Letter to the Editor: Rethinking Riverside’s Economic Development

It’s time to confront a difficult reality: Riverside’s economy is not operating at its full potential.

A common complaint among disaffected Riversiders is that there is simply “nothing to do” here. While some longtime Riverside residents may be tempted to offer passionate, forceful rebuttals (I’m one of them) touting the positive elements that make this city a great place to live and raise a family, it is apparent that Riverside has a disjointed array of community amenities which are increasingly falling short of serving a growing population. Riverside has a limited number of quality restaurants; shopping options are continuously decreasing and do not cater to varying income demographics; main thoroughfares are underutilized; and we simply lack crucial opportunities that enable college graduates to obtain high-paying jobs in attractive and/or emerging industries.

At its core, the problem lies within our economic development. A city’s economic development strategy is one of the most important facets of its overall performance. When effective, these strategies are the drivers that enable small businesses to grow and thrive; they facilitate a culture of innovation, balance community sentiment with the need to grow sustainably, and provide opportunities for residents to recreate and enjoy local community life. To ensure our economic development activities position Riverside for expansive growth in the 21st century, it is imperative we reverse any regressive initiatives and past trends in order to align the city government, residents, and business owners on a vision that will uplift our neighborhoods and increase our competitive offerings.

For me, it is personal. I am a local college graduate working as a business consulting analyst at a large technology consulting firm—my nearest company office is in Los Angeles. I am a proud product of a family of small business owners. As a lifelong Riversider, I truly want the best for my city—just like any well-meaning resident. For over 20 years in my hometown, I have attended school, developed lifelong friendships, and witnessed real progress take place. Therefore, I am deeply passionate about Riverside’s prosperity and the opportunities that it can unlock.

But as a Riversider, I am forced to confront the reality that while Riverside is a place that is aesthetically beautiful, it is also a destination whose current recreational options, job/career paths, and sense of urgency insufficiently meet the requirements to positively transform our city’s economy. Now, I understand transformation might be an undesirable proposition for some, but I believe it is exactly what we need to ultimately improve our overall quality of life.

Anecdotally, I have experienced the disappointment of friends and family leaving Riverside. While specific reasons varied, an overwhelming theme of their departure was the general lack of incentives enticing them to remain. To them and others, we became a city that lacked energy. Our crises became rooted in our identity. Our past-looking mentality started to become our Achilles’ heel. This must change.

In this article, I want to discuss Riverside’s economic challenges in more detail and share a perspective that describes how we can begin making substantive improvements so that our road toward prosperity and quality of living is straightforward. To be clear, I am no economic development expert, but I am concerned about our city becoming averse to the evolutions in business and governance that are reshaping our world and transforming the way cities operate. If we do not capitalize on the rapid growth of technology, the shift towards increased domestic manufacturing, and aggressive efforts to retain and relocate top talent, the challenge of maintaining our relevancy might be too insurmountable for Riverside to overcome.

Evaluating Key Economic Factors and Challenges

It is within our interest to invest considerable thought, time, and resources in developing an economy that accounts for Riverside’s unique character and traditions while recognizing the need to support new families, students choosing Riverside as their home, and residents who are weary about our prospects.

Overall, Riverside is on an upward trajectory. Over the past year, our city government has helped bolster small businesses and made progress, envisioning new areas for opportunities to improve our local economy. In 2023, there were 3,500 additional business licenses awarded, small and micro businesses can now apply for up to $25,000 in financial assistance via grant money made available through the American Rescue Plan Act (ARPA), and the upstart electric bus manufacturer Ohmio, chose Riverside to base its operations. Despite the productive activity, Riverside is moving at a pace too slow to match the accelerating growth of our peers.

To get a clear understanding of how Riverside is lagging relative to competitor cities, it is helpful to identify and evaluate a sample of specific indicators while simultaneously demonstrating the performance of those cities utilizing the defined parameters. These indicators, or measures, are cornerstone elements of a city’s economic vitality; they are not exhaustive but provide useful guidance for tracking performance.

