Friday, July 10, 2015

Will San Diego’s Increasing Exports Lead to New Employment Opportunities?

San Diego’s economy is picking up speed in ways that may lead to greater employment opportunities. According to the U.S. Department of Commerce, San Diego realized $18.6 billion worth of goods which is a substantial increase of over $700 million from 2013 (1). Should the city expect increasing employment opportunities in the near future?

The majority of exports was in computers and electronics, transportation, machinery, plastics and rubber, metal, and processed food. In these sectors greater sales often lead to greater profits and expansion of buyer networks that often leads to production expansion for companies. 

Corporations expand production to sell more items while seeking to increase their returns from economies of scale. Expanded production sometimes leads to more efficient operations which in turn impacts profit margins. Profit margins stoke the fire of expansion as firms have healthy returns and seek to maximize those returns through additional investments. 

It is those investments in capacity that eventually leads to increasing employment.  Highly skilled and educated employees are likely to find higher wages than employees that have not learned market relevant skills. 

The economic system relies on exports and sales. Only through pro-growth strategies that encourage alignment of the local hubs to international needs can long-term employment stability be found. When market adjustment doesn’t happen, or employment is artificially inflated through excessive legislation, there will be long-term economic consequences.

San Diego should expect increasing employment opportunities in those sectors that have long-term relationships/contracts with international companies and fit within current growing market trends. A boom in growth in 2014 often results in increased hiring in 2015. There are many other factors that can impact this but if the invisible free market hand takes precedence we should see new hiring.

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