The New York Times today lamented slow hiring in the tech sector, which has generally slithered through the recession unscathed.

The disappointing hiring trend raises questions about whether the tech industry can help power a recovery and sustain American job growth in the next decade and beyond. Its tentativeness has prompted economists to ask “If high tech isn’t hiring, who will?”

So how does this impact San Diego, where we’re relying on the tech sector to get us through this rough patch?

Well, the story focuses mostly on the software industry, where growth is slow and many jobs are being outsourced overseas.

That doesn’t really apply in San Diego because many of the local tech companies are devoted to biotech, a field that benefits from a growing health care market and is less likely to outsource jobs.

But these companies also have their own unique problems, including a lack of venture capital investment and a sluggish stock market, which have slowed hiring and could create a bigger employment dip in the future.

In April, the National University System’s Institute for Policy Research published a study showing the biotech industry’s employment increased slightly between 2008 and 2010, while the overall local tech industry lost 3,600 jobs.

The reason for biotech’s employment resilience so far is mainly because almost all of the work done to research and develop new drugs and medical devices can’t be easily outsourced, said Marney Cox, the chief economist at San Diego Association of Governments. Even pharmaceutical companies are generally unwilling to move production of their drugs to cheaper places like China and India because they are worried about losing control of their patents.

“If they start making drugs in China and India, the companies worry generic forms of those drugs will begin to pop up,” Cox said.

Joe Panetta, the CEO of local trade group Biocom, said job openings are shifting away from larger established biotechs, but the jobs aren’t going overseas. Instead, new companies that do contract research for the bigger biotechs are cropping up locally (like one owned by the entrepreneur we profiled). These research contractors sometimes even turn the idea of outsourcing upside down.

“I’ve been to China several times over the last few years, and what I keep hearing is that, in fact, companies in China have the desire to work with firms here that do contract research,” he said.

But San Diego’s biotech industry has not been immune to the recession, and actually could take a harder hit in a few years if the economy doesn’t improve, Cox said. These local companies depend on venture capital investment and stockholders for most of their funding, and if those money sources don’t improve soon, companies’ current resources could dry up.

“The longer this recession lasts, the more chances there will be that when some of those products’ venture capital funds run out, there will be a substantial decline,” Cox said. “If the market doesn’t pick back up, we will see a decline here. It just hasn’t occurred yet.”

Please contact Claire Trageser directly at or follow her on Twitter at

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