♪♪ Scott: Prior to the pandemic, the Sacramento region was on a roll.

Now, as we try to recover, what's next for our economy and growing our region's prosperity?

Barry Broome, CEO of the Greater Sacramento Economic Council, joins us today to share his insights on the future of the capital region.

Barry, it's been six and a half years since you came to Sacramento to lead the council.

How are we different today than we were when you first arrived?

Barry: Oh, I think we're dramatically better.

I mean, first off, uh, look at the, uh, leadership that's coming from higher education in our community.

I mean, Aggie Square, the California Mobility Center, the Carlsen Center at Sacramento State, um, all of the innovation and commitment that, uh, chancellor Gary May and Dr. Robert Nelsen have shown the community.

You know, people don't often think about it, but that's 70,000 students, one of the only 10 R1 universities in the United States doing a billion in research.

I mean, getting them shoulder to shoulder, leaning into this market, um, was, uh, a critical achievement when you consider, especially, UC Davis.

In 2015, I met with the mayor of Davis, and I met with UC Davis officials, and they told me they were more of a Bay Area, uh, university than a Sacramento university.

Scott: Really?

Barry: Yeah.

Scott: Well, uh, stop there for a sec.

Tell us more about that, 'cause that's interesting to hear.

Barry: Yeah.

I mean, you know, I was in a meeting with, uh, chancellor Katehi at the time and, you know, the deans all had their PhDs from Berkeley.

They all came out of Stanford.

They all grew up in the peninsula.

They all had Bay Area ties.

If you remember, uh-— and this isn't to show-— to, you know, throw shade at anyone-— but our tech transfer office lived in San Francisco and commuted out, and all of our spinouts would go into the Bay Area and Silicon Valley, automatically.

And, really, the faculty and the career counseling centers all encouraged the students to migrate to the Bay Area and Silicon Valley.

You know, it started under chancellor Katehi, but now, that's been completely reverse-engineered, where UC Davis, now, is shouldering, uh, the Sacramento region's economy as part of its mission, alongside Sac State.

Incredible shift and transformation, from the insular philosophy of UC Davis to stay on the Davis campus, operate in an ivory tower-— I mean, I think what Gary May has done at UC Davis has probably been as profound as any leader in the history of our community.

That doesn't happen without Gary and Robert being on the executive committee of this organization, and our own, uh, efforts to present and pitch cases on the role of universities in the economy.

So, I would say that's the number one thing that's happened.

Scott: So, let... let... let's talk about that for a sec, because the conventional wisdom has always been that Sacramento could not get out of its own way and would always play, you know, sort of the "second chair" to the Bay Area.

What's changed in terms of the mindset, as well as the commitment?

Barry: I think it's been the leadership of the community.

You know?

I mean, the community has been willing to take risks, um, and we only have 45 CEOs on this board.

And, from the original board, I've only lost two people in six and a half years, going through a pandemic.

So, when the leadership starts to demonstrate a commitment-— I mean, Mike Teel's leadership in Food and Ag-— he's funded the, uh, food and agricultural accelerator in Woodland.

Um, I mean, the things that Kevin Nagle are doing-— he's on Gary May's advisory board.

There was almost no connectivity between the CEOs, and I may have mentioned this to you before, but I introduced Pat Talamantes, who was the CEO of McClatchy, and Mike Teel, who is the CEO of Raley's.

I introduced them at a board meeting, native Sacramentans, two iconic companies, 1.2 miles apart from each other in their headquarters, and they had never met each other until the first executive committee.

So, we were very provincial, very dispersed, the CEOs operated in small pockets, you know, kind of a great place to live, but spent a lot of their resources and money elsewhere-— Having that shifted under the Higher Education Leadership, and then, all of these governments have been working together for almost seven years.

And if you look at Woodland, they're coming out with a 235-acre research park.

Davis's number one priority, as a city, is to get the Mace road research park off the ground.

How different was that to Davis five or six years ago?

Placer County-— Scott: Okay.

