the 1930s. In 21 months, the region lost more than 116,400 jobs and unemployment spiked to 11%. While over the past 3 quarters leading economic indicators have trended mildly positive, the lack of employment growth remains a critical concern.
Responding to an inquiry from CONNECT regarding the number of people employed in the region’s technology-oriented industries, the National University Institute for Policy Research (NUSIPR) drew upon recently refined data from the California Employment Development Department (EDD), as well as our own monthly estimating model to focus in on the recession’s impact on San Diego’s principal technology segments.
Overall, we found that the impact on technology employment has not been as nearly pronounced as the recession’s overall effect. Technology employment between Q2 2008 and Q1 2010 has fallen only 2.6% (3,600 jobs). Three segments (biotechnology, software, and other technical consulting services) have actually seen modest increases. Worst hit has been the region’s communications (shedding 1,900 jobs) and defense/transportation industry (a decline of 1,500 jobs) since Q2 2008. We also found that job losses were particularly pronounced in Q3 2009.
METHODOLOGY
To derive this data we first utilized the definitions for technology sectors compiled by CONNECT in its Index of Innovation and the San Diego Association of Governments (SANDAG) 2006 “Traded Clusters in the San Diego Region” study. Appendix B of this report lists the detailed NAICS codes used to define the nine technology sectors.
To derive employment figures in each of these categories we used the California Employment Development Department’s (EDD) Quarterly Census of Employment and Wages data (QCEW – formerly known as the ES- 202 program) for quarterly employment. In some instances, EDD suppresses data when they believe that the data’s release compromises the confidentially promised to employers. In those instances we interpolated figures using state-wide estimates for employment, assuming that San Diego’s share of employment in those industrial segments is similar to statewide ratios.
Currently, EDD’s latest release of QCEW data is for Q3 2009. To bring our estimates forward to Q1 2010, NUSIPR built an econometric model that utilizes more current statewide economic and employment data available for San Diego County. As future data is released by EDD we will continue to refine the model’s econometric parameters to increase the accuracy of the estimates. Subsequent to the release of this report, NUSIPR will be publishing these findings each quarter as part of the CONNECT Innovation Index.