San Francisco Economic Strategy Update: Phase I Findings Ted Egan, - PowerPoint PPT Presentation

Office of the Controller – Office of Economic Analysis City and County of San Francisco San Francisco Economic Strategy Update: Phase I Findings Ted Egan, Ph.D., Chief Economist Controller's Office of Economic Analysis May 21 th , 2012 1

Office of the Controller – Office of Economic Analysis City and County of San Francisco Introduction • Proposition I, passed by voters in 2004, mandated that the City establish an economic development plan for the first time. • The first edition of the strategy, Sustaining Our Prosperity: The San Francisco Economic Strategy , was released by the Office of Economic & Workforce Development in 2007. • Prop I also requires regular updates to the economic development plan. • The Controller's Office of Economic Analysis has assisted OEWD in the update to the plan by analyzing the city's economy, workforce, demography, and relative competitiveness. 2

City and County of San Francisco Office of the Controller – Office of Economic Analysis I. San Francisco's Economy in Context 3

Office of the Controller – Office of Economic Analysis San Francisco's Employment Has Lagged the Bay Area Rate for City and County of San Francisco Forty Years San � Francisco � Employment, � 1969 � 2009: Employment has changed Total � City � Jobs, � and � as � a � Share � of � the � Region little in San Francisco for 30 700,000 30% years. The city had fewer jobs at the 2008 peak of its business cycle than it did at 600,000 its peak in 1981. 25% San Francisco’s employment base has been 500,000 growing more slowly than 20% the rest of the Bay Area for SF � % � of � Bay � Area � Jobs Jobs � in � San � Francisco at least the last forty years. 400,000 In 1969, 28% of the jobs in 15% the Bay Area were located in the city. In 2009, only 300,000 17% of jobs were in San Francisco. 10% 200,000 SF � Jobs While San Francisco’s percentage of regional jobs SF � % � of � Bay � Area has increased slightly since 5% 100,000 2005, this has more to do with slower regional growth and the severity of the 0 0% recession in other parts of 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 the region. Source: Bureau of Economic Analysis 4

Office of the Controller – Office of Economic Analysis San Francisco Has a Declining Share of Bay Area Jobs in Every City and County of San Francisco Sector of the Economy San � Francisco's � Share � of � Bay � Area � Employment, � 1969 � 2009: Some of San Francisco's Four � Major � Industry � Sectors relatively slow employment growth can be attributed to 45% population growth in the other Bay Area counties. 40% Finance, � insurance, � and � real � estate As their population grows, they 35% have a greater need for local- Manufacturing serving industries, such as Retail � trade retail trade, than San Francisco 30% Services does. 25% However, San Francisco has not only seen slower growth in local-serving industries, it has 20% also seen lower growth in key parts of its economic base that 15% are not tied to the local population, such as advanced financial and professional 10% services. 5% 0% 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: Bureau of Economic Analysis 5

City and County of San Francisco Office of the Controller – Office of Economic Analysis 2. Structure of San Francisco's Economy 6

Office of the Controller – Office of Economic Analysis City and County of San Francisco Structure of San Francisco's Private Sector Regional, National, and Global Markets Consulting Creative IT Software Services Industries Internet Media Design IP HighTech Mgt. Advertising Manf. Financial & Recreation Experience Architecture Film & Insurance Professional Music Industries Traditional Performing Services Media Arts & Sports Banking Legal Museums Accounting Restaurants Admin / HQs & Nightlife Support Accommodations Services Wholesale Education Retail Trade Construction Local-Serving Industries Trade Personal Traditional Waste Civic Health Services Manufacturing Management Associations Social Real Estate Transportation Communications Services 7

Office of the Controller – Office of Economic Analysis The Export-Based Sectors Have Driven San Francisco's Overall City and County of San Francisco Employment Through Business Cycles Average � Annual � Change � in � Employment: Creative, � Visitor, � and � Local � Serving � Industries, � 2004 � 2010 Because the city's export base industries draw in spending 12.0% from outside of the region, their competitiveness strongly 10.0% determines how much the city's businesses and residents can 8.0% afford to spend on imported goods not made here (such as food and many manufactured 6.0% goods). 4.0% Creative In this way they also affect the Visitor performance of local-serving Local 2.0% industries. In the last recovery, both the Creative and Visitor 0.0% industries led the city's economy out of recession, and the local-serving industries � 2.0% followed later. In the 2008 recession, the creative and � 4.0% visitor industries actually declined first, before growing � 6.0% again in 2010 to lead the city's economy out of recession � 8.0% again. 2004 2005 2006 2007 2008 2009 2010 8

Office of the Controller – Office of Economic Analysis City and County of San Francisco Performance of the Four Sectors, 2004-2010 San � Francisco's � Four � Sectors: Growth � Share � Matrix, � 2004 � 2010 Two of the three clusters in San Francisco's economic base can 2.0 be termed Established Clusters. Creative Creative Industries (69,000 Industries 1.8 jobs) grew at over 4% per year Financial � & � Professional over the past business cycle Service � Industries 1.6 (2004-2010), and San Experience � Industries Francisco's concentration is 1.4 70% more than the national average. Experience industries (78,000 jobs) grew at 1.5% per 1.2 Location � quotient year during that period and are 40% more concentrated than 1.0 the U.S. average. 0.8 Local � Industries The city's financial and professional service industries 0.6 (107,000 jobs) remain concentrated but lost jobs during the last business cycle. 0.4 The set of local-serving businesses (186,000 jobs) are 0.2 losing jobs and have a low concentration, indicating weak 0.0 competitiveness. � 2% � 1% 0% 1% 2% 3% 4% 5% Average � Annual � Employment � Growth, � 2004 � 10 Source: Bureau of Labor Statistics 9

Office of the Controller – Office of Economic Analysis City and County of San Francisco Creative Industries Creative � Industries: Growth � Share � Matrix, � 2004 � 2010 Within the creative industries 5.0 cluster, Information Technology services is both the largest industry and its most successful Design major component. Over the last business cycle, covering the 4.0 Intellectual Great Recession, the industry Advertising Property grew over 10% per year. Management Information � Technology � Consulting and private-sector Services Traditional education are also major Media 3.0 sources of employment in this Location � Quotient Internet cluster. Media Among creative industries, only Consulting traditional media (newspapers, 2.0 Architecture magazines, radio and Software � Products television) and architecture lost jobs over the last business cycle. Film � & � Music Education 1.0 High � Tech � Manufacturing 0.0 � 5% 0% 5% 10% 15% 20% Average � Annual � Employment � Growth, � 2004 � 10 Source: Bureau of Labor Statistics 10

Office of the Controller – Office of Economic Analysis City and County of San Francisco Financial & Professional Services Financial � & � Professional � Service � Industries: The financial and professional Growth � Share � Matrix � 2004 � 2010 services cluster is split between the relatively healthy growth of 3.5 corporate headquarter establishments and traditional professional and business 3.0 services such as law and Legal accounting, and the decline of Services banking and insurance. 2.5 Banking Financial services was hard-hit Headquarters across the country during the Locaiotn � Quotient 2.0 past recession, but the decline Accounting in San Francisco has been a longer-term trend. 1.5 Insurance 1.0 Administrative & � Support 0.5 0.0 � 6% � 5% � 4% � 3% � 2% � 1% 0% 1% 2% 3% 4% Average � Annual � Employment � Growth, � 2004 � 10 Source: Bureau of Labor Statistics 11