The Changing Face of the Texas Labor Market

Rural Workforce Network Lubbock, Texas

February 11, 2003

Richard Froeschle, DirectorCareer Development Resources(CDR)rich@cdr.state.tx.us(512) 491-4941

Why Do We Care About Understanding the Labor

Market?• Improve Job Search. Identify industry and

occupational areas with economic activity (pos & neg) to guide job search for all customers

• Reduce Frictional Unemployment. Improve efficiency of universal job search process by directing clients to occupational areas in demand

• Employer Contact. From the targeted list, develop a “hot prospects” or potential “sales” contact list. Better than “cold calling”! Provides rationale for contact strategy and improves staff efficiency

• Increase the likelihood of job placements. Assist in connecting education & training programs with actual job openings e.g. finding jobs after exit

Why Labor Market Targeting (continued)

• Improving Workforce Program Performance. Research demonstrates targeting leads to improved placement rates and Board performance

• Connect Local Partners. Knowledge basis for forming industry partnerships/clusters to leverage funds, share resources, promote solutions

• Connect to Regional Economic Development Strategies. Focus on targeted industries or clusters. Plan the work, allocate the resources, work the plan

• Understand the competition for jobs. Think like an employer, think globally, plan (and act) locally. Prepare yourself and your clients accordingly!

Economic forecasting is a field that gives

Astrology a good name!

Does this Sound Like an Economist?

A Changing Texas Labor Market

1. If it’s not a recession, it’s still not fun! Downturn affects output, employment, tax revenues, employment in all sectors

2. Economists still very divided on duration, turning point signals, and level of job growth in recovery

What do labor economists agree on?

1. There will be no shortage of opportunities in the knowledge sector for those with the education and intelligence to perform in it

2. All jobs, even the most low-skilled, will require higher levels of basic education, math, communication and technology skills…for survival and growth

3. Those without some specialized knowledge or skill are likely to suffer declining real wages

What do labor economists agree on? (II)

4. The Digital Divide exists and those on the wrong side will have limited hiring and advancement opportunities

5. Jobs requiring “human touch” will continue to be in demand e.g. health services and nursing, construction…no robot plumbers!

6. Workplace settings and business practices and knowledges will change rapidly, making lifelong learning essential e.g. life after “paving the cow path”

A Changing Texas Labor Market (2)

3. Continued transition to services, not products for value-added and employment opportunities

Increase in “high tech” and “high touch” jobs

What comes after the Knowledge economy? The Creativity Economy? The Celebrity Economy?

U.S. Industries Adding Most Jobs 2000-2010

• 1. Computer and Data Processing 1.80 mil• 2. Retail Trade 1.60 mil• 3. Eating & Drinking Places 1.48 mil• 4. Offices of Health Practitioners 1.24 mil• 5. State and Local Education 1.07 mil• 6. Misc. Business Services 1.00 mil• 7. Construction 824 thou• 8. State and Local Government 808 thou• 9. Wholesale Trade 776 thou• 10. Health Services, NEC 689 thou• 13. Residential Care 512 thou• 14. Hospitals 509 thou• 16. Nursing/Personal Care Facilities 394 thou

Texas Industries Adding the Most Jobs 1999-2002

Absolute Growth• Educational Services• Food Services/Drinking Places• Ambulatory Health Care

Services• Professional and Technical

Services• Local Government• Specialty Trade Contractors• General Merchandise Stores• Hospitals• Heavy and Civil Construction• Motor Vehicle and Parts

Dealers

Percent Change• Warehousing and Storage• Management of Companies• Financial Investment• Heavy and Civil Construction• Support Activities for Mining• Ambulatory Health Care

Services• Utilities• General Merchandise Stores• Educational Services• Motor Vehicles/Parts Dealers

(NAICS codes)

Industries Losing the Most Jobs from 1999-2002

Absolute Change• Agriculture/Forestry Support• Computer/Electronic Manuf.• Apparel Manufacturing• Transportation Equip Manuf.• Fabricated Metal Manuf.• Chemical Manuf.• Oil & Gas Extraction• Food & Beverage Stores• Administrative Support

Services• Federal Government (NAICS codes)

Percent Change• Agriculture/Forestry Support

• Apparel Manufacturing

• Computer/Electronic Manuf.

