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Advanced Micro Devices, Austin, Average Wages, Dell Computer, Freescale Semiconductor, Job Growth, Ohio State University, Rick Perry, Texas, University of Illinois, University of Michigan, University of Texas at Austin, University of Wisconsin

Stellar Job Growth in High Wage Austin, Texas

In Austin, Job Creation, Rick Perry, Texas on September 11, 2011 at 1:19 am

The majority (509,560, or 59%) of the 860,740 net new jobs created in Texas in 2001-10 occurred in three metropolitan areas, each of which has average wages above the US average (see https://econscius.wordpress.com/2011/09/03/stellar-texas-job-growth-in-above-average-wage-cities/). We will look closely at each of these three metropolitan areas, Houston, Austin and Dallas.

We start with the Texas state capital of Austin. The Austin MSA had 1,716,291 residents in the 2010 Census, up 466,528 (37%) from 2000. [1] Metro Austin’s job growth of 101,510 in 2001-10 accounted for 12% of all Texas job growth. Note the USA actually had negative job growth during the same time frame.

The Austin job growth was in the following US Bureau of Labor Statistics categories: Computer & Mathematical (+11,950 jobs, average wage $82,960), Office & Administrative (+12,370, average wage $35,200), Education & Training (+16,580, average wage $54,970), Sales & Related (+15,750, average wage $38,240), Food Preparation (+22,740, average wage $19,870), and all other groupings combined (+22,120 jobs). [2] This shows most of the job growth was in white-collar jobs. Note the proverbial “burger flipper” jobs of the Food Preparation category accounted for only 23% of the total job growth, are often held by teenagers, and such growth is to be expected when the metro area had 37% population growth in the decade.

Austin is one of nation’s best educated metro areas as 38.2% of Austin adults hold a college degree vs. 27.7% national average. [3]

The Austin area is 30% Latino, 8% Black and 5% Asian [4], compared to the US average of 16% Latino, 13% Black, and 5% Asian. [5] Thus, Austin has a larger minority population than the US average. Given the lower average educational and income attainment of racial minority groups, the fact Austin is above US averages in both education and income attainment stands out.

The graphs below show Austin’s job distribution is similar to US average but slightly more white-collar, being particularly strong in Computer and Mathematical jobs (Austin 6 % vs USA 3 %).

Occupation Distribution, Austin vs. US Average, May 2010 BLS data

Occupation Code	Austin Jobs, 2010	USA Jobs, 2010
Computer and Mathematical	6%	3%
Office and Administrative Support	18%	17%
Architecture and Engineering	3%	2%
Management	5%	5%
Sales and Related	11%	11%
Business and Financial Operations	5%	5%
Education, Training, and Library	7%	7%
Healthcare Practitioners and Technical	4%	6%
Installation, Maintenance, and Repair	3%	4%
Construction and Extraction	4%	4%
Food Preparation and Serving Related	9%	9%
Production	4%	6%
Transportation and Material Moving	4%	7%
All Other	16%	16%

Average Wages by Occupation, Austin vs. US Average, May 2010 BLS data

The wage graph is interesting. Austin’s average wage of $46,130 is higher than US average of $44,410, but Austin wages are below US averages for less skilled work (food preparation, transportation, production, construction). This might be due to the lack of unions in Texas. On the other hand, skilled white-collar work (education, business, finance, computers and office support) are above US averages. The higher Austin white-collar wages must reflect high worker productivity, which is not surprising given the highly educated workforce and presence of top technology companies in the Austin area.

Austin has a knowledge-based economy. In addition to state employees, the University of Texas at Austin (“UT”) is an important employer. Though some like to say Texas education is ‘bad’, the Longhorns rank as the #45 university in the USA, according to US News. [6] UT’s ranking is more impressive given that most of the top ranked universities are private (e.g. Ivy League). Texas-Austin is rated #13 amongst US public universities [7], tied at #13 with Univ. of Wisconsin-Madison and just ahead of my undergraduate alma mater, University of Illinois, #15.

