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Changing Face of the Texas Labor Market. January 15, 2009. Richard Froeschle richard.froeschle@twc.state.tx.us Texas Workforce Commission/LMCI (512) 491-4941 www.lmci.state.tx.us. Tell Me About the Labor Market….

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changing face of the texas labor market

Changing Face of the Texas Labor Market

January 15, 2009

Richard Froeschle

richard.froeschle@twc.state.tx.us

Texas Workforce Commission/LMCI

(512) 491-4941

www.lmci.state.tx.us

slide2

Tell Me About the Labor Market…

1. Current labor market conditions- Snapshot of current economic measures. What do the numbers tell us about the labor market relative to historical periods, e.g. Urate, payroll job growth, labor force growth, personal income, sales taxes, GDP growth, college enrollments & graduations, etc.

2. Where is the labor market headed. What do we expect the labor market will look like in the foreseeable future. How will the present situation change, e.g projected industry and occupational job growth and decline, expected demographics

3. What is the environmental context, business climate and likely structural transformations that will shape future job growth and creation. What are the larger trends that will influence business decisions and the demand for workers, e.g. impact of globalization, technology, demographic trends etc.

economic truth about predicting recessions
Economic Truth About Predicting Recessions

“ Nobody ever sees anything coming. Nobody saw stagflation coming, nobody saw the Great Depression coming, nobody saw Pearl Harbor or 9/11 coming. Really big, bad things tend to be surprises.”

Laurence Ball, economist at Johns Hopkins University

gleaning wisdom from data
The Japanese eat LESS red meat and drink less red wine than do Americans or the British—and they have a much lower incidence of heart attacks.

The Italians eat MORE red meat and drink much more red wine than do Americans or the British--and yet they too have a lower incidence of heart attacks.

Gleaning Wisdom from Data…

Conclusion: Go ahead and eat whatever you want.

It's pretty clear that speaking English is what kills you

slide6

What has the economy been doing?

Macroeconomic Growth Patterns and

Changes in Consumer Behaviors

we re from texas what country are you from
We’re from Texas: What country are you from?
  • We have NASA so we control the space industry.
  • We have all the oil and gas that we will need for the next 300 years & refine over 85% of the gasoline in the U.S.
  • We have 65% of the Defense Industry; The term "Don't mess with Texas," takes on a whole new meaning.
  • We got technology: Texas leads the nation in producing computer chips and communications equipment.
  • We have our own food; Texas is self-sufficient in beef, poultry, hogs, sea food & several types of grain, fruit and vegetables; and every Texan knows how to cook.
  • We have a ready supply of workers.  We could just open the border when we need some more.
harry truman is purported to have said

Harry Truman is purported to have said,

All my economists say, “on the one, or on the other hand”…what I really need is a one-handed economist.

the rise of behavioral economics
The Rise of Behavioral Economics

“Behavioral economics focuses on the ways humans fail to act as rational, self-interested beings that economic models call for—we aren’t good at thinking about the future, we’re susceptible to peer pressure, we overestimate our abilities and underrate the odds of bad things happening.”

Robert Shiller, Yale University economist

the two minds of the global economy i
Difficult for smaller companies to compete

Widening income and wealth inequality

Job instability, job portability, job volatility, offshore potential of American jobs

Big Box retailers give us one-stop shopping convenience (the WalMart premium)

Global investment opportunities, diversified portfolio & higher rates of return

More productive & profitable ways to do business; offshoring, temps, outsourcing, foreign skilled labor

The “Two Minds” of the Global Economy I

As Consumers/Investors, we like…

As Citizens, we don’t like…

the two minds of the global economy ii
Soaring CEO pay relative to worker wages

Lowered sense of “community” in a global world

Reduced loyalty: firms to workers, workers to firms, consumers to firms (brand loyalty)

More opportunities for entrepreneurs, more millionaires per capita!

