The Changing Face of the Texas Labor Market

TEA High School Counselors Conference Austin, Texas

March 17, 2003

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

Economic forecasting is a field that gives

Astrology a good name!

Does this Sound Like an Economist?

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

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, impact of Iraq war, and level of job growth in recovery

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• Computer/Electronics $25.7 billion 27.0%• Chemicals $14.6 billion 15.4%• Machinery, ex. Electrical $12.8 billion 13.5%• Transportation Equipt $11.3 billion 11.8%• Electrical Components $4.8 billion 5.1%• Petroleum Products $3.7 billion 3.9%• Fabricated Metals $3.2 billion 3.4%• Plastic & Rubber Prod $2.8 billion 2.9%• Food & Kindred $2.6 billion 2.7%• Primary Metal Manuf. $2.1 billion 2.2%• Agricultural Products $1.9 billion 2.0%

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

11. Labor supply and certification

How Globalization Impacts the

Labor Market—The Basics• Globalization & new digital technology opens

producer/consumer markets around the world• Increased customer access to producers leads

to global price competition, driving employer need for greater productivity, lower prices

• Increased price competition leads to cost containment pressures

• Cost containments leads employers to new supply chain practices, concerns over labor costs, alternative labor options

Population Pyramids for Anglo and Hispanic Ethnic Groups in Texas, 2000

Male Female Male Female

Anglo Hispanic100 + years

95 to 99 years90 to 94 years85 to 89 years80 to 84 years75 to 79 years70 to 74 years65 to 69 years60 to 64 years55 to 59 years50 to 54 years45 to 49 years40 to 44 years35 to 39 years30 to 34 years25 to 29 years20 to 24 years15 to 19 years10 to 14 years

5 to 9 years< 5 years

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Estimating Labor Supply

a. Changing Demographics-new mixChanging Demographics-new mix of diversity in the labor poolof diversity in the labor pool

b. Relevance of a college major? c. College credential vs. industry certification? Value of a diploma? d. Counting skill attainment from non-traditional sources, e.g. on-

line courses, employer training e. Marketable skills achievers??

Educational Attainment Concerns

• Hispanics are much less likely to complete HS (62.8%) than Blacks (86.8%) or Whites (94%)

• Hispanic drop out rates (28.6%) are twice as high as Blacks and four time higher than Whites

• Hispanic and Black 15-17 year olds are more likely to be below modal grade

• Hispanics HS grads are less likely to be enrolled in college than Blacks or Whites and much less likely to have received a Bachelor’s degree.

A Changing Texas Labor Market (7)

12. 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

The Workplace of the Future...

The factory of the future has just one man and one dog. The man’s job is to feed the dog. The dog’s job is to keep the man from touching the equipment.