There is an important point here, too. Some will downplay the Austin job growth by saying the city is the home of a state capitol and flagship university, therefore, the job growth is unimpressive. However, the similarly ranked University of Wisconsin sits in Madison, which is also a state capitol. Likewise Ohio State University stands in state capitol Columbus. Madison and Columbus have held their own compared to other Midwestern cities but are not even in the ballpark of Austin population and job growth. Champaign, home of the University of Illinois, has little growth. In fact, the Champaign example is instructive as it shows universities are excellent employers because they are stable and ride out recessions well. But, student populations grow very slowly, if at all, meaning the number of jobs directly tied to any university hardly changes. What matters is a culture of entrepreneurs and venture capital driving economic growth around universities. There is nothing automatic about economic growth in any particular city that houses an excellent university. One of the nation’s top public universities (#4, see [3]), University of Michigan, is located in the Detroit suburb of Ann Arbor. Despite its fantastic engineering program, Michigan has been unable to prevent the flow of jobs out of the Detroit area.

Michael Dell famously started Dell Computer in his University of Texas dorm room. Dell today leads the private employers in employment in the Austin metro area. Interestingly, Dell Computer now employs more than the University of Texas. The Top 20 list displays Austin’s strong technology presence as literally every single non-hospital corporation on the list is in technology (Dell, IBM, Freescale Semi, Solectron, AT&T Labs, AMD and Applied Materials). Another growth company founded and headquartered in Austin is Whole Foods.

Metro Austin Top 20 employers: [8]

1. State of Texas – 65,688 employees

2. Dell Computer – 14,000

3. University of Texas at Austin – 13,577

4. Austin Independent School District – 10,714

5. US Gov’t – 10,624

6. City of Austin – 10,000

7. Seton Healthcare – 7,538

8. IBM Austin Research Laboratory – 6,200

9. St. David’s Healthcare – 5,712

10. Freescale Semiconductor – 5,600

11. Internal Revenue Service – 4,728

12. Round Rock Ind. School District – 4,400

13. Travis County – 4,000

14. Austin Community College – 3,258

15. Solectron – 2,900

16. Leander Ind. School District – 2,800

17. Brackenridge Hospital/Dell Children’s Hospital – 2,537

18. Applied Materials – 2,500

19. AT&T Labs – 2,400

20. Advanced Micro Devices – 2,300

The conclusion is Austin has enjoyed stellar job growth in higher-than-average wage, white collar jobs. As always, your comments are welcome below.

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[1] http://en.wikipedia.org/wiki/List_of_United_States_metropolitan_areas, retrieved 9/10/11.

[2] Austin-Round Rock-San Marcos MSA employment and mean wage data retrieved for total and Occupational categories in 2001 and 2010 from http://www.bls.gov/oes/2001/oes_0640.htm#otherlinks and http://www.bls.gov/oes/current/oes_tx.htm#00-0000.

[3] 2008 Census Bureau data in http://www.austin-chamber.org/do-business/greater-austin/greater-austin-profile/population.php, retrieved 9/10/11.

[4] 2007 Census Bureau data in http://www.austin-chamber.org/do-business/greater-austin/greater-austin-profile/population.php, retrieved 9/10/11.

[5] http://en.wikipedia.org/wiki/Demographics_of_the_United_States, retrieved 9/10/11.

[6] http://colleges.usnews.rankingsandreviews.com/best-colleges/university-of-texas-austin-3658 retrieved 9/9/11.

[7] http://colleges.usnews.rankingsandreviews.com/best-colleges/rankings/national-universities/top-public retrieved 9/9/11.

[8] http://www.austintexashomes.com/topemployers.htm data retrieved 9/9/11.

Pictures from Wikipedia Commons.

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$447 Billion "Jobs" Stimulus Bill, Corporate Taxes, General Electric, Jeffrey Immelt, Payroll Tax Holiday, President Obama, Tax Credits, Washing Machines, Whirlpool

More Corporations to Pay Less Tax Under Obama’s “Jobs” Plan

In General Electric, Income Tax Rates, Job Creation, Obama Administration on September 9, 2011 at 1:43 am

They say politics makes for strange bedfellows and President Obama’s proposed $447 Billion “Jobs” bill is a strange partner to the oft stated Democratic goal demanding corporations “pay their fair share”.

President Obama’s plan cuts by half the payroll tax paid by employers and sets an employer payroll tax holiday for new workers or higher wages. The President offers “tax credits of up to $5,600 for businesses that hire unemployed veterans, $4,000 for hiring workers unemployed for more than six months, and up to $9,600 for companies that hire unemployed workers with service-connected disabilities who have been looking for work for more than six months.” [1]

Setting aside the issue of whether these credits will really work or not, it surprises Econscius the same people who decry the low effective US tax rates paid by GE and other large companies are supporting a plan that will… offer new tax credits to GE and other large companies for doing things they already do.