• Transportation Equip Manuf.

• Wood Product Manuf.

• Misc. Manufacturing

• Printing and Related Support

• Oil & Gas Extraction

• Electrical Equipment and Appliances

• Paper Manufacturing

Texas Exports 2001$94.995 billion in 2001

• Mexico (41.0%)• Europe (11.8%)• Southeast Asia

(11.8%)• Canada (10.8%)• Asia (8.6%) • South America (5.5%)• Africa (4.8%) • Middle East (3.6%)

• Computer/Electronic Products (27.0%)

• Chemicals (15.3%)• Industrial Machinery (13.5%)• Transportation Equipment

(11.9%)• Electrical Equipment (5.1%)• Petroleum (3.9%)• Fabricated Metal Products

(3.4%)• Plastics and Rubber (2.9%)

A Changing Texas Labor Market (3)

4. Technology implementation will enhance productivity and transform many job sites and skill sets. What jobs can be replaced by technology (sheep shearing, textile inspector, electronic insurance processing, voice recognition)? What jobs does technology create? see….

Burlington/Nano-Tex, Texasinabox.com

More Output…Not More WorkersU.S. Projections 2000-2010 (annual)

Industry Sector Output Employment• Computers & Related 7.0% 1.6%• Chemicals 3.3% .4%• Industrial Machinery 6.1% .5%• Transportation Equipment 3.7% 1.1%• Motor Vehicles 4.4% 0.8%• Electrical Equipment 5.3% 0.6%• Fabricated Metal Products 3.6% 0.8%• Plastics and Rubber 4.0% 1.4% • Telephone Communications 6.5% 1.2%• Computer Data Processing 8.0% 6.4%

Technology Meets Apparel Manufacturing

Technology Meets Barbeque…

A Changing Texas Labor Market (4)

5. More jobs in small firms, greater use of leased and independent contract labor means fewer and shorter career ladders

6. Higher overall workforce education levels encourage fewer internal career ladders, fewer growth options for unskilled when they get a job e.g. hire outside folks who don’t need training

Texas Employment Distribution by Firm SizeFirst Quarter 2001

Firm Of Firms Statewide Of Workers StatewideSize No. Percent No. Percent

0-4 243,788 55.3% 462,175 5.0%5-9 77,816 17.7% 520,016 5.6%10-19 52,239 11.9% 723,532 7.7%20-49 38,203 8.7% 1,203,531 12.9%50-99 14,554 3.3% 1,040,977 11.1%100-249 8,820 2.0% 1,396,492 15.0%250-499 2,826 0.6% 992,058 10.6%500-999 1,242 0.3% 891,835 9.6%1,000 plus 843 0.2% 2,106,265 22.6%Total 440,331 100.0% 9,336,881 100.0%

Pattern of Change 1989-2001Texas Employment Percentages by Firm Size

Firm Pct of Workers TrendSize 1989 1992 1996 2001

0-4 4.92 5.78 5.16 5.0 SMALL INCREASE5-9 5.68 7.02 5.97 5.6 SLIGHT DECLINE10-19 6.92 9.12 8.01 7.7 INCREASE20-49 10.26 14.52 13.11 12.9 INCREASE50-99 8.34 11.62 10.91 11.1 BIG INCREASE100-249 11.52 14.64 14.56 15.0 BIG INCREASE250-499 9.24 9.04 9.77 10.6 INCREASE500-999 9.02 7.87 9.53 9.6 SMALL INCREASE1000 + 34.10 20.48 22.98 22.6 MAJOR DECLINE

A Changing Texas Labor Market (5)

7. For those working within companies, organizational structure moving from pyramid to flatter pyramid to hour glass, so fewer ports of entry for low skill workers

