San Francisco: Economy
Major Industries and Commercial Activity
Since the days of the Gold Rush, San Francisco has been an important financial center. Located halfway between London and Tokyo as well as between Seattle and San Diego, San Francisco is at the center of global business. Because of its natural, landlocked harbor, San Francisco has thrived on trade and shipping since its early days. Today, through its main port in Oakland, eight smaller ports, and three key airports, the Bay area handles nearly 30 percent of West Coast trade. The port system is augmented by San Francisco International Airport, the country's ninth largest and the world's fourteenth largest airport.
San Francisco's economic activity attracts and supports a range of industries. As the base for some of the country's largest banks, the Pacific Exchange, and over 30 international financial institutions, San Francisco is a center for world commerce. Most recently San Francisco is considered the birthplace of new media; its South Park neighborhood houses some of the most innovative new technology companies in the world. San Francisco's Mission Bay neighborhood is a model for collaborative innovation between the biotechnology industry and academic researchers.
World War II started a local boom in defense industries, resulting in subsequent high-technology development that hasn't ceased. Nearby Silicon Valley, along with Stanford University, are considered to be among the places where the worldwide technology boom began, and they remain on the leading edge today. More than 2,800 Bay Area companies produce computers, semiconductors and related components, scientific instruments, and various other electronic systems and equipment. Aerospace industries such as the National Aeronautic and Space Administration (NASA) and Lockheed also maintain major research facilities in the area.
Another important high-technology industry in the area is medical science; several hundred companies in the Bay Area are setting the pace in research and development of pharmaceutical products, medical electronics, and genetic engineering. Almost one third of the total worldwide biotechnology workforce is employed in San Francisco and the surrounding region. Other prominent industries are tourism, which generates $6.73 billion in tourist spending each year and is the largest industry in the region; fashion apparel, with the Bay Area home to the world's largest apparel maker, Levi Strauss & Co.; health care; education; and restaurants.
Items and goods produced: paper boxes, confectionery, paints, chemicals, glass, leather, lumber, textiles, steel, clothing, bags, furniture, auto parts, electric machinery, matches, clay, rubber products, tools, beverages
Incentive Programs—New and Existing Companies
Businesses that create new permanent jobs in San Francisco receive a two-year credit against their city payroll tax liability for the new employees as part of the New Jobs Tax Credit. San Francisco's enterprise zone offers a variety of city and state economic benefits for businesses that locate within it. With the Mayor's Office of Community Development Loan Fund, companies that create jobs in the city and meet certain federal criteria are eligible for loans ranging from $1,000 to $250,000. San Francisco is a state-designated Recycling Market Development Zone, enabling businesses involved in recycling to utilize low-interest loans, technical assistance, siting and permitting assistance, and reduced permit application fees. SFWorks is a program that assists employers in hiring low-income individuals who are transitioning to work or trying to advance their careers. Many businesses that participate may qualify for a number federal and state hiring tax credits, ranging from $2,400 to $8,500.
Companies that purchase manufacturing or R&D equipment for use anywhere in California are allowed a tax credit equal to 6 percent of the costs paid or incurred for acquiring the property as part of the Manufacturers' Investment Credit program. The California research and development tax credit allows companies to receive a credit of 8 percent for qualified research expenses (research done in-house), and 12 percent for basic research payments (payments made in cash to an outside company).
Job training programs
The San Francisco Private Industry Council (PIC), the organization responsible for administering the federal Workforce Investment Act (WIA) programs, funds offers significant benefits to employers who hire PIC trainees. Under the on-the-job training program, the PIC will reimburse employers 50 percent of wages paid to participants for as long as the first 6 months of employment. The California Employment Training Panel (ETP) assists businesses in training employees through a cost reimbursement program. The California State Enterprise Zone (EZ) Hiring Tax Credit is a state income tax credit for employers who hire job seekers from targeted groups. Employers can claim up to $31,605 in tax credits over a five-year period when they hire qualified employees.
Pacific Bell Park, the new home of the San Francisco Giants, was completed in April 2000. The $306 million project took more than 2,000 construction workers and more than 650,000 bricks to build the 42,000-seat stadium. San Francisco's premier convention facility, Moscone Center, added an additional 300,000 square feet of function space in 2003. With the completion of Moscone West, which opened in 2003, today's Moscone Center is a collection of facilities covering more than 20 acres on three adjacent blocks. It anchors the 87-acre Yerba Buena Center redevelopment district in a neighborhood of hotels, theaters, restaurants, museums, galleries, housing, parks, and urban recreation centers. The new Sony Metreon retail and entertainment complex and Children's Center are also located in the Yerba Buena Center. The Children's Center includes facilities for childcare, ice skating, and bowling, as well as an arts and technology center.