In addition to a select group of cities chosen outside of California, I will be comparing Riverside to the cities of Anaheim, Irvine, Rancho Cucamonga, Redlands, and Temecula. The cities listed were chosen based on defining features such as similar population size, popular recreational characteristics, or a significant corporate presence. Some cities contain all three features, while others might only have one. These are our direct competitors. And if we are going to improve our competitive standing, we must use other cities as models for tackling challenges and designing solutions.

A city’s population growth demonstrates the holistic strength of its quality of life and signals confidence from transplants who intend to find new, permanent residences. In a piece describing how cities can quantify economic growth, Forbes contributor Scott Beyer explained, “if a city or country is growing, it means numerous factors are working. They are likely providing good jobs, schools, roads, and housing, otherwise people wouldn’t move there.” In this regard, Riverside is performing well and is in line with its peers.

From 2020 to 2024, Riverside has seen its population grow from approximately 315,000 to 326,000, a rate of 3.4%. Comparatively, cities of similar size and proximity decreased in population or have tracked alongside Riverside. Anaheim, for instance, experienced a decreased growth rate of -1.5%, while Irvine’s population grew at a rate of 3.0%.

In response to Riverside’s growth, construction companies have identified development sites and are proceeding with projects ranging from affordable housing to upper-end townhome units to ambitious mixed-use developments. Some notable projects or sites include the demolition of the old Sears building lot on Arlington Avenue, the vacant Kmart in Mission Grove, and “Riverside Alive,” a Downtown project that will consist of two hotels, residential units, and various retailers.

As these projects continue, and as new ones are planned, some residents are voicing their disagreements about the overall concepts, and others are raising alarms about issues like increased traffic. While this is a legitimate cause for concern, studies show that developments like apartments and mixed-use buildings actually reduce traffic under certain conditions. Further research reveals that traditional single-family households contain more vehicles per unit and make more trips per week.

Household Median Income Levels

Another useful performance measurement is household median income level. While a measure like Gross Domestic Product (GDP) provides a high-level view of economic health and performance, household median income serves as a helpful determinant of a population’s general financial maneuverability. An added benefit is the elimination of outlier income figures (extremely low or extremely high) that could adversely skew a dataset.

In this category, Riverside is grossly underperforming. By utilizing information provided by the United States Census Bureau, we can see in Figure 1 that Riverside’s median household income levels are over $5,000 behind its nearest competitor, Anaheim, $39,000 behind the furthest competitor, Irvine, and $17,000 behind the average between the six California cities that are being compared in this piece.

Neighborhoods with high household median income levels are safer and have improved opportunity outcomes for a variety of factors that contribute to the long-term economic security for benefitting families.

The household median income indicator functions as a barometer for the strength of local economies, but it can also uncover an economy’s glaring weaknesses or its inherent risks. While this may be a simple economic concept, it is important to include it in any economic development discussion so that Riversiders can grapple with the gravity of its effect on our daily lives. Simply put, when median household income levels for a city are lagging, individuals living in those households might struggle to afford basic necessities like housing, healthcare, education, and quality food options. They might also struggle to afford leisure activities like shopping or weekend excursions. Although households that fall within the low-income threshold may not experience every constraint listed, their contributions and ability to freely exercise spending in the broader local economy are limited.

The scenario I just presented is exactly what is happening in Riverside. In an analysis of metro areas across the country, the Ludwig Institute for Shared Economic Prosperity found that after essential expenses were paid, working-class families in the Riverside-San Bernardino metro have -9.2% of their income left—that is the definition of living paycheck to paycheck. Riverside has an income problem; it is a predicament that could snowball into an avoidable low-wage cyclical crisis that will continue to negatively affect communities across the city.

The National Institute of Health starkly outlines how lower incomes impact disadvantaged local communities: “The costs of highly unequal access to neighborhood opportunity include reduced human capital, reduced economic productivity, lower educational achievement, less participation in the labor force, and lower potential for higher incomes as adults.”