So, that... that's interesting to hear, Barry, because, you know, a... another one of the assumptions that's been embedded in this region for decades has been that this is a government town, and that our mentality is... is one, government is sclerotic and... and is not ever a part of the solution, and the second thing is... is that we can't think big enough to start to do these mega type of initiatives like Aggie Square, or like, uh, a research park out in Woodland.

And it's interesting to hear that, because it... it would seem that maybe there is something different in this region today than when you first arrived.

Barry: Well, we just went over-— You know, take, uh-— You had-— SARTA was your only accelerator model.

Right?

You now have the Cambridge Innovation Center taking a hundred thousand square feet at Aggie Square.

You have the Carlsen Center at Sacramento State.

I mentioned Raley's food and agricultural accelerator in Woodland.

Uh, the Growth Factory, my good friend, Mark Haney, is launching.

It's going to have a presence in Roseville, have a presence in Rocklin.

We're working in-— with Folsom right now on a digital platform around the old schoolhouse.

You know, uh, Folsom has acquired that.

The Folsom chamber does a great job.

And, you know, there's a much different appetite to do economic del-— development than there was before.

And, you know, now, what you have, too-— Almost all of these communities have economic development incentives.

I mean, the city of Sacramento had one economic developer when I came to town.

You know, they now have a fully loaded team in shop, uh, doing a lot of really hard work with the neighborhoods in the community.

Scott: Let... let me raise something with you, Barry, about, sort of, the flow of people in companies.

It's always been difficult, supposedly, to attract and recruit companies to come to Sacramento.

And one of the things that's been noted, throughout the pandemic, is that we have a lot of individuals coming to Sacramento.

Are the companies following them?

What... what's the story on that?

Barry: Well, you know, without a lot of fanfare, you know, we're very disconnected, but, you know, HCL chose us.

700 software engineers, uh, for Sacramento.

They would've probably, five years ago, been in San Francisco.

That's the largest software house in India.

They're a huge partner to Google.

You know, they have 175,000 employees worldwide.

They chose us.

We have another company from the East Coast that's bringing 250 software engineers.

Uh, we've landed an R&D center out of Menlo Park.

We're under a nondisclosure agreement.

A $200 million capital investment.

400 jobs under construction in Sacramento.

So, we're getting the people, and-— but we're now starting to get the companies.

What we haven't been getting is the high-profile-— Salesforce, Google, Facebook-— investment, and, um, I think we still have a good shot at doing that.

But a lot of people are overlooking, you know, these incredibly compelling companies that are, you know... you know, funding six figure jobs and doing exciting things.

You know, we're... we're attracting a number of R &D centers, and we're starting to attract software, and the food and agricultural business is starting to mature.

So, really, uh, we're going to, uh-— Right now, we've had 11 companies, in the first two quarter, commit average wage over a hundred thousand dollars, and we're very close to announcing what would be, probably, the largest engineering deal that's happened in our community since Intel and Hewlett Packard.

So, the... the economic model-— it's very hard to measure California.

It works against everything you've ever been taught your entire life.

You know?

But, um, you know, a large economy with a highly sophisticated growing workforce around UC Davis and Sac State, we're holding our own when it comes to new, exciting, and compelling... Scott: So... so, help me understand this.

I read constantly about the exodus of companies, uh-— Elon Musk and Tesla, Larry Ellison and Oracle, on, and on, and on-— leaving California.

What is it that is attracting people to this region-— people in companies to this region, in the face of what many throughout the United States say is the most hostile, uh, business climate that exists?

Barry: You know, we're a negative business climate with a high-value business proposition.

We're a double-edged sword.

Scott: Say that one more time?

Barry: We're a negative business climate with a high-value economic proposition.

You know?

So, what... what we're-— If you look at these R&D companies that are coming here, and they're paying six figures-— I mean, if you want to create and design and build a product, no one's as good as California.

Not even close.

Not Austin.

Not Seattle.

Not even close.

And, I think, Sacramento region, if we put our head down, we can catch Seattle and Austin as an emerging, early-stage technology player, especially in the life sciences.

I really do believe this.

I wouldn't say it if I didn't believe it.

Um, what hurts us is, you know, when you look at our economy, almost a third of the people have a household income under $50,000.