8. Workplace earnings are increasingly correlated with education and earnings inequality is increasing based on education and the “Digital Divide”

Changing Nature of Work:New Paradigm for Career

Ladders1. Increased employment growth in

service industries with higher percentages of workers in the secondary labor market

2. More jobs being created in smaller firms with shorter or less well-defined promotional ladders

3. Increased role for contingent workers, outsourcing, independent contractors

with few formal promotional ladders

Distribution of U.S. Employment by Education Category

Education CategoryEmployment

2000 2010Percent distribution

Jobs Added

Between2000-2010

Mean Annual

Earnings 2000

Bachelors Degree or higher

20.7% 21.8% 29.3% $56,553First Professional Degree 1.4% 1.4% 1.7% $91,424Doctoral Degree

1.0% 1.1% 1.6% $52,146Masters Degree 1.0% 1.0% 1.5% $43,842Bachelors plus work experience 5.0% 5.2% 6.4% $69,967

Bachelors Degree 12.2% 13.0% 18.1%$48,440

Associate Degree 3.5% 4.0% 7.3% $41,488

Postsecondary vocational award

4.6% 4.7% 5.5%

$31,296

Work experience 7.2%8.5%

6.9% 5.0% $40,881Long-term OJT 8.0% 4.2% $33,125

Moderate-term OJT 19.0% 18.4% 14.1% $29,069

Short-term OJT 36.6% 36.3% 34.6% $19,799

Lifetime Earnings by Education Level in Texas

Education Level Estimated Estimated Texas 2000 Lifetime Hourly Work Life

Hours Earnings Earnings

Short-term training 83,200 $8.26 $687,232Moderate-term training 83,200 $11.32 $941,824Long-term OJT* 83,200 $12.12 $1,008,384Work Experience 83,200 $15.85 $1,318,720Post-sec Vocational Award 83,200 $13.30 $1,106,560Associate’s Degree 83,200 $17.72 $1,474,304Bachelor’s Degree 83,200 $19.74 $1,642,368Bachelor’s + Experience 83,200 $24.82 $2,065,024Master’s Degree 83,200 $18.51 $1,540,032Doctoral Degree 83,200 $19.53 $1,624,896First Professional Degree 83,200 $35.61 $2,962,752

A Changing Texas Labor Market (6)

9. Globalization is changing economic theory, business practices and labor supply options

10. Changing demography affects everything from education needs, working with diversity, consumer tastes, tax structure, retirement

Globalization and the U.S. Economy

Total World Gross National Income (Product) 2001 = $31,500,012 million

 United States Gross National Product 2001=

$9,900,724 million The FACT is that the United States economy

represents 31.4 percent of the World Economy.

 The REALITY is that the top 20 richest countries

represent 85 percent of the World Economy and the top 10 richest account for 74 percent.

 

What Is an American Company?

Percent of 2000 Revenue Outside U.S.

• YUM Brands Inc. 34.5%• General Motors 26.2%• Ford 30.4%• Boeing 34.3%• Intel 58.8%• Coca Cola 61.0%• Federal Express 29.9%• Emerson Electric 40.0%

• Texaco 65.9%• IBM 57.9%• Motorola 52.5%• Johnson/Johnson 38.2%• John Deere 25.1%• Colgate 69.4%• Nike 50.3%• Hasbro 36.0%

Global Labor Supply Competition is Real!

India is positioned to become the world’s information

technology hubIndia’s software exports are expected to grow from $8

billion in 2001 to $57 billion by 2008, providing 4 million

jobs.

The Competition for Financial Services Jobs…

  

Impacts of Globalization on Consumers

• Broader access to a wider variety of products and services than neighborhood offers

• Greater vendor diversity leads to better buying opportunities, lower prices; eg. comparison shopping via Internet

• Lost allegiance to domestic producers; what about the “union label” or U.S. TVs??

