San Diego: Economy

Major Industries and Commercial Activity

San Diego's economy, once dominated by military and defense endeavors (now the city's second largest economic sector) is led by manufacturing, particularly in the areas of shipbuilding and repair, industrial machinery and computers, metals production, and the manufacture of toys and sporting goods. In 2002, manufacturing contributed $25 billion to the county's economy. International trade is an important part of San Diego's economy, accounting for 37 percent of its manufacturing dollars. In 2001, goods moving through San Diego customs totaled $33.6 billion. The border between the San Diego area and Tijuana is the busiest in the world.

Since the founding of San Diego, the city's economy has been tied to San Diego Bay, a natural harbor which today is one of California's five major ports. It is an important link in the nation's international shipping trade; the port's two marine cargo facilities are the National City Marine Terminal, which is a primary port of entry for Honda, Acura, Volkswagen, Isuzu, Mitsubishi Fuso, and Hino Motors vehicles; and Tenth Avenue Marine Terminal, which handles a wide variety of commodities. The port also has a growing cruise ship operation, with more than 180 cruise ships docking annually.

San Diego's harbor has had the most significant impact on the local economy, however, through the Eleventh Naval District Headquarters, the base for the U.S. Navy Pacific fleet, which is located on the bay. San Diego is the Navy's principal location for West Coast and Pacific Ocean operations. Increases in military and homeland defense spending during the early 2000s has contributed to economic growth in San Diego. The military/defense industry is the city's second largest economic sector, bringing more than $13 billion into the local economy annually. The Marine Corps Base Camp Joseph H. Pendleton, the Marine Corps Recruit Depot, Marine Corps Air Station at Miramar, Naval Air Station North Island, Naval Station San Diego, and Naval Submarine Base, San Diego, are among San Diego's military installations.

With the San Diego Zoo and Sea World, a variety of historical and cultural attractions, and year-round good weather, San Diego is a top destination for tourists. In 2004, Travel and Leisure magazine ranked it America's second favorite city (behind Honolulu). San Diego's tourism industry is the third largest segment of its economy, with more than 26 million visitors to the county bringing more than $5.6 billion in annual revenues. Service industries have seen continued growth in recent years, specifically in areas such as dining, lodging, shopping and recreation services. San Diego regularly ranks as a top-10 U.S. vacation destination for international travelers.

The fourth largest segment of the economy is agriculture. San Diego County is the 20th largest agricultural producer in the nation. It is a top producer of nursery products, flowers, foliage plants, and avocados.

San Diego is a center for high technology and biotechnology. Nearly 160,000 high-technology workers are employed at 1,400 companies throughout San Diego. High technology growth areas include the biomedical, software, telecommunications and security sectors. Among all U.S. metropolitan areas, San Diego has the third largest concentration of biotech companies, with more than 32,000 biotech jobs at 499 companies.

Items and goods produced: acoustical materials, adhesives, airplane parts, bamboo, dairy products, electronics transmission and distribution equipment, plastic, rubber products, awnings, beverages, paper, clothing, dental products, detergents, computers, televisions

Incentive Programs—New and Existing Companies

Local programs

The city of San Diego offers permit and regulatory assistance, problem solving, regulatory reform, and project troubleshooting for large companies interested in expanding in the San Diego area. Most of these companies must be creating or retaining 200 or more jobs, generating $500,000 in annual revenue to the city, or be located in one of the City's three Enterprise Zones. The city's Business Cooperation Program offers incentives that can lower operating and facility costs for a variety of businesses. San Diego has 18 business improvement districts, 15 redevelopment project areas, 3 enterprise zones, a foreign trade zone, recycling market development zones, and a renewal community.

State programs

California's Commerce & Economic Development Program offers financial solutions by helping businesses secure capital to invest in major public, private, and nonprofit ventures; providing export assistance and financing; and supporting small businesses by offering financial assistance, training, and technical assistance.

Job training programs

The city of San Diego works closely with the San Diego Workforce Partnership, a nonprofit community corporation that supports the region's workforce and employers through education, training, and employment services.

Development Projects

Recent development highlights in San Diego include the expansion of the San Diego Convention Center, completed in 2001, and the construction of PETCO Park, which opened in 2004. The new 1.7 million square foot convention facility features 615,701 square feet of exhibit space. PETCO Park, home of the San Diego Padres, is located downtown and has 42,000 seats. In 2002, a $312.3 million program to build or improve 24 San Diego libraries was approved. As of 2004, more than 100 residential, commercial, retail, and entertainment development projects in San Diego's downtown area were underway or on the drawing board.

Economic Development Information: City of San Diego Economic Development Division, 600 B Street, Suite 400, San Diego, CA 92101; telephone (619)533-4233; fax (619)533-5250; email

Commercial Shipping

The Port of San Diego handles hundreds of merchant ships each year; nearby Tijuana, Mexico, is also a duty-free port. The Burlington Northern Santa Fe (BNSF) railroad connects San Diego to major market areas. More than 80 trucking companies are established in metropolitan San Diego, providing freight, hauling, or equipment services. Air cargo services are maintained at San Diego International Airport, which handles more than 70,000 tons of cargo annually.

Labor Force and Employment Outlook

A large portion of the San Diego work force is derived from in-migration, creating a diverse population. In 2002, San Diego added nearly 20,000 jobs, while the nation as a whole experienced an economic recession. Among the three occupations expected to see the most growth in San Diego in the near future, all are in the information technology field. A 2005 report by the San Diego Workforce Partnership indicates that the occupations with the highest growth rate between 2001-2008 are expected to be computer support specialists (57.9 percent growth), network and computer systems administrators (51.9 percent), and network systems and data communications analysts (50.0 percent). According to the same report, occupations forecasted to have the most opportunities for job seekers—the most job openings between 2001 and 2008—include janitors and cleaners, security guards, laborers, stock clerks, computer support specialists, bookkeepers, and elementary school teachers.

The following is a summary of data regarding the San Diego/Carlsbad/San Marcos area labor force, 2004 annual averages.

Size of non-agricultural labor force: 1,258,600

Number of workers employed in . . . natural resources and mining: 400

construction: 87,300

manufacturing: 104,200

trade, transportation, and utilities: 214,400

information: 36,400

financial activities: 81,500

professional and business services: 205,100

educational and health services: 121,300

leisure and hospitality: 145,200

other services: 47,600

government: 214,700

Average hourly earnings of production workers employed in manufacturing: $13.70

Unemployment rate: 4.6% (January 2005)

San Diego: Economy

Largest employers Number of employees
Federal Government 44,200
State of California 32,400
San Diego Unified School District 25,230
University of California at San Diego 21,444
County of San Diego 17,700
City of San Diego 11,085
Qualcomm Inc. 10,431
Sharp HealthCare 8,111

Cost of Living

The following is a summary of data regarding key cost of living factors for the San Diego area.

2004 (3rd Quarter) ACCRA Average House Price: $597,641

2004 (3rd Quarter) ACCRA Cost of Living Index: 144.8 (U.S. average = 100.0)

State income tax rate: Ranges from 1.0% to 9.3%

State sales tax rate: 6.0% (food and prescription drugs are exempt)

Local income tax rate: None

Local sales tax rate: 1.75

Property tax rate: 1.00% of assessed valuation in city proper