So, the business climate things that are hurting us is if you wanted to put 3,000 people here to do back-office customer service work and pay $75,000 a year, the labor laws, and the liability on those labor laws, just add $25,000 per job cost.

And that's what's hurting us.

Scott: Yeah.

Well, I...

I would also ask you to factor in housing costs as well.

Barry: But that's kind of out of whack everywhere.

So, when you think about our housing costs, I mean, um, they've gone up, but, you know, I was in Nashville-— rents downtown studio apartments for 1500, 2000 a month.

So, when I look at housing, you know, it's really... you know, it's really not cheap in Phoenix any longer.

So, these cities in these metros where all the opportunity exist is just drawing people, and whether you're Salt Lake, Denver, Phoenix, your housing market ends up being lopsided, and our community is really doing a great job at building housing right now.

Scott: All right.

So, I-— So, you've told us what-— uh, you know, how we are now attracting people and attracting businesses.

Tell us what our competition is saying about us today?

Barry: I think...

I think nationally and internationally, you know, we've really made headways to where, if you were talking to national consultants that advise companies and you said Sacramento, they'd give you a thumbs up.

You know, we're starting to get the reputation as the last, and maybe the only, place where you can build, or drive, a company to in California.

The competitors, nationally, you know, they just keep going to the body.

You know, the state of California has to reel in, uh, their affinity towards labor policy, and they have to look a little closer at the data and listen more to businesspeople.

Uh, Governor Newsom just doubled the size of GO-Biz.

We have a great relationship with the Newsom administration.

You know, Dee Dee Myers has done a nice job.

But, I think, um-— I think we need to sell California harder.

I think we need to demonstrate our value proposition a little clearer, but we do have to reel back PAGA and AB5.

I mean, some of these labor laws are very questionable, in my opinion, from a functional standpoint, and how they originate through special interest groups.

So, our competition continues to go to the body.

You know, they're having a field day with our courts right now, Texas is.

But the bottom line is we're still the most powerful economy in California.

And California is the most powerful economy in America.

Scott: So, if... so, if somebody-— If a CEO is thinking about us and Austin right now, how do you make the sale, to keep them out of Austin and make 'em come to Sacramento?

Barry: Depends on the industry, but, you know-— So, if it's an e-mobility company, why wouldn't you be in Sacramento, where the industry is being birthed by the relationship between CARB, the regulators in industry?

Right?

So, Texas is-— has a large carbon footprint.

You know, they're not building electric vehicles.

And I know Tesla's moved there for tax reasons under Musk, but it's not going to change the fact that that's a carbon state that lives in fear of electric vehicles.

So, if you're in the e-mobility place, you should choose us.

And from a scientific standpoint, Austin is nowhere near a scientific center the way our region is, with our food, agricultural, biomedical, and veterinarian science expertise.

Software-— you'd probably choose Austin.

Headquarters, because of the zero income tax and the less liability, you would choose Austin.

So, it's really about understanding our market position and how we differentiate it.

Scott: When the pandemic rolled us right on our back, at least for a while, how has the pandemic affected the work of greater Sacramento, and-— where it is that you all are focused?

Barry: Well, it's interesting because, you know, we've always focused on talent, and I think, um, you know, talent has a different advantage now, because of remote working.

So, it's not so much about bringing talent to the greater Sacramento region to support VSP, or Centene, or Zennify, but now, that talent becomes a permanent economic marker, because the talent's not as mobile as it used to be.

So, talent recruitment is a little bit different than recruiting for the employers in your... your region.

It's more about paying attention to your educational achievement and attainment levels and getting the right head count.

So, that's been a huge difference.

Our outreach is fantastic.

I can wake up at 8:30, make a presentation in New York.

At 10 o'clock, make one in LA.

And at two o'clock, make a presentation in Atlanta.

And Zoom presentations in the early stage of a negotiation is considered, you know, very appropriate and intimate enough to get traction.

The challenge is going to be, you know, my employees have been remote.

Our numbers are very good.

So, I tell my team, "If you like being remote, just make sure your numbers are great," and there's a case for remote working.

I worry a little bit on the back end.