Cities that succeed prioritize uplifting all socioeconomic demographics by increasing the accessibility of higher income brackets for individuals and households in lower ones.

As certain economic conditions are met, the resulting output is a more resilient local economy that positively impacts residents’ quality of life. Specifically, when economic prospects for broad swaths of households increase, the downstream outcomes are noticeable and shared between residents of all income levels. For instance, businesses like grocery stores might expand to new territories, city services can improve because of increased tax revenue, and city governments might be empowered to invest in the formation of new parks, schools, and other projects.

Education Attainment

Educational attainment is an indicator that complements household income. High educational attainment underscores the strength of the talent that a city offers and correlates to regional economic activity. This is bolstered by a study from the Brookings Institute, which confirmed that “Highly educated households spend much more on the local economy than their less educated peers.” These households have additional spending power and can afford to patronize local restaurants and shops at a higher rate, and they tend to spend more on housing and utilities. On an individual level, the correlation can be easily assessed. Local spending is highest among individuals who have attained a master's, professional, or doctoral degree. High school graduates’ local expenditures average $19,000, while bachelor’s degree holders and degree holders with a master’s or above spend roughly $32,000 and $41,000, respectively.

When broken down into different expenditure groups, housing, utilities, fuel, public services, and food make up the vast majority—81%—of local purchases.

Educational attainment is an especially relevant indicator since Riverside is home to nearly 60,000 college students. Understanding this metric relative to other cities can inform decision-making on critical issues like housing and retail development. It can also drive initiatives that encourage increased higher education attendance, better retention of college graduates, improved quality of schools, and provide another foundational layer for pursuing a more proactive, strategic approach to persuading companies to build a local presence in Riverside.

Figure 2 presents another example of how Riverside measures against its peers.

In terms of high school attainment, Riverside is 5th when compared to the other five cities used in this example.

Riverside is behind each one of these municipalities in terms of college degree attainment. And if we are to believe the data on spending in relation to educational attainment, Riverside’s local businesses are missing out on vital financial lifelines provided by college-educated individuals with high spending capacity.

A question that also arises from analyzing this data is how well we are retaining our college students. If we have 60,000 college students in a given year, how do our college graduates only consist of 24% of our population? Unfortunately, publicly available data to inform this index and other historical education attainment metrics are scarce.

Top Industries

Cities are also defined by the top industries that make up a significant share of the local economy. This is a fairly accessible and identifiable indicator, given the availability of data showing the concentration of jobs and the visibility of businesses operating within certain industries. It can be used to determine what skills are required from local talent to secure industry-specific, local jobs, comparative pay for similar jobs in other cities, and the actions required to aid the growth of new industries that might better serve the community.

It is not enough to simply accept the current economic foundation that has been built upon a base of industries that merely sustain growing populations. It is not enough to accept the slow, localized growth of emerging industries while other cities accelerate opportunities for companies in these fields by recognizing trends and taking action.

A plethora of impactful use cases show the importance of galvanizing regional resources and capitalizing on broader macro developments to drive economic growth or revitalization. Harvard professor Rosabeth Moss Kanter explained that concepts, competence, and connections are key principles that businesses have leveraged to succeed over a span of decades.

More than 20 years ago, Moss Kanter profiled the Spartanburg-Greenville region of South Carolina. She discovered that it was the competence and strength of the local workforce that attracted more than 200 foreign manufacturing companies to the area over a span of 40 years. Rather than providing foreign companies with large tax incentives, South Carolina provided their local talent with training tools and apprentice-style programs designed to prepare workers for the area’s manufacturing job market. In the 1980s, Spartanburg and Greenville both employed an explicit strategy to continue attracting foreign investment. Greenville set up a Headquarters Recruitment Program in 1985, and by 1993, “14 foreign companies announced that they would open new regional headquarters or expand existing offices in the city.”