Better shopping! Access to “stuff” created anywhere in the world

Global competition results in lower product prices

The “Two Minds” of the Global Economy II

As Consumers/Investors, we like…

As Citizens, we don’t like…

3 wealth effect 4 job losses unemployment

The Downward Cycle for Consumers

3. Wealth Effect4. Job Losses/Unemployment

1. Real Estate/Home Values

2. Stock Prices/Investment Portfolio

5. Borrowed Money/Credit

Consumer Spending

slide19

Texas Industry and Occupational

Growth Patterns:

Historical Change and

Projected Employment

unemployment has many faces
Unemployment has Many Faces
  • Frictional – Lack of information makes it difficult for employers and jobseekers to locate each other in a timely & efficient way
  • Seasonal– Different calendar periods are normally slower or more robust than average
  • Structural – Mismatch between skills in demand and the skills and abilities of the workforce
  • Cyclical or demand deficient – Insufficient economic activity causes even appropriately skilled workers to have trouble finding suitable employment
how is the texas economy performing it depends on your personal perspective
It’s doing well if….

Employed w/ marketable

& transferable skills

Nursing, Home Health Care

Medical/Drs. Assistants

Therapists &Therapy Aides

IT, DBA, Network Systems

Construction & Utilities

Wind, Renewable Energy

Teaching, all levels

Oil & Gas industry

Cross/Multi-disciplinary

It’s not doing well if…

Unemp w/Undefined skills

Repetitive, Rules-based Jobs

Textile/Apparel Sector

Small Farmer/Rancher

Telemarketer/Travel Agent

Financial Sector

Production Assembler

Order, Grocery or File Clerk

Mail & Postal Clerks

Low education, technophobic

Geographically immobile

How is the Texas Economy Performing? It Depends on Your Personal Perspective!
online job openings in texas september 2008 372 529 total unique ads placed
Registered Nurse (27,219)

Engineers (all) (9,984)

Customer Service Reps (8,439)

Computer System Analysts (8,167)

Retail Sales Supervisors (6,884)

Physical Therapists (6,602)

Accountants (6,149)

Admin Assistants (6,051)

Computer Support Specialist (5,580)

Heavy Truck Driver (5,538)

Retail Salesperson (5,179)

Sales Managers (5,112)

Sales Reps, Man/Wholesale (4,629)

Occupational Therapist (3,970)

Applications Programmers (3,968)

Web Developers (3,705)

Online Job Openings in Texas September 2008372,529 total unique ads placed
decomposition of work net job change masks important market dynamics
Decomposition of Work: Net Job Change Masks Important Market Dynamics

1. Real industry growth viewed in terms of revenues, profits & market share, not necessarily jobs, e.g. Who’s making money vs. Who’s creating jobs?

2. Technological obsolescence & Labor substitution work activities made obsolete through technology, some replace workers

3. Emergence of new & blended occupations -combining job duties from 2 or more occupations into a single, “new” job… you’re a what? e.g. windmill turbine mechanics, cable installers

4. Connecting education and the economy:How to best match educational coursework & majors to employer skill needs, What do I study to become more employable?

decomposition of work labor market skill needs are getting tougher to measure
Decomposition of Work:Labor Market Skill Needs are Getting Tougher to Measure

5. Outsourcing arrangementse.g. IBM and Marriott change work arrangements on paper affecting labor market data, but not training needs

6. Patterns in use of temporary & contract workers – Increasingly common use of the contingent workforce

7. Global Supply Chain Leakages -- lost jobs & $$$ through global supply chain mgmt. (decoupling of production, labor and stock price)

8. Work Activity Off-loading --passing off lower value-added work to assistants/technicians

9. High resolution globalization -- tradable skills, outsourcing specific work functions, not occupations

globalization is altering our perspective
Globalization is Altering Our Perspective