I worry a little bit about engagement, um, and, uh, I worry a little bit about finishing complex real estate deals, which are tough to do through a Zoom call.

Scott: Of course.

I wanted to talk a little bit about-— You talk about talent, and I want to talk about what's historically been an issue for Sacramento.

When you attract these big employers and these high wage jobs, at the same time, we've got a lot of people here that live in this region, whose families have lived here for generation, and they don't feel like they're connected to those opportunities.

What's the reality of the mismatch between these opportunities that you and your colleagues are bringing in and where we're at in terms of the educational system and workforce preparation, in order to support those companies, so that prosperity is shared by all, very broadly?

Barry: Yeah.

We're very concerned about the inability to train up people from low income, low wage jobs to prepare them for higher skilled jobs.

One of the things we're working on right now-— Mai Vang and Eric Guerra, myself, Mark Noriega from Accenture, Mayor Steinberg-— uh, we're asking for the Sacramento Employment Training Agency to be really rebooted and... and redesigned.

Uh, we're, uh-— You know, there's a new executive search.

We're calling for a national search.

This is where the government mentality hurts us.

Really, our training programs have been handled as political bureaucracies.

They're more about being careful with how the money is administered, staying within the white lines, but a lot of young people are missing out on great opportunities.

And we can-— We've got-— Uh, you know... uh, you know, Centene offered to hire a hundred people that were homeless and put 'em in at $50,000 a year.

I couldn't even find a training program in the community that had their fingertips on any of the unhoused residents.

Scott: You're kidding!

Barry: Uh-uh.

Yeah, so, there's a big disconnect.

The workforce systems have to become enterprises.

So, the workforce system has to be connected to the industries of the future, so when people are coming through these workforce systems, they're being prepared for living wage jobs.

And if you look at what we've been doing in our community, we are-— we're, right now, spending, uh, $42,000 per placement through the Sacramento Employment Training Agency, and we're placing people in $35,000 a year jobs.

Well for-— Scott: What?

Barry: Yeah.

Yeah, because, in defense of the system, they've been told to work with very, very low-income people.

And they spend a lot of times on soft skills, so people aren't prepared to go work, but, you know, employers-— Like, Blue Diamond's ready to hire people at living wages if they have some type of robotics certification.

Um, you know, VSP is hiring people through our training programs, uh, Centene, as I mentioned, Kaiser.

Uh, there's tremendous, uh, job opportunities, even in the car dealerships.

You know, car technicians making 90 to a hundred thousand dollars a year.

But if you look at our training programs, it lacks skills.

The community colleges aren't connected to industry of the future.

Not local employers, you have to connect people to the future industries, because that employment situation shifts-— Scott: So, what's the answer, Barry?

Barry: I think the first answer is we got to bring somebody, in a national search, into the Sacramento Employment Training Agency, that's young, that's dynamic, that's hungry, that wants to set the tone for a modern workforce training system.

And then, we have to go in and disrupt these training modules, which will be hard for people to do in Sacramento because, as you know, uh, our... our strength is our affinity for each other and our intimate relationships.

But, you know, the... the goal of those workforce programs isn't to prop up nonprofits.

It's to empower people of the future.

Scott: So... so, beyond this issue of this talent and skill and employer mismatch, what are the other big issues confronting the growth of the region and broadening the access to prosperity?

Barry: I'm really concerned about the lack of attention that kids from these underserved communities are getting from all of us right now, after losing two years of an education.

It seems to me, there ought to be some type of intervention conversation in our community on how to get direct, hands-on, uh, support to young people that have missed almost a couple years of school, to make sure that we're bridging that gap around things like literacy and getting them ready for STEM fields.

Uh, one of the things that, um, I think we need to do a better job with is tying our community colleges into our high schools.

I tackled chancellor King about this.

You know, uh, kids are graduating from high school, in states now, with two-year technical degrees, plus a high school diploma, and we need to start to think about stackable credentials and preparing people for work at age 18.

Um, you know, HCL, uh, which is one of the companies I mentioned, they want to hire a hundred kids right out of high school-— diversity, equity, and inclusion-— pay 'em $50,000, and train them to be software developers.

That's something we've never had before in the history of the U.S. economy.