In Phoenix, Arizona, semiconductor manufacturing has been a major economic asset since 1949. Since 2020, the city has secured $40 billion in investments from Taiwanese Semiconductor Manufacturing (TSMC), including a second factory location in northern Phoenix slated to open in 2026.

Back in California, due to initiatives that were intended to increase high-tech manufacturing, EV automotive company Rivian continued to pour jobs into the City of Irvine.

In addition to quality and high-tech manufacturing, technology is a driving force for economic vibrancy. Tech hubs mobilize a wave of high-paid, skilled workers, causing housing prices to soar and placing pressure on local employers to raise salaries. This industry is a jobs magnet, and the skills acquired from these occupations are being deployed to solve complex problems, increase productivity, and streamline business processes.

Irvine is increasingly standing out for its commitment to tech. Here, companies are drawing from UC Irvine to staff relocated operational sites or newly opened tech offices. Micro-satellite company Tyvak Nano-Satellite Systems chose Irvine when its parent company searched for a new headquarters. And corporate giants like Google, Edwards Lifesciences, and Oracle all maintain a strong presence within the city.

Conversely, Riverside severely lacks technology job opportunities, and this is evidenced by the size of the industry’s share within Riverside’s economy compared to other cities. Making up only 4.3% of our economy, the tech industry in Riverside is significantly smaller than the 16.6% share technology accounts for in Irvine. Riverside is also trailing other competitors. The tech industry in Redlands makes up 9% of its economy; Anaheim and Temecula hold over 7%; and tech in Rancho Cucamonga makes up over 6%.

Riverside not only lacks the presence of key industries, but for industries that are already prominent within the city, Riverside’s median earnings are well below the levels enjoyed by other cities. Figure 3 visualizes the disparity between the median earnings for Riverside and competitor cities in the healthcare industry.

Despite being one of Riverside’s top industry groups, the median earnings in health care & social assistance are over $60,000 less than a neighboring city like Redlands, nearly $40,000 less than fellow Riverside County peer Temecula, and slightly less than that of Anaheim. 

Startup Activity

The prevalence of a robust startup culture is another important indicator of a formidable local economy. Startups are at the forefront of innovation, creativity, and job creation. These companies become hubs for activity, and their potential for rapid growth produces a multitude of beneficial outcomes for municipalities. According to a Kauffman Foundation study, “New and young companies are the primary source of job creation in the American economy.”

Fortunately, this is an area where Riverside has continued to mature. A few years ago, Riverside ranked “No. 19 on MSN Money’s list of the best cities in the US to grow a business, ahead of Atlanta, San Jose, and Charlotte, North Carolina, among others.” However, this ranking dates back to 2018, so it will be important going forward to understand what our current positioning is.

These economic indicators spell out a clear challenge for Riverside: our city has a growing population that is not experiencing the individual financial flexibility that exists for competitor city populations, with at least one of the reasons being low education attainment. This problem directly affects Riverside’s budget, ability to expand other industry groups and bandwidth to improve the city’s offerings.

Now, this picture may seem grim, but there are reasons to be hopeful and optimistic about our future. We are not going to get to Riverside’s North Star if we accept the underlying pain points that are holding us back.

Past and Present Examples

The fundamental problems that bely the root cause of our economic shortcomings will not be solved overnight, but we can peel back contextual layers to chart a course toward consistent upward mobility. It starts by briefly looking into our past and taking stock of our present dynamics.

Riverside’s early days were marked by a pioneering spirit coupled with remarkable innovation. The famous citrus industry made it the wealthiest city per capita in the United States.

