The Changing Face of the Texas Labor Market

1. The Changing Face of the Texas Labor Market Rural Workforce Network Lubbock, Texas February 11, 2003 Richard Froeschle, Director Career Development Resources(CDR) rich@cdr.state.tx.us (512) 491-4941

2. 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

3. 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!

4. Economic forecasting is a field that gives Astrology a good name!

5. Does this Sound Like an Economist?

6. 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

7. What do labor economists agree on? • There will be no shortage of opportunities in the knowledge sector for those with the education and intelligence to perform in it • 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

8. 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”

9. 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?

10. 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

11. 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) Texas Industries Adding the Most Jobs1999-2002

12. 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 Industries Losing the Most Jobs from 1999-2002

13. 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%) Texas Exports 2001$94.995 billion in 2001

14. 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

15. 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%

16. Technology Meets Apparel Manufacturing

17. Technology Meets Barbeque…

18. 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

19. Texas Employment Distribution by Firm Size First Quarter 2001 Firm Of Firms Statewide Of Workers Statewide Size 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%

20. Pattern of Change 1989-2001 Texas Employment Percentages by Firm Size Firm Pct of Workers Trend Size 1989 1992 1996 2001 0-4 4.92 5.78 5.16 5.0 SMALL INCREASE 5-9 5.68 7.02 5.97 5.6 SLIGHT DECLINE 10-19 6.92 9.12 8.01 7.7 INCREASE 20-49 10.26 14.52 13.11 12.9 INCREASE 50-99 8.34 11.62 10.91 11.1 BIG INCREASE 100-249 11.52 14.64 14.56 15.0 BIG INCREASE 250-499 9.24 9.04 9.77 10.6 INCREASE 500-999 9.02 7.87 9.53 9.6 SMALL INCREASE 1000 + 34.10 20.48 22.98 22.6 MAJOR DECLINE

21. 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”

23. Changing Nature of Work:New Paradigm for Career Ladders • 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

24. Distribution of U.S. Employment by Education Category Education Category Employment 2000 2010 Percent distribution Jobs Added Between 2000-2010 Mean Annual Earnings 2000 Bachelors Degree or higher 20.7% 21.8% 29.3% $56,553 First Professional Degree 1.4% 1.4% 1.7% $91,424 Doctoral Degree 1.0% 1.1% 1.6% $52,146 Masters Degree 1.0% 1.0% 1.5% $43,842 Bachelors 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% $40,881 Long-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

25. 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 $687,232 Moderate-term training 83,200 $11.32 $941,824 Long-term OJT* 83,200 $12.12 $1,008,384 Work Experience 83,200 $15.85 $1,318,720 Post-sec Vocational Award 83,200 $13.30 $1,106,560 Associate’s Degree 83,200 $17.72 $1,474,304 Bachelor’s Degree 83,200 $19.74 $1,642,368 Bachelor’s + Experience 83,200 $24.82 $2,065,024 Master’s Degree 83,200 $18.51 $1,540,032 Doctoral Degree 83,200 $19.53 $1,624,896 First Professional Degree 83,200 $35.61 $2,962,752

26. A Changing Texas Labor Market (6) 9. Globalizationis 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

27. 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.

28. 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% What Is an American Company?Percent of 2000 Revenue Outside U.S.

29. Global Labor Supply Competition is Real! India is positioned to become the world’s information technology hub India’s software exports are expected to grow from $8 billion in 2001 to $57 billion by 2008, providing 4 million jobs.

30. The Competition for Financial Services Jobs…

31. 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

32. 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

33. 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.

34. 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 Projected Fastest Growing OccupationsBLS National 2000-2010

35. 1. Computer Support Specialists 2. Computer Software Engineers, Apps 3. Network & Systems Administrators 4. Desktop Publishers 5. Computer Software Engineers, Systems 6. Network & Data Communications Analysts 7. Computer Specialist, NEC 8. Database Administrators 9. Medical Records Technician 10. Social Services Assistants 11. Special Education Teachers 12. Computer Systems Analysts 13. Medical Assistants 14. Physician Assistants 15. Information Systems Mgrs. Occupational Growth in Texas Fastest Growing 2000-2010

36. 1. Customer Service Representatives 2. Food Prep and Serving Workers, Fast Food 3. Child Care Workers 4. Retail Salespersons 5. Registered Nurses 6. Cashiers 7. Computer Support Specialists 8. 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 Occupational Growth in Texas Most Jobs Created 2000-2010

38. 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

39. The Secret is in Collaboration!

40. 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

41. 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.