• More volatile labor market with stronger competition from global labor supply

Impacts of Globalization on Business

• Businesses with global reach access more customers and get exposed in new markets

• Businesses with regional niche lose local customers to a global market place

• Business is exposed to supply chain opportunities to acquire lower cost inputs

• Business is exposed to new labor supply options; foreign affiliates, H1B, global outsourcing

A Changing Texas Labor Market (7)

11. A changing industry mix is resulting in changing occupational demand and skill sets, with an emphasis on lifelong learning.

Projected Fastest Growing Occupations

BLS National 2000-2010• Fastest Growing• Computer Software

Engineers Applications• Computer Support

Specialists• Computer Software

Engineers Systems• Network Administrators• Systems Communication

Analyst• Desktop Publishers• Database Administrators• Personal Home Care Aides• Computer Systems

Analysts• Medical Assistants

• Adding Most Jobs• Fast food Prep

Wrkers• Customer Service

Reps• Registered Nurses• Retail Sales Workers• Computer Support

Specialists• Cashiers, ex. Gaming• General Office Clerks• Security Guards• Software Applications

Engineers• Waiter/Waitress

Occupational Growth in Texas Fastest Growing 2000-2010

1. Computer Support Specialists

2. Computer Software Engineers, Apps

3. Network & Systems Administrators

4. Desktop Publishers5. Computer Software

Engineers, Systems6. Network & Data

Communications Analysts

7. Computer Specialist, NEC

8. Database Administrators 9. Medical Records

Technician10. Social Services Assistants11. Special Education

Teachers12. Computer Systems

Analysts13. Medical Assistants14. Physician Assistants15. Information Systems

Mgrs.

Occupational Growth in Texas Most Jobs Created 2000-2010

1. Customer Service Representatives

2. Food Prep and Serving Workers, Fast Food

3. Child Care Workers4. Retail Salespersons5. Registered Nurses6. Cashiers7. Computer Support

Specialists8. Office Clerks, General

9. Waiters & Waitresses 10. General and Operations

Managers 11. Elementary School

Teacher 12. Teacher Assistants 13. Secondary School

Teacher 14. Janitors and Cleaners 15. Truck Drivers, Heavy

and Tractor Trailer

(sorted by Absolute Change)

Cluster Name Employment Employment Absolute Percent Average2000 2010 Change Change Wages

Business Administration 3,024,530 3,450,090 425,560 14.07 $18.11Wholesale & Retail Trade 1,775,390 2,030,000 254,610 14.34 $12.30Hospitality and Tourism 1,255,660 1,477,950 222,290 17.70 $10.11Human Services 1,001,240 1,218,640 217,400 21.71 $11.65Health Services 884,380 1,099,320 214,940 24.30 $16.67Manufacturing 1,107,930 1,294,450 186,520 16.84 $18.04Logistics & Distribution 1,050,760 1,217,400 166,640 15.86 $17.31Information Technology 455,330 616,930 161,600 35.49 $24.45Education and Training 619,900 778,100 158,200 25.52 $16.23Public Administration 919,650 1,062,960 143,310 15.58 $26.18Construction 838,270 951,350 113,080 13.49 $15.57Scientific Research & Technical 443,870 544,810 100,940 22.74 $26.97Legal and Protective Services 330,090 410,420 80,330 24.34 $17.04Finance 639,470 712,920 73,450 11.49 $18.33Art & Communications Services 512,880 585,760 72,880 14.21 $19.65Agriculture 559,220 631,360 72,140 12.90 $21.42

Texas Career Clusters

A Changing Texas Labor Market (8)

12. All education and workforce development

is part of economic development. Industry Clusters and regional targeting must emphasize regional collaboration.

13. The economic future of the region will depend on understanding the market factors faced by the employer community and how you shape policies to take advantage of that environment

The Secret is in Collaboration!

The Future is Uncertain…

Predictions--statements indicating that something definitely will happen in the future--are generally impossible, due to human

decisions that alter the future and to the many

uncertainties inherent in human life

Foretelling the Future…There Are No Gypsys

with Crystal Balls!

Futurists suggest things that might happen in

the future so that people can decide what

they want to make happen.