Although Riverside is establishing new residency accommodations like the Mark in Downtown Riverside, adding new restaurants like The State, and generating success and excitement with hallmark events like the Festival of Lights, we’re still moving too slowly. The city has become mired in lawsuits that are restricting our ability to develop properties for retail and housing, and economic development initiatives are seemingly—and inexplicably—resulting in swift approvals for the installation of businesses like car washes, dispensaries, chicken stores, smoke shops, and fulfillment warehousing. Car washes are particularly puzzling since they contribute negligible economic benefits. According to a Bloomberg report, “most self-service car washes don’t pay sales taxes to their host communities.” Yet, far too often, a new car wash is taking the place of a more desirable and beneficial community asset. The prospect of additional Marijuana dispensaries is another concerning development since these businesses only cater to a niche customer base and cause a significant increase in neighborhood crime, according to research from Colorado University.

I am a strong capitalist; I am not saying that the City Council or the City’s Community Economic Development Department should target business owners or discriminate against businesses. However, the types of businesses listed above represent what Riverside should be avoiding. I am simply proposing stricter requirements and regulations. Our communities and our neighborhoods deserve better access to businesses that serve our best interests. But right now, we cannot adequately express our interest because we have been force-fed an unattractive list of options.

Riverside Needs to Revamp its Economy

It is time to revamp Riverside’s economy. To do this, we can follow a simple framework: 1) Value our people, 2) strategize proactively, and 3) be receptive to change.

Value Our People

Valuing our people is more than just organizing more community events or engaging in public discussions; it is about the intentional investment and development of our residents. Uplifting the middle class should be a key priority. The long-term driver of that goal is increasing our educational attainment. Riverside needs to function as a lever to ensure students from elementary through high school are receiving a quality learning experience that fuels our youth to be passionate and aspirational. Alongside that broader mission, Riverside schools should continue to emphasize Science, Technology, Engineering, and Mathematics (STEM) curriculum across all educational levels. On the collegiate level, our main goal should be to increase graduation rates so there are more college graduates living in the city after their time in college. For California Baptist University, La Sierra University, and UC Riverside, the graduation rates are 62%, 47%, and 76%, respectively. For comparison, Pepperdine University, a Christian institution, has an 86% graduation rate. UC Irvine has an 84% graduation rate. Riverside can do better.

Another approach to this framework element is creating jobs with a clear career pipeline that encourages individuals to learn applicable technical or trade skills to gain experience in sought-after fields. The aim of such an initiative is to produce wage growth while empowering our workers to become competitive members of the workforce.

Improving socioeconomic conditions should be a main pillar of our economic development. In parallel to growing our working class, Riverside should target high-net-worth individuals and highly paid technical workers. But we also need to retain our talent. Programs like Campus Riverside from the Mayor’s Office are designed to do exactly that. Young professionals need a reason to stay in Riverside. And since programs alone will not prevent talent from leaving, we will need enhanced cooperation from the community, business leaders, and our city government. Cultivating these groups is essential to solidifying an economic foundation that will provide increased support for city functions and local businesses.

Balancing these interests also necessitates diverse housing options. If Riverside were to bifurcate developments to include affordable, high-tier, and mixed-use options, we would be able to meet our required building quota and prepare our neighborhoods for improvement. Building housing, offering added amenities, cleaning up our streets, investing in infrastructure, and improving forgotten relics like public transportation ensures residents are provided with basic, deserved community benefits. These activities could also encourage residents to place value on their position as members of the broader Riverside community. The nature of this level of community buy-in is what our economic well-being depends on.

Strategize Proactively

We must also be hyper-strategic in how we approach economic development, from the businesses (small or large) we target to fostering a unique startup culture.

Instead of additional, replicated fast-food chains, we should be working with landowners to identify small businesses that might succeed at a specified location and then work with prospective leasers to provide a playbook for their success. If that dialogue is unsuccessful, we should introduce the alternative that targets restaurant chains that have yet to establish a presence in Riverside. A new Citrus City Grille, Wood Ranch Grill, Mendocino Farms, Sweetgreen, and Corner Bakery are a few biased examples that I can think of.

Instead of car washes, we could build more space for retail shopping (i.e., clothing stores, bookstores, home goods stores, flower shops, etc.). Instead of smoke shops and dispensaries, we could have more gyms, art studios, or martial arts facilities.