1. Economic theory: what’s wrong with Keynesian economics…global leakage!

2. Employer business practices: the drive for greater productivity and market share in a globally competitive economy

3. Labor supply options: not just U.S. FTEs

4. Decoupling of the labor market, stock market and aggregate production

5. Creating competition for Commodities, Kapital and Natural Resources

slide40

“”The world has arrived at a rare strategic inflection point where nearly half its population—living in China, India and Russia—have been integrated into the global market economy, many of them highly educated workers, who can do just about any job in the world. We’re talking about three billion people.Craig Barrett, CEO Intel 01/08/2004

top 10 richest world economies 2006 and growth rate 2000 2006 mil where are the growth markets
Top 10 Richest World Economies 2006 and growth rate 2000-2006 (mil$)Where are the Growth Markets?
  • United States $13,163,870 34.8%
  • Japan $4,368,435 -6.4%
  • Germany $2,896,876 52.4%
  • China $2,644,681 120.7%
  • United Kingdom $2,376,984 64.8%
  • France $2,248,091 69.3%
  • Italy $1,850,961 68.7%
  • Canada $1,271,593 75.4%
  • Spain $1,224,676 110.9%
  • Brazil $1,067,472 65.6%
  • Russian Federation $986,940 280.0%
  • India $911,813 98.1%

77%

52%

emerging markets in a global economy percent of 2000 2007 revenue outside u s
YUM Brands34.5% (50.1%)

Ford 30.4% (53.1%)

Boeing 34.3% (40.8%)

Intel58.8% (84.3%)

Coca Cola61.0% (73.8%)

Corning (70.7%)

Emerson Electric40% (51.6%)

Accenture(60.5%)

Microsoft(38.7%)

IBM57.9% (57.9%)

Motorola 52.5% (49.4%)

JNJ38.2% (47.1%)

John Deere25.1% (34.6%)

Colgate69.4% (80.3%)

Nike50.3% (62.6%)

Campbell Soup (31.0%)

Molson Coors (55.4%)

3M Corporation (61.4)

Emerging Markets in a Global Economy:Percent of 2000 & 2007 Revenue Outside U.S.
subsidiaries of emerson electric company
AIH Inc. (Delaware)

Alco Controls S.A (Mexico)

Artesyn Technologies Inc. (Florida)

Astec International Holdings (UK & China)

Branson Ultrasonic S.A. (Switzerland)

Daniel Industries Inc. (Delaware)

EECO, Inc. (Delaware)

Emerson Capital Corp (Canada)

Emerson Electric Nederland BV (Netherlands)

Bristol Inc. (Australia)

Subsidiaries of Emerson Electric Company
texas exports 2007
Texas Exports 2007
  • Chemicals Manufacturing $34.9 bil 20.8%
  • Computer/Electronics $33.7 bil 20.0%
  • Industrial Machinery $24.8 bil 14.7%
  • Transportation Equipment $16.3 bil 9.7%
  • Petroleum Products $14.7 bil 8.8%
  • Electrical Components $6.7 bil 4.0%
  • Primary Metal Manufacturing $5.8 bil 3.5%
  • Fabricated Metals $5.4 bil 3.2%
  • Agricultural Products $4.6 bil 2.7%
  • Food & Kindred Prod $3.7 bil 2.2%
  • Plastic & Rubber Prod $3.4 bil 2.0%
  • Misc. Manufactured Commodities $2.8 bil 1.7%
  • Oil & Gas Extraction $1.8 bil 1.1%

**94.5 percent of Texas Exports**

how does globalization and free trade affect u s industry

How Does Globalization and Free TradeAffect U.S. Industry?

“…Global markets expand the scope for specialization. We do what we do best and trade for the rest.” Dallas FRB

So, what does the U.S. do best?

How does specialization affect job growth, business practices and

educational preparation?

employer expectations and education 1950
Employer Expectations and Education 1950

“Rules and SOP determined who was to do what, and how. Most people were not supposed to think for themselves except in the most narrow of parameters. Original thought could imperil the entire plan.”

