Monday Morning Thoughts: Why Innovation Can Work in Davis

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Last week the New York Times ran an article that highlighted a report documenting “the concentration of cutting-edge industries in a few coastal areas.”  But, while this represents perhaps bad news for midwestern cities and states hoping to innovate, it may represent good news for Davis.

The Times reports: “There are about a dozen industries at the frontier of innovation. They include software and pharmaceuticals, semiconductors and data processing. Most of their workers have science or tech degrees. They invest heavily in research and development. While they account for only 3 percent of all jobs, they account for 6 percent of the country’s economic output.”

However, the Times adds that “if you don’t live in one of a handful of urban areas along the coasts, you are unlikely to get a job in one of them.”

Boston.  Seattle.  San Diego.  San Francisco.  Silicon Valley.  They captured nine of ten of those jobs in that industry from 2005 to 2017.  The report released a week ago found that five metro regions accounted for one quarter of these jobs, while half of the 382 metro areas in the country – including LA, Chicago, and Philadelphia – lost such jobs.

That concentration, the Times notes, “does not appear to be slowing down.”  This is a cause of concern because of America’s deepening inequality.

At least for Davis, this report serves as a reason for hope.

The report from Mark Muro and Jacob Whiton from the Brookings Institution’s Metropolitan Policy Program, and Rob Atkinson of the Information Technology and Innovation Foundation, a research group that gets funding from tech and telecom companies, identified about 13 “innovation industries.”

These include “aerospace, communications equipment production and chemical manufacturing — where at least 45 percent of the work force has degrees in science, tech, engineering or math, and where investments in research and development amount to at least $20,000 per worker.”

Overall, the authors argue “a broad federal push is needed to spread the business of invention beyond the 20 cities that dominate it.”

“Hoping for economic convergence to reassert itself would not be a good strategy,” Mr. Muro said.

However, if we look at the map, we see that we happen to live in the convergence of the first (San Francisco) and third (Silicon Valley) biggest growth areas for innovation.

Moreover, we are already set up to take advantage of the knowledge economy.  According to data presented by GSEC’s (Greater Sacramento Economic Council) Danielle Casey in August, 69 percent of Davis’ population with bachelor’s degrees have STEM (Science, Technology, Engineering and Mathematics) degrees.  From other data, we see that 57 percent of students who graduate from UC Davis, graduate with a STEM degree.

As she put it, “high technology jobs are STEM jobs related to advanced technology in computing, manufacturing and health care…”

The Times argues that “expanding the knowledge economy across all of America might be a fool’s errand.”  But Davis is ready-made and positioned to take advantage of this push.

Moreover, Sacramento itself is a rising star in the startup field.  As the Bee reported in June: “Long seen as little more than a government town, Sacramento is rising in the ranks of cities where young entrepreneurs and startup companies want to stake a claim.”

“The once sleepy government town is ripe for new tech companies to take shape here and feed the early-stage startup scene,” analysts at CommercialCafe wrote.

Writes CommercialCafe: “With a 45% increase over five years in the number of jobs in computer, engineering, and science occupations, Sacramento placed first for tech employment growth. Census data showed that the number of residents aged 25 to 39 with a science and engineering bachelor’s degree or more increased by 16.6%, marking the largest percentage increase in tech educated talent pool.”

The Times article is of course focused on expanding the knowledge economy off the coasts.

They note, for instance, that places like Erie (Pennsylvania) and Flint (Michigan) “might never attract the Googles or Apples of the world.  However, they note: “But midsize cities like St. Louis, Pittsburgh and Columbus, Ohio, could feasibly transform into hubs of technological entrepreneurship.”

The report by Brookings proposes about eight to ten cities, far from the coasts, “that already have a research university and a critical mass of people with advanced degrees.”  They note: “The government would then spend about $700 million a year for research and development in each of them for a decade.”

That sounds like a tough order.  But, fortunately for us, we already check all of those boxes and are well on our way to the kind of investment needed to become a technology hub – especially situated where we are.

As the article notes: “Young educated workers will flock to cities with large knowledge industries because that’s where they will find the best opportunities to earn and learn and have fun. And start-ups will go there to seek them out.”

But we already have a lot of that.  What we need is a place for start-ups and other companies to go.  The rest is already in place.

—David M. Greenwald reporting


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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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13 thoughts on “Monday Morning Thoughts: Why Innovation Can Work in Davis”

  1. Ron Oertel

    “However, the Times adds that “if you don’t live in one of a handful of urban areas along the coasts, you are unlikely to get a job in one of them.”

    “You” (on average) are unlikely to get a job in one of them, even if you do live in a “handful of urban areas”.

    And, you’re even less-likely to be able to afford housing costs, which were driven up by the “handful” who do have the top-level qualifications and skills to get one of those jobs. (Not to mention the founders/investors, who retain the bulk of the money, by far.)

      1. Ron Oertel

        Ideally, there should be a “balance” – thereby avoiding a situation in which an excess number of jobs exceeds the needs of a local population – resulting in an increase in both housing prices and development pressure.

        Gee, I wonder what other city (that begins with a “D”) already experiences a similar situation as a result of jobs on campus?  (But unlike the Bay Area, is surrounded by less-expensive housing – resulting in surrounding sprawl, as well.)

        1. Richard McCann

          1) The demand for housing in Davis is much greater than the population as reflected in the price premium over surrounding communities. Serving only the local population is creating artificial scarcity that enforces continued segregation and enhances the wealth of long-time residents.

          2) As you’ve pointed out, the UCD workforce (of which only a tiny fraction will live on campus) also needs housing. Given our obligation to support higher education in California, our city needs to be prepared to house that workforce and to reduce the number commuting from elsewhere.