Too often, City departments and landowners target low-quality establishments in high quantities. But if the City targeted high-quality businesses and organizations at lower quantities, our communities would be more valuable, and those enterprises would operate as the anchors needed to drive increased foot traffic to nearby or adjacent businesses.

While Riverside is already in the process of setting a new strategic direction with the General Plan Update, the opportunity to iterate does not simply fade away. For this, other cities should be used as informative reference points. Atlanta, for instance, is becoming a major tech hub. Companies are starting to move operations to the Georgian city to capitalize on the city’s tech talent. This can be seen in the 15% growth in tech jobs in Atlanta over five years from 2017-2022. 

This is how we pair strategy with execution. For example, if we were to align on an approach to engage with companies in emerging industry segments like technology, AI, Software as a Service (SaaS), EV automobiles, and aerospace, we could build constructive relationships with outside stakeholders that might have been unattainable in the past. The purpose would be to discuss specific needs, understand how other cities are taking advantage of their respective economic environment, and ultimately secure agreements that deliver on major programs and initiatives.

As Riverside gains inspiration, it is imperative we continue engagement efforts designed to attract large, quality companies. Luckily, we already have established relationships with companies such as Esri, DoorDash, Bloomberg, and even Samsung. Our efforts to expand those partnerships should be aggressive.

At the same time, we should be working with Riverside-based companies like Bourns, Inc. to identify complementary companies that rely on Bourns’ products. Relocating some of the operational capabilities of those adjacent firms might ease Bourns’ supply chain or, at the very least, encourage the city to continue forging a path for new categories of businesses.

Collins Aerospace, a subsidiary of Raytheon with a facility in Riverside, could similarly serve as a regional gateway for other aerospace companies. A particularly useful example from Long Beach demonstrates this process. Back in 2015, a small Virgin Galactic satellite launch provider, Virgin Orbit, reestablished the city’s aerospace industry. Because of their presence, “a host of space and aviation companies have moved to Long Beach, including Rocket Lab, SpinLaunch and Relativity Space.”

The most immediate and feasible direction Riverside can take to proactively seek out new business is through manufacturing and sustainability—the city already has the infrastructure and dedicated resources for these fields. Manufacturing makes up 10% of our economy, and assets like the UCR Sustainability Office and the California Air Resources Board (CARB) have laid the groundwork for companies hoping to expand into the market. Riverside can rely on our network of warehousing centers to explore high-tech manufacturing for semiconductors, electric vehicles, or even pharmaceuticals. With CARB, we can pursue alternative energy like solar and geothermal, but we can also compile research that might be used to create consumable products.

Despite the opportunities that Riverside can pursue, startups will be the determining factor. As previously stated, Riverside has been cognizant of its importance. Since 2015, the “ExCITE Riverside Incubator has supported more than 30 startups, creating over 180 high-paying jobs in the region.” Many times, innovation is what differentiates other cities from their competitors. With organizations like ExCITE, community stalwarts like the Chamber of Commerce, educational institutions like CBU, La Sierra University, and UCR, and the City’s Community Economic Development Department working collaboratively, these special novel businesses will have the ability and resources to succeed.

Be Receptive to Change

Every Riversider shares the desire to see the city prosper. Everyone wants to enjoy a more comfortable and desirable city experience. But we only get there if we are willing to be honest about where we stand and realistic about the challenges that lie ahead. The solution is not to be motionless or to regress; it is to be forward-looking and respectful of our unique history and traditions.

The good news is that we finally have a mayor and a city council who have the vision to bring transformative change to Riverside—that’s what we need. Not a change to another extreme partisan ideological dogma, but a change to the ways in which we solve our problems.

There will surely be opposing perspectives who might say, “Riverside should be small,” or “It’s fine just how it is.” In my view, those perspectives are misguided. Cities do not thrive because they stagnate; they thrive because they progressively adapt despite the comfort of avoiding the changing tides.

Miles Ward, Arlington Business Partnership board member