That would normally require a bachelor's degree.

So, we've got to get hard skills and certifications into these high schools, the Cristo Reys, the McClatchy Highs of the world.

And, uh, for these kids that are coming out of tough economic backgrounds, you know, preparing them to work at 18 might be a very realistic step to get them into prosperity.

Scott: That... that... that would be some good news.

I want to go back to the beginning.

Which areas of the economy, when you arrived six and a half years ago, did you expect to see more growth from, as you stand here today?

And which over-performed, that you didn't expect to see much growth from?

Barry: I thought I would see more in food and ag.

You know?

But, you know, when I came into the market, you know, we were a world leader in food and ag, and there was a lot of conversations about, you know, the, uh, you know, food and agricultural center that chancellor Katehi was attempting to develop.

Um, and I thought we would do better in that, but the industry went through a big transformation on technology and kind of stalled.

Um, I'm surprised we've done as well as we have on software and digital technology.

Um, and, uh, I'm pleasantly surprised at the level of R&D activity in the genomics and cell therapeutics state.

And when Aggie square gets operational, I really see the life science sector, specifically around cell therapies, just exploding here and being a big industry driver.

Scott: Barry, you're known as a straight shooter.

I want to ask you what's the most difficult conversation that this region needs to have, that it seems to continually avoid?

Barry: We're not committed enough to our community.

You know, I think...

I think we have-— You know, we love our community, and we love each other, and we love each other's company, and, you know, it's a great... great place to... to live, and it's a great place to make friends.

It's been a fantastic experience for our family.

But if we're really talking about-— I want people to talk about us the way they talk about Austin.

You know, I want people-— When... when people talk about admired communities in America, I want Sacramento to roll off their lips.

And in order for that to happen, we've got to match our, uh, rhetoric with our commitment.

If we are Sacramento proud, and if we are the indomitable city or region, you know, we can't let things like MLS slip through our fingers.

You know, we can't let a homeless situation-— even though it's so difficult-— we just can't let that continue to be both inhumane for the people that are suffering and, uh, disturbing for the people that live with it on a mainstream level.

So, to... to me, I think we got to allow ourselves to be a little bit more edgy in the exchange in our community, to get better and challenge ourselves to get better, because, really, there's nothing we can't do.

It's unbelievable, the amount of opportunities I see acrossed our desk.

Scott: So, le...

So, let's talk about that in our final moments.

Based on what it is that you see that we really need to do, and the conversations that we really need to have with each other, give us a sense of possibility on what our region could be like and how it could be different-— say, 10 years from now-— based on the trends that you see, if we take those actions.

Barry: Well, I'll...

I'll just stay on the workforce thing.

Right?

We got one of 10 R1 universities doing a billion in research.

We have Sac State.

Right?

We really have Chico State and Cals leaning in more-— because of the cost and lifestyle of the Bay Area, into our community.

There's no reason why we're not the most inspired, sophisticated human capital delivery system in America.

And that's something that... that we're smart enough to do.

I mean, we have plenty of money.

Right?

I mean, the one thing California does-— does a good job at funding community colleges.

It does a pretty good job at funding higher ed.

There should be no excuses for us not delivering the best training system in America, and that should be, like, a mantra in our community.

I also think, um, you know, we have to just be a little bit more aggressive and aspirational on big ideas like MLS, um, because I think we can get an NHL team.

I don't think it's impossible that the Oakland A's, if they leave Oakland, will consider us.

But you got to have that in your head.

You gotta believe that, and when those opportunities come, you gotta be willing to take risks.

Scott: And I think we're going to have to leave it there.

Thank you, Barry.

Uh, good luck, and we'll see you in a couple of years and, uh, we can see how well you did at, uh, you being Nostradamus.

Barry: Right.

Thank you very much.

Thanks for having me.

Scott: All right.

And that's our show.

Thanks to our guest and thanks to you for watching Studio Sacramento.

I'm Scott Syphax.

See you next time right here on KVIE.

♪♪ ♪♪ Scott Syphax: All episodes of Studio Sacramento, along with other KVIE programs, are available to watch online at kvie.org/video.