Why did GE pay no US income tax in 2010? There are many reasons, including a loss carry-forward from its loss in 2009, artful distribution of income among international jurisdictions as well as numerous US tax credits. GE enjoys “green energy” credits for its wind turbines [2], receives export subsidies [2], credits for its front-loading washing machines [3] and other tax code goodies. The “green” washing machine subsidies are significant as its competitor Whirlpool also managed to pay no income tax in 2010, on a profit of $619 million. [3]

These tax credits exist as a matter of public policy. America’s elected representatives offer up tax credits to encourage companies to export, sell “green” products and so forth. President Obama’s plan would sweeten the rewards for hiring new workers. While that is a noble goal, it is certain much of the tax credit benefit will reward companies for hiring the employees they already intend to hire. A temporary tax credit is of even less likely long-term benefit since it is a reward to hire an employee but only until the tax credit ends. I think a small number of employees will be added at the margin, but the numbers will be small since a temporary credit is not, in and of itself, a reason to hire if a company believes the economy is too weak to justify the overall expense of a new worker.

Be that as it may, the tax credits will actually reduce the taxes paid by American corporations, which we have been led to believe is exactly the opposite of what the Left wants. It does not take too much imagination to think the tax sharpies at companies like GE may even find ways to game whatever new tax benefits are ultimately passed, perhaps firing employees in one area and then rehiring others to take the tax credit in another area.

I like the idea of a simpler corporate tax code with lower rates but fewer credits and loopholes. The more complicated the tax code is, the more perplexing it is to average businesses and the more advantage it conveys to large corporations like GE, who employs 975 clever people in its tax department. [3]

[1]http://abcnews.go.com/Politics/obama-pushes-447-billion-jobs-plan-address-congress/story?id=14476349

[2] http://www.nytimes.com/2011/03/25/business/economy/25tax.html?pagewanted=all Also, source of Immelt/Obama picture.

[3] http://online.wsj.com/article/SB10001424052748704662604576202212717670514.html

GE pictures from Wikipedia Commons.

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Austin, California, Dallas, Dallas Fed CEO Richard Fisher, El Paso, Houston, Job Creation, Laredo, New York State, Paul Krugman, San Antonio, Texas

Stellar Texas Job Growth in Above Average Wage Cities

In Job Creation, Oil, Texas on September 3, 2011 at 1:53 am

Texas Major MSA Population Growth (Outer Ring) & Job Growth (Inner Ring)

The graph above shows how the Dallas, Houston, San Antonio and Austin metropolitan areas account for the vast majority of Texas population growth and job growth in the past decade. The entire rest of the state is in the olive shading. This fact exposes a common and untrue claim about Texas job growth, namely that is is adding a lot of jobs but they are low wage. Dallas, Houston and Austin all have wage levels that are above both the Texas and US averages.

Average Wages and wage growth 2001-10 are shown in the chart below. Texas is a little behind the US average but actually made up a little of the gap. We see the aforementioned average 2010 wages in three of the four big metro areas are above both Texas and US averages. As we just saw above, the bulk of Texas job creation, 509,560 of 860,740 total new jobs, took place in just those three cities. San Antonio is not far behind ($39,410 average) and with its low cost of living and absence of state income tax; San Antonio accounted for another 130,940 of the 860,740 total.

US & Texas Average Wages in 2001 plus Wage Growth to 2010

How does Texas job growth compare to US job growth? The next chart shows us how impressive the 860,740 jobs created in Texas was. The United States total was a loss of <883,250>. When we remove Texas from the USA total (for statistical purposes, not political secession!), we see the non-Texas US total was really a loss of <1.7> million jobs. The chart below also shows how geographically diverse the Texas job growth was; all four of the large metropolitan areas as well as the fifth largest city, El Paso and the border cities of Laredo and Brownsville-Harlingen far outpaced overall US job growth.

This dispersion of job growth is also found in other, smaller Texas MSAs, too:

McAllen-Mission	32%
Victoria	32%
Killeen-Temple	24%
Bryan-College Station	21%
Abilene	15%
Corpus Christi	12%
Waco	5%
Beaumont-Port Arthur	2%
Sherman-Denison	-3%

Chart by Author
Source: BLS OES, MSA data 2001 vs. 2010

A criticism of Texas job growth made by Paul Krugman is that Texas is a “still energy-heavy economy”. [2] Oil and gas are actually a small percentage of Texas jobs, however. “Mining, which encompasses oil and gas, employs only 2.1 percent of the Texas population – a surprising statistic for those unfamiliar with Texas economics.” [3] It is true some support jobs, for example teachers and restaurant workers, are indirectly employed by supporting the 2.1% directly involved in mining, but Mr. Krugman overstates the case. It is also true Texas is not the only state with mineral wealth. Some states with oil such as California and New York have been less diligent about developing their resources than states like Texas, Louisiana, North Dakota and Pennsylvania have. This impacts jobs.

The dispersion of job growth also proves false the claims Texas job growth is all energy. Houston, Beaumont and Corpus Christi are along the oil intensive Gulf Coast but are not exclusively energy, anyway (e.g. SYSCO Foodservice, headquartered in Houston). Dallas, Austin and San Antonio have more varied, non-energy economies. Dallas, the largest metro in Texas, is a major white-collar corporate center. Austin, home of Dell Computer and many chip companies, is a major technology and Venture Capital hub. The Rio Valley cities are agricultural centers with strong Mexican border trade. San Antonio is “Military City USA” with low paid soldiers as well as many white-collar back office functions, logistics, tourism and skilled manufacturing (e.g. new Toyota and Caterpillar plants).

Dallas, Austin and San Antonio certainly help account for the fact education, healthcare and professional and business services, account for 26 percent of all jobs in Texas. [3] Dallas Federal Reserve Bank CEO Richard Fisher pointed out, “Non-agricultural employment growth in Texas has compounded at an annual rate of 1.95 percent over 21 ½ years; that of California at 0.57 percent and New York at 0.19 percent.” Mr. Fisher noted in the period of June 2009-2011, Texas had accounted for 49.9% of net new jobs created in the United States. [3]

So where are the low wage Texas jobs some pundits keep talking about? They are not in the four big metropolitan areas, but instead are found in rural areas and smaller communities, many of which have been poor since before the US annexed Texas. This is hardly unique, however, as there are poor rural areas and declining small cities in upstate New York, downstate Illinois, interior California, etc. I am unaware of any state that has solved this disparity. In fact, other high wage metro areas are not located far from much lower wage, economically depressed cities in their own states, e.g. San Francisco ($59,820 avg. wage) vs. Fresno ($41,100) and Merced ($39,080) or New York City ($55,080) vs. Buffalo ($42,010) and Binghamton ($41,260).

I think another important point is how the direction of Texas wages is up and has, for decades, been slowly but surely closing in on national averages. There is something disingenuous about comparing the higher average wage levels in declining northern small cities with traditionally poor, but upcoming Texas cities. Rochester was the birthplace of Kodak. Buffalo was a very prosperous port and manufacturing city. Carrier invented air conditioning in Syracuse. The somewhat higher residual wages in some of these Rust Belt cities do not go as far due to taxes and living costs and their long term unemployment and wage trends are typically not at all promising. Would you rather build your future in Buffalo or San Antonio?

Another factor in Texas wages is the unfortunate fact that racial minority groups are lower-income in America. Whites are a minority in Texas. I should emphasize I do not believe there are any innate differences, simply differences in culture, role models, difficulties with English as a second language, etc. Metro San Antonio is majority Latino. High wage metro Houston is 41% Latino. It would appear the Texas economy is doing something right for many Hispanics in these cities. Many of the below average wage areas in the Rio Valley are almost exclusively Latino, such as Hidalgo County, home of McAllen ($32,470 avg. wage), which is 91% Latino, and Webb County, home of Laredo ($33,580 avg. wage), which is 96% Latino.

In conclusion, the data shows Texas job growth far exceeded the nation in 2001-2010 and the Texas job growth was concentrated in metropolitan areas with above average wages. This disproves the claims Texas is simply creating low wage jobs. There are low wage jobs in Texas, many in South Texas agriculture have been there in more or less the same form for centuries, but it takes some clever mental jujitsu to look at the actual record of Texas and not see the huge growth in population and in jobs in above average wage cities.