Robert Reich Supercapitalism

“Our schools, in every important respect, are very much as we created them at the beginning of the 20th century, when the aim was to build a mass education system that could provide basic literacy for a nation of factory workers, shopkeepers, and (low-tech) farming.”

Tough Choices or Tough Times

employer expectations in the 21 st century
Employer Expectations in the 21st century

“Firms that succeed in this [global economy] will constantly be looking for ways to shed their routine work, either by automating it or outsourcing it. They will be constantly preoccupied with the search for competent and highly creative people…”

“Creativity, innovation, and flexibility will not be the special province of an elite. It will be demanded of virtually everyone who is making a decent living, from graphic artists to assembly line workers, from insurance brokers to home builders.”

Tough Choices or Tough Times

slide56

To an Educator a “demand” program is one that has high enrollmentsTo an Employer a “demand” occupation is one where there is a shortage of workers

texas educational equilibrium
TX 2006 University Grads 2006 by Degree

Annual AVG Openings for Jobs Requiring a Bachelor’s Degree or More

TX Associates Degree Graduates 2006

Annual AVG Openings for Jobs Requiring an Associate’s Degree or Postsecondary Award

Texas Educational Equilibrium

57,251 Total Graduates

Less 18,955 General Studies

131,007 Bachelor’s

28,312 Graduate Degree

159,319 All Grads

38,296 Market Ready

98,431

40,894

texas occupational imbalances
More Openings than Grads

1. Registered Nurses

2. Elementary Teachers

3. Computer Systems Analysts

4. Software Engineers

5. Clergy

6. Health Services Mgrs.

7. Pharmacists

8. Medical Lab Technician

9. Training & Development

More Grads than Openings

Historians & Archivists

Accountants/Auditors

Graphic Designers

Clinical Psychologists

Journalists

Art Directors

Advertising Executives

Film & Video Editors

Archeologists

Texas Occupational Imbalances
student career interests 30 868 inquiries january 2004 january 2006
1. Doctor, all specialties (2,064)

2. Lawyer (1,816)

3. Teacher K-12 (1,744)

4. Athletes & Coaches (1,238)

5. Law enforcement (1,193)

6. Registered Nurses (1,100)

7. Veterinarians (1,093)

8. Singers/Entertainers (827)

9. Cosmetology/Hairdresser(759)

10. Actors & Directors (506)

11. Architects

12. Biological scientist

13. Auto mechanics

14. Photographers

15. Designers

16. Computer programmer

17. Fire fighters

18. Computer engineers

19. Artists

20. Psychologists

Student Career Interests30,868 Inquiries January 2004-January 2006
top 15 fall 2005 2006 public university graduates
Top 15 Fall 2005-2006 Public University Graduates

Fall 2006 graduate seed records were determined by THECB ($8,126 avg. all CIPs)

texas economic signposts to monitor
Texas Economic Signposts to Monitor
  • TX economy is better than, but still mirrors the U.S. Texas is not immune from the same forces
  • Ike lives on. Clean-up costs and job loss still unknown
  • TX economy has been buoyed by oil & gas industries Lower oil prices will slow/reverse job growth. Upside is that the consumer benefits by lower gas prices
  • Manufacturing will continue to shed jobs, globally, due to declining consumer demand, M&A, technology
  • Credit is the lifeblood. TX banks do better but credit still a problem affecting home builders, auto supply chain, credit institutions, commercial construction
  • Defense spending likely to moderate, stunting growth
texas economic signposts to monitor65
Texas Economic Signposts to Monitor

7. TX real estate market better than U.S. but still a problem. Likely to cool further, lower property values

8. Job loss lags economic declines. Unemployment will continue to climb, will stay below U.S. averages

9. Higher Urates will strain government services. Lower property values and declining sales taxes will decrease tax revenues and affect local government budgets

10. Ripple effects of slower retail sales, less construction and job loss will impact the service sector. Health care, education jobs will endure.

11. Stronger dollar & slumping global economies will slow U.S. exports, bad for larger exporting states.