miracle or myth: the real story of job creation & economic development in texas

Miracle or Myth: The Real Story of Job Creation & Economic Development in Texas

April 23, 2014

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1. Examine the facts underlying the “miracle or myth” debate

2. Discuss political environment’s impact on Texas EDCs

3. Review latest available data on Temple’s economy

Presentation Overview

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St. Louis Post-Dispatch via Associated Press

Texas: Miracle or Myth?

“People are fleeing high tax, high regulatory states to come and be a part of what some people refer to as the Texas Miracle. It’s not a miracle…just common sense.”

Governor Rick Perry

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Texas is leading the U.S.in job creation

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June 09 Feb 2014 Change PercentTexas 10,283,700 11,406,000 1,122,300 11%California 14,361,500 15,350,400 988,900 7%Florida 7,221,100 7,718,500 497,400 7%New York 8,522,600 8,985,700 463,100 5%Michigan 3,837,700 4,117,300 279,600 7%Ohio 5,042,800 5,280,000 237,200 5%Indiana 2,776,400 2,965,900 189,500 7%Massachusetts 3,198,300 3,386,600 188,300 6%North Carolina 3,897,000 4,080,900 183,900 5%Colorado 2,239,900 2,422,300 182,400 8%United States 130,944,000 137,736,000 6,792,000 5%

Miracle:

Source: US Bureau of Labor Statistics, Current Employment Statistics. Data is total non-farm employment, seasonally adjusted.

17% of all net new jobs in US since end of recession have been created in TX

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Texas has the fastest growingeconomy in the U.S.

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Miracle:

Source: US Bureau of Economic Analysis, Regional Economic Accounts. Data is nominal GDP (not adjusted for inflation) in thousands of dollars.

Texas economy is growing twice as fast as the U.S. economy as a whole

GDP 2009 GDP 2012 Change PercentTexas $1,140,218,000 $1,397,369,000 $257,151,000 23%California $1,818,627,000 $2,003,479,000 $184,852,000 10%New York $1,080,441,000 $1,205,930,000 $125,489,000 12%Illinois $625,423,000 $695,238,000 $69,815,000 11%Pennsylvania $540,231,000 $600,897,000 $60,666,000 11%Ohio $451,574,000 $509,393,000 $57,819,000 13%Florida $721,175,000 $777,164,000 $55,989,000 8%Michigan $349,195,000 $400,504,000 $51,309,000 15%Indiana $252,488,000 $298,625,000 $46,137,000 18%Massachusetts $360,675,000 $403,823,000 $43,148,000 12%United States $13,869,678,000 $15,566,077,000 $1,696,399,000 12%

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People are fleeing Californiafor Texas in droves

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Myth:

Source: Internal Revenue Service, SOI Tax Stats. Data is # of tax returns used as proxy for households.

0.2% of all households in California are moving to Texas on average per year

19961997

19981999

20002001

20022003

20042005

20062007

20082009

20102011

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000 Outmigration from California to Texas, 1996-2011(# of Households)

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19961997

19981999

20002001

20022003

20042005

20062007

20082009

20102011

02,0004,0006,0008,000

10,00012,00014,00016,00018,00020,000 Net Migration, California to Texas, 1996-2011

(# of Households)

Myth:

Source: Internal Revenue Service, SOI Tax Stats. Data is # of tax returns used as proxy for households.

Net migration from California to Texas averages only 6,200 HHs per year

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Washington

Georgia

District of Columbia

Colorado

0 1,000 2,000 3,000 4,000 5,000

293

615

1,737

4,556

Net Migration from Texas, 2000-2011(# of Households)

Myth:

Source: Internal Revenue Service, SOI Tax Stats. Data is # of tