1999 Workforce Development Assessment

The local economy

A recent study commissioned by the U.S. Department of Housing and Urban Development has identified economic foundations that are associated with economic competitiveness (Rondinelli, et al., 1998):

• Human resources
• Technology resources
• Financial capital
• Business climate/regulatory climate
• Physical infrastructure
• Quality of life/environmental quality
• Social equity

The Austin/Travis County community has been relatively strong in each of these areas. (Greater Austin Chamber of Commerce, Apr 1998). In particular, Austin holds a comparative advantage with its highly educated workforce (human resources). Also, Austin has a significant concentration of scientists, engineers, and research and development activities (technology resources). The level of venture capital investment has increased steadily (financial capital). Additionally, the quality of life in our community is often noted as a draw for new business.

Building upon these foundations, our community has moved through three major economic stages, and is now moving into a fourth (Greater Austin Chamber of Commerce, Apr 1998).

Today Travis County and the Austin metropolitan area have a thriving economy characterized by solid and consistent employment growth during the last 5-8 years. A few indicators of the current health of the economy are:

• Continued job growth
• Low overall unemployment rates
• Continued population growth
• Increase in per capita personal income
• Increase in tax bases and tax revenues
• Increase in residential and commercial construction
• Increase in retail sales
  
• (CAWDB, 1999)

Also, venture capital funding has reached record high levels: over $164.5 million in 1997, which climbed to over $206.8 million in 1998 (Greater Austin Chamber of Commerce, 1998).

Return to Top of Page

Growth industries.

All industries (except for the federal government) in the Austin-San Marcos MSA have experienced increases in employment from 1994 to 1998. The Greater Austin Chamber of Commerce predicts a 4.0% job growth rate for Austin in 1999 and a 3.5% growth rate in year 2000 (Austin American-Statesman, Mar 11,1996). Projections indicate that future growth will be driven by continued strength in three interrelated "core clusters": semiconductors and electronics, computers and peripherals, and software.

Five emerging industries also have the potential to become core clusters:

• Logistics and distribution (both transportation planning and management and the flow of goods and information)
• Biomedical products (manufacture of products for medical use, ranging from pharmaceuticals to orthopedic implants and hearing aids)
• Film and music (independent film, video and music, as well as clubs and other music venues)
• Multimedia (CD-ROM and video game software development as well as internet software firms)
• Transaction services (firms engaged in providing information to consumers and executing transactions via communications networks such as telephone or internet)

These clusters represent families of related industries that are resilient and dynamic. Clusters create self-generating economic activity that attracts both capital and labor, ensuring long term, sustainable development.

Government, education, retail, and other service sectors will continue to remain strong (see Table 2 below). These "sectors" differ from the "clusters" described above in that they provide substantial job opportunities, but add less new wealth to the economy.

Table 2

Nonagricultural Wage and Salary Employment for Austin-San Marcos Metropolitan Statistical Area

		1994	1995	1996	1997	1998	Percent Change 1994- 1998
Mining		1,000	1,100	1,100	1,200	1,300	30.0%
Construction		22,000	24,700	27,700	29,600	33,200	50.9%
Manufacturing
	Durable Goods	51,600	56,900	61,200	63,600	64,800	25.6%
	Nondurable Goods	11,600	11,800	11,900	12,100	12,400	6.9%
Transportation & Public Utilities		15,000	16,200	17,600	18,600	19,700	31.3%
Wholesale and Retail Trade		102,000	110,000	115,700	121,300	127,200	24.7%
Finance, Insurance, and Real Estate		27,300	28,000	28,900	29,800	30,600	12.1%
Services		129,300	140,300	151,000	161,500	171,400	32.6%
Government
	Federal	10,900	11,100	10,300	10,000	9,400	-13.8%
	State	64,000	64,900	62,800	63,600	64,400	0.6%
	Local	49,900	51,700	52,300	53,900	55,900	12.0%
Total Jobs		484,600	516,600	540,900	565,500	590,300	21.8%

Note. Yearly figures are averages of monthly figures. Total jobs in a year may not add to the sum of the jobs in each sector due to rounding. The 1998 figures use preliminary estimates for December and are subject to revision.

Source. Texas Workforce Commission, Labor Market Information Department, "Nonagricultural Wage and Salary Employment for Texas Metropolitan Statistical Areas- December 1998".

The leading industries with the largest growth rates from 1994-1998 were construction (50.9%), services (32.6%), transportation and public utilities (31.3%), mining (30%), and durable goods manufacturing (25.6%).

Among the services industries, business services have experienced a high rate of growth. For example, employment agencies and temporary help services have tripled in the number of jobs statewide from 1987 to 1997 (Fiscal Notes, Oct 1998). Within Austin, the number of individuals employed by temporary help services increased 41% between 1996 and 1997 (Austin Business Journal, Dec 1998). This trend bears monitoring since increased levels of temporary employment may be a precursor to a less stable workforce.

The Texas Workforce Commission (TWC) reports that "high-tech manufacturing has added some diversity to an economy that is somewhat dependent on government employment& this slight re-distribution of employment is a positive sign that employment volatility in this area is declining" (TWC, Mar 1998).

Threats to economic prosperity. The Austin economy is booming and the future looks good, so why should the community be concerned about workforce development? One prime reason is that the job growth rate is exceeding the current labor supply. For example:

• Sixty percent of high-tech firms reported difficulty finding employees, primarily engineers, programmers, and assemblers/machinists. Many companies (31%) cited the labor shortage as a major barrier for continued growth (Fiscal Notes, Aug 1998).
• Industries that have traditionally been labor-intensive and required few advanced skills are increasing their use of technology. One example is McDonalds new computerized food ordering system (Fiscal Notes, Aug 1998).
• Small businesses in Austin have been impacted by the tight labor market and are expanding the variety of resources they use to attract and locate workers. Many of these small businesses cannot afford to offer attractive salaries (Austin Business Journal, Feb/Mar 1999).
• Continued demands for new residential construction is creating a shortage of skilled, experienced construction laborers. The Texas Association of Builders (TAB) has requested that the state put more funding into trade schools and into promoting apprenticeships in electrical, contracting, plumbing, and carpentry (Fiscal Notes, Nov/Dec 1998).

Return to Top of Page

Summary

Although the economic foundations of our community remain strong, in order for businesses in Austin to continue to maintain its current status and expand, a skilled, trained, consistent labor supply must be provided. There exists an opportunity for corporations, businesses, and public employers in Austin to tap a historically under-utilized workforce in the community. This small population of workers currently does not share in the prosperity that Austin is experiencing. The majority of this population is motivated and hard working, but must overcome factors and barriers beyond their control (lack of basic skills including workplace readiness, lack of resources to access training, family demands, lack of access). These barriers have kept them from obtaining the education and skills they need to contribute to and participate in our communitys prosperity.

Return to Top of Page

Assessment Home