[1] Data sources: 2001 US and Texas employment data:

http://www.bls.gov/oes/2001/oes_00al.htm and http://www.bls.gov/oes/2001/oes_tx.htm#b00-0000; 2010 US and Texas employment data: Texas $42,220, US average $44,410

http://www.bls.gov/oes/current/oes_tx.htm#00-0000 and http://www.bls.gov/oes/current/oes_nat.htm#00-0000

2001 MSA employment data:

http://www.bls.gov/oes/2001/oes_0640.htm#otherlinks, 2010 MSA employment data: http://www.bls.gov/oes/current/oes_32900.htm#00-0000, 2000 & 2010 Census data by MSA: http://en.wikipedia.org/wiki/List_of_United_States_metropolitan_areas and State Census data: http://www.census.gov/popfinder/

[2] http://seattletimes.nwsource.com/html/opinion/2015919308_krugman16.html

[3] http://www.christianpost.com/news/dallas-fed-ceo-defends-texas-job-growth-warns-politicians-over-criticism-of-bernanke-54419/

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A-1 Wire Technologies, American Recovery & Reinvestment Act, Chicago, Chicago Sun-Times, Clarin Furniture, Herbert Hoover, Illinois, Indiana, Jobs, On-Cor Frozen Foods, Schofield Media

Stimulus Recipient Among Illinois Mass Layoff Notices… Indiana Welcomes Another Illinois Company

In American Recovery & Reinvestment Act (Stimulus), Economy, Illinois, Indiana, Job Creation on August 3, 2011 at 9:32 pm

Today’s Yahoo News story “Ominous signs of surging layoffs in Illinois, nation” [1] reports mass layoff notices. Let’ see why these layoffs are happening. An AP story explains why A-1 Wire was closing its Rockford, Illinois operation, laying off 51 employees:

“ELKHART, Ind. — The Indiana Economic Development Corp. says a producer of high-performance engineering alloys is moving its operations from Illinois to Indiana, creating up to 100 new jobs by 2014. THE IEDC said Saturday that Special Metals Corp. will move its A-1 Wire division from Rockford, Ill., to a 50,000-square-foot plant in Elkhart starting in September.” [2]

The State of Indiana is one of many that has targeted Illinois companies for relocation after Illinois raised its personal and corporate income tax rates in January 2011.

On-Cor Frozen Foods is moving 85 jobs out of Illinois [3]. This is interesting because last fall, On-Cor was the beneficiary of Stimulus tax-exempt financing to open a new facility in the Chicago suburb of Geneva. [4] As reported 11/6/10 in the local newspaper:

“GENEVA – Kane County officials are getting ready to issue $10.25 million in recovery zone bonds to facilitate On-Cor Frozen Foods’ relocation to Geneva. Under the American Recovery and Reinvestment Act of 2009 the county can issue up to $41 million in bonds to stimulate the economy through low-cost, tax-exempt financing. The proposed bonds are intended to help companies with financing for buying or improving property or for buying equipment. The bonds do not create an obligation for the county or the taxpayers, but will be paid back by On-Cor, officials said. Sherry DeMeulenaere, treasurer for a limited liability corporation that owns most of On-Cor, said the bonds will pay for equipment used to process frozen foods… “We have an existing workforce in Chicago and jobs will depend on how many will come out to Geneva. We have 85 jobs downtown and we expect to create another 46.” [4]

So much for the job creation in Illinois. 46 minus 85 is a negative number. Might those “46 jobs” at the new Geneva facility be among Stimulus jobs the Administration’s website counts as created?

“Furniture maker Clarin is closing in Lake Bluff, telling the state that it’s letting 75 workers go due to the sale of its assets. ” [5] This site is Clarin’s corporate office and manufacturing plant. Ironically, Clarin’s website is proud President Hebert Hoover sat in a Clarin chair. [6] [7] Clarin survived the Great Depression but not the Great Recession.

Atlanta-based Consolidated Container is a good-sized operation with 65 facilities; I could find no word on why they’re closing in suburban Chicago. [8]

Pacific Coast Feather is a large company from Seattle, WA. No word on why it is closing a facility in Des Plaines, Illinois. [9]

Schofield Media Group LLC in downtown Chicago is closing, affecting 107 employees. Schofield was a $25 million revenue company and is closing operations after “unexpectedly” losing its bank financing. [10]

The Chicago Sun-Times “will eliminate 456 jobs in Chicago starting in late September through year-end. Most of the jobs are unionized and include electrical workers, machinists, mailers, operating engineers, pressmen, paper handlers and Teamsters who serviced the soon-to-close plant at 2800 S. Ashland Ave.” [5]

Some of these closings are not surprising; Borders is closing everywhere. Retail operations like Shopko, restaurants or garden centers may close due to competitive stresses or because of weakness with local consumers. A weak economy may reflect high local unemployment, which might be expected when companies like A-1 Wire, Pacific Coast Feather, On-Cor Foods, Clarin Seating and Schofield Media close or leave. The Illinois economy is not working very well and Illinois does itself no favors with an unattractive tax and regulatory environment.