San Francisco continues to invest in improvements that fuel its world-class reputation. Located midway between London and Tokyo, America's closest major city to the Pacific Rim, it sits at the center of the global community. A multiyear, $2.4 billion program to bring San Francisco International Airport into the 21st century was nearly completed in 2005, and includes new parking garages, a consolidated rental car center, and other amenities. In 2003, a $1.5 billion new Bay Area Rapid Transit (BART) station began connecting trains to the heart of San Francisco and the East Bay; an intra-airport rail system links airport terminals and facilities together. Revitalization of San Francisco's scenic waterfront, which runs 7.5 miles along its northern and southern perimeters, is an ongoing project to reconnect the city to this historic area and enliven the area for both residents and visitors; the project will include the addition of an expanded ferry terminal and new office space.
Economic Development Information: The San Francisco Partnership, 465 California Street, 9th Floor, San Francisco, CA 94104; telephone (415)352-8801; fax (415)956-3844; email email@example.com
San Francisco International Airport is served by all of the major air freight companies; some 600,000 tons of cargo are handled each year. The port of San Francisco has terminals offering six berths, on-dock rail, acres of paved land for staging cargo, more than 550,000 square feet of covered storage for weather-sensitive cargo, cranes capable of working both breakbulk and containers, and 624 reefer outlets. Once a major West Coast cargo port that lost much of its business to Oakland, a resurgence has happened in recent years and strategic plans are underway to continue the volume increase of cargo shipping.
Labor Force and Employment Outlook
San Francisco has the highest concentration of new immigrants in the nation, providing a continuous supply of workers at all levels of expertise. The city also boasts some of the most well-trained professionals in the United States, with nearly 70 percent of San Franciscans having educational training beyond high school. Approximately 30 percent have a bachelor's degree, nearly twice the state level, and more than 16 percent of residents hold a graduate or professional degree, compared to 9.5 percent for the state.
The city's workforce is a magnet for business and employment. According to the U.S. Department of Labor, San Francisco's diverse and educated population results in one of the most productive workforces in the country and the world. Growth is expected to continue in the areas where San Francisco is already strong: high-technology industries, medical science and health-related fields, and finance. As the sixth largest metropolitan market in the United States, San Francisco offers future opportunities in areas such as retail trade, service industries, and restaurants.
Small businesses thrive in San Francisco; according to the city there are a multitude of small and medium sized businesses in the city, and 95 percent of all of the city's businesses employ 50 workers or less.
The following is a summary of data regarding the San Francisco metropolitan area labor force, 2004 annual averages.
Size of nonagricultural labor force: 938,400
Number of workers employed in . . .
natural resources and mining: 200
trade, transportation, and utilities: 164,700
professional and business services: 175,000
education and health services: 99,900
leisure and hospitality: 113,500
Average hourly earnings of production workers employed in manufacturing: $19.93
Unemployment rate: 3.6% (December 2004)
Cost of Living
San Francisco's cost of living is one of the highest in the country, due in part to the tight labor market and the high cost of housing, food, and other consumer goods. It is reported that Bay Area residents possess the third-highest discretionary income in the United States. This is because of the high percentage of an educated workforce and the concentration of jobs in high-paying industries. Its housing market has experienced record-breaking appreciation, with the median home price increasing by nearly 96 percent since the early 1990s. Although the residential property tax is low, because property values are high, the absolute payment is relatively high.
The following is a summary of data regarding several key cost of living factors for the San Francisco area.
2004 (3rd Quarter) ACCRA Average House Price: $846,000
2004 (3rd Quarter) ACCRA Cost of Living Index: 182.4 (U.S. average = 100.0)
State income tax rate: Ranges from 1.0% to 9.3%
State sales tax rate: 6% (public utilities and prescription drugs are exempt)
Local income tax rate: None
Local sales tax rate: 1.25%
Property tax rate: Real-estate (secured property) taxes are set for the 2003–2004 roll year at $1,117 per $100 of full value as determined by the last assessment or as reassessed at the time of sale.
Economic Information: San Francisco Partnership, 465 California Street, 9th Floor, San Francisco, CA 94104; telephone (415)352-8801; fax (415)956-3844; email firstname.lastname@example.org
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