San Diego Economy: Defense, Biotech, and the Border

The San Diego metro area — formally San Diego-Chula Vista-Carlsbad — is the second-largest metro economy in California after Los Angeles. It is anchored by the largest concentration of U.S. Navy and Marine Corps installations on the West Coast, one of the leading biotech clusters in the country, and a major cross-border manufacturing relationship with Tijuana that makes the metro one of the most active U.S.-Mexico trade corridors.

This is a plain-English tour of how the San Diego metro economy works. For the state-level picture, see California Economy. For the country-level view, see The State of the U.S. Economy and the broader Economy hub and city cluster.

How big is the San Diego metro economy?

For example, recent metro GDP for San Diego-Chula Vista-Carlsbad has run around $290 billion, according to the Bureau of Economic Analysis. Metro population is roughly 3.3 million, per the U.S. Census Bureau. The San Diego-Tijuana cross-border region together holds more than 5 million people and is sometimes treated as a single binational economy.

The biggest industries

A handful of sectors do most of the work in the San Diego metro economy:

• Military and defense — Naval Base San Diego, Naval Air Station North Island, and Marine Corps Base Camp Pendleton anchor one of the largest military footprints in the country. General Atomics, Northrop Grumman, and many smaller defense contractors cluster around the bases.
• Biotech and pharmaceuticals — the cluster around UC San Diego, Salk Institute, Scripps Research, and the Torrey Pines mesa is one of the leading biotech centers in the U.S., with major operations from Illumina, Pfizer, and dozens of smaller firms.
• Tourism and hospitality — beaches, the San Diego Zoo, Balboa Park, and a year-round event calendar drive a major travel sector.
• Healthcare — UC San Diego Health, Sharp HealthCare, Scripps Health, and Kaiser Permanente together employ huge numbers of workers across the metro.
• Tech and software — Qualcomm is headquartered in San Diego and anchors a major chip and wireless cluster. Software, cybersecurity, and data-center firms have grown around it.
• Cross-border manufacturing — many companies operate paired facilities in San Diego and Tijuana, taking advantage of the binational labor market.
• Higher education — UC San Diego, San Diego State, and several private universities employ large faculty and staff workforces.

Jobs and wages

Metro labor data is published by the Bureau of Labor Statistics West region. For example, the San Diego metro unemployment rate has typically run close to the national average, with steadier swings than LA because of the large military and biotech workforces.

The City of San Diego uses California's statewide minimum wage, which is well above the federal floor of $7.25, and specific industries — fast food and healthcare — have their own state-set higher minimums. The latest rates are published by the California Department of Industrial Relations.

Cost of living

San Diego is one of the most expensive metros in the country, especially for housing. For example, recent HUD Fair Market Rent for a two-bedroom in the metro has run around $2,400 a month, with the coast (La Jolla, Coronado, Del Mar) far higher and inland areas (El Cajon, Escondido, Chula Vista) lower. Current county-level numbers are at HUD User.

The federal government tracks region-specific inflation data through the BLS West region. San Diego's CPI tends to track close to the national average month to month, but the level of prices is among the highest in the country.

Taxes in San Diego

San Diego residents pay California's progressive state income tax, with the highest top rate in the country. Combined sales tax in the City of San Diego is 7.75%, made up of the state's 7.25% base plus a small county addition. Property taxes are governed by the state's Proposition 13 system, which caps how fast assessed value can grow once a property changes hands.

How the San Diego metro fits into the national picture

San Diego is the U.S. military's main Pacific naval hub. When the Navy expands or contracts, when carriers move in or out of port, and when defense procurement budgets shift in Washington, San Diego feels it within a quarter or two. The biotech cluster gives the metro a second engine that runs on a different cycle — drug-development funding tracks federal research spending and venture capital, not military budgets — which has helped steady the overall economy.

The cross-border economy

San Diego and Tijuana share more than a fence. Tens of thousands of people cross the border in both directions every day for work, school, and family. Many U.S. companies operate paired facilities — engineering and design in San Diego, manufacturing in Tijuana — that depend on smooth border crossings. Federal data on U.S.-Mexico trade lives at the Bureau of Transportation Statistics.

A note on the numbers

Numbers in this article change every quarter — always check the latest from BEA, BLS, and HUD User for the most current data on the San Diego metro.