          3) With more residents leaving town to work rather than commuting in, we are losing City revenues that are needed to reach a healthy fiscal situation. (And please don’t repeat that there isn’t a problem. The facts support that there’s a problem.)

        2. Ron Oertel

          Richard:  The article references jobs, not housing.

          More jobs = more demand for housing.  In a city that already has an excess number of them, on campus.

          What you and David are advocating will make the situation more challenging (regarding housing).

          I have yet to see any coherent argument put forth by those who claim to be concerned about housing shortages/cost (and the resulting challenges created by adding even more more jobs).

          In fact, I suspect that some who claim to have such concerns are actually not concerned at all. (It’s usually the same folks who also advocate on behalf of development interests – regardless of what the issue is – including Affordable housing requirements.)

    1. Richard McCann

      Have you seen the latest unemployment rates in these areas? Getting a job is much easier even from seemingly unrelated businesses because the spillover effect is so large. A new tech job is likely to produce 1 to 2 more new jobs at suppliers and services in the region. (I work on estimating regional economic impacts of different policy proposals and actions.)

      Yes, housing costs go up, and they go up more when the housing supply is artificially constrained. And there’s an offsetting increase in incomes that pay for the increased costs. That’s how land values are created–they are set by the willingness to pay of home buyers that is driven by their income. When housing prices outstrip the ability to pay, as they did by 2007, then the housing market prices collapse.

      Read the NY Times article and you’ll see why the industry agglomerations are happening. Davis situated on the periphery of the single biggest concentration which makes us particularly attractive for some type of innovation center.

      1. Ron Oertel

        And there’s an offsetting increase in incomes that pay for the increased costs.

        Which is always insufficient – except for those at the top.

        It’s a primary reason that there’s a net exodus of people (at lower/mid income levels) leaving the Bay Area and the state as a whole.

        It’s happening to a lesser degree in places such as Davis/Sacramento, as well. (As former Bay Area residents move to these areas – many of whom could never afford to go back.)

  2. Matt Williams

    In an effort to avoid the Groundhog Day Syndrome that dominates the Vanguard all too often these days, let me try and approach this issue from a slightly different tack.  The article states:

    “… it may represent good news for Davis”

    “At least for Davis, this report serves as a reason for hope.”

    and

    “According to data presented by GSEC’s (Greater Sacramento Economic Council) Danielle Casey in August, 69 percent of Davis’ population with bachelor’s degrees have STEM (Science, Technology, Engineering and Mathematics) degrees.  From other data, we see that 57 percent of students who graduate from UC Davis, graduate with a STEM degree.”

    I personally buy into that “hope” concept, but finding a reality-based route to “get there” is the real challenge.  Council member Will Arnold said it best from the dais several months ago, “My biggest question, and I think is the biggest question that remains for everyone – how do we get from here to there?”

    If we are going to actually making Innovation a major part of the Davis economy, “My biggest question, is – how do we get from very uncertain Hope to a much more certain reality?

    Two thoughts come to mind.  The first is that the Aggie research Campus should lead the way in sharing with the Davis community where they are on the Hope-Reality scale.  The only actual company that we know about vis-a-vis ARC is FMC Schilling Robotics, and in that case the reality is that they are leaving the Davis innovation economy rather than growing the Davis innovation economy.  ARC needs to be something more 100% Hope.  ARC needs to demonstrate it is Real.  The February meeting of the Finance and Budget Commission will be an excellent venue for ARC to walk the walk, as opposed to talk the talk.

    The second thought is that UC Davis needs to be much more active and public in its efforts to grow the Davis innovation economy.  Close to 100% of the startup companies that UCD has announced in their recent press releases have been healthcare technology associated with UCD’s Sacramento campus.  Where are the innovations that grow from STEM work on the Davis campus?  Those we don’t hear anything about.  UCD needs to change that.

    There are no doubt other steps that could be made to translate Hope into Reality.  The key is not only to identify those steps but to make actual tangible progress.  Otherwise, all we will have is Hope.

     

     

     

    1. Ron Oertel

      At the risk of repeating the “Groundhog Day” scenario, do you count the 4,340 parking spaces as “reality” or “hope”?  😉

      Or, is it “hope and change”?   (What was Obama’s slogan, again?)

      Could it be that Davis simply isn’t going to support this, no matter how it’s promoted (or how it’s promised to “pay the city’s bills”)? (I wonder if the promised businesses and employees know what’s being “expected” of them, regarding that?)

  3. Don Shor

    The obvious fields for STEM graduates from UC Davis in the best-known area of expertise of this campus would be ag sciences. There are plenty of ag science companies in the area, along with related industries. Unfortunately, there is a pattern.

    The following ag companies are presently listing job openings in the area:

    Tauzer Apiaries

    BASF Corporation (West Sac)

    BioConsortia *

    Corteva Agriscience

    Garton Tractor

    HM. Clause *

    Intexon *

    Land IQ LLC (Sac)

    Limagrain Europe

    NuFarm Americas

    Sakata Seed

    Syngenta

    Wilbur-Ellis (Dixon)

    Those with the * asterisk are located in Davis. All the others are located in Woodland, Dixon, or West Sac/Sac. This town would do well to encourage ag science industries to locate here.

    1. Matt Williams

      “This town would do well to encourage ag science industries to locate here.”

      I agree 100% Don, but like “hope,” “this town” is alot like the Pillsbury Doughboy … hard to pin down and lacking specifics.  As I said in my original post, UCD needs to do more, and our City government needs to do more, and DJUSD needs to do more.  Actions speak louder than words.

       

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