In summary

Here are 3 things California needs to do to distribute the state’s innovation infrastructure to regions that have been largely ignored.

By Matt Horton

Matt Horton is a director at the Milken Institute’s Center for Regional Economics and California Center, mhorton@milkeninstitute.org.

Fred Walti, Special to CalMatters

Fred Walti is president and CEO of Network for Global Innovation, NGIN, fred@ngin.org.

Today, the COVID-19 pandemic is accelerating long simmering unemployment trends precipitated by pre-pandemic advancements in technology and automation. 

While automation has enhanced productivity, it has also eliminated jobs and reshaped the skills needed for others. Although these disruptive forces impacting the workforce are not new, they do exacerbate long-standing social inequities embedded in our pre-COVID economic landscape.

If the future of work has arrived and automation trends are here to stay, without backstops, the rich will continue getting richer and the poor poorer throughout the state. This dynamic resulted in many leaders calling for increased taxation of wealth in order to distribute more equity. But redistributing wealth alone will not address the underlying problem – that only a few Californians have access to most of the higher wage, family-supporting job opportunities that innovation delivers.  

This widening opportunity gap manifests most sharply when looking at new job creation and expanding opportunities in the technology sectors. On a national level, only five cities in the U.S. – Boston, San Jose, San Diego, San Francisco and Seattle – account for 90% of all tech sector job growth. The world knows of Silicon Valley, or San Diego or even Silicon Beach as innovation centers, but what of Modesto, Riverside, Redding and El Centro? 

It’s not too late to address these imbalances. California’s successful record in incubating technology spans from clean-tech to biotech, electronics to entertainment, and from sea to ground and air to space demonstrate California’s potential for scale. We need to start now to provide innovation to those who don’t have access.

Outlined in the Milken Institute’s, Recalibrating Workforce Development Across California report, by leveraging a Hub & Spoke economic development framework, state leaders can embrace a model that allows for enhanced partnership with their regional counterparts to promote more equitable growth and competitiveness strategies from the ground up. 

What California needs to do:

  1. Enhance the state’s innovation infrastructure by directing investments to regions that lack the necessary capacity and resources to capture the spillover effects resulting from R&D and commercialization. In essence, we need to de-risk and give Inland California a seed investment in its future. Using a Hub & Spoke coordinated state governance framework can direct needed investments in talent and innovation infrastructure to those regions most in need. 
  1. Invest in industry specific growth initiatives across Inland California that capitalizes on local strengths and assets. But where to begin? No other place in the U.S. has the rare earth and lithium deposits that Imperial Valley does. Let’s start by realizing the potential of the “Lithium Valley,” by directing the necessary investments in infrastructure and talent designed to incubate growth in the renewable energy sector. 
  1. California’s higher education leaders should launch a “Future Proofing California Workforce” taskforce in order to meet the reskilling, training and employer partnership needs across all higher education platforms. We not only need to rethink how we prepare our young people for the future: independent problem solving; embracing the entrepreneurial spirit, and emphasizing soft skills, creativity and technology but how we are affording opportunities for social mobility and those seeking economic advancement. 

As mirrored in similar coastal/rural divides throughout the U.S., those in California’s inland economies are among the most vulnerable to abrupt and simmering societal change, whether it be health, climate or technology induced. COVID-19 has accelerated the social imperative for immediate action while reminding us we cannot simply sit back and continue to merely hope that more economic prosperity will trickle down and will find those left behind. 

It is up to us to build this future and in doing so, rebuild the California dream for new generations. By fostering collaboration among the region’s innovation leaders, we can begin to distribute the state’s innovation infrastructure framework to those regions that have been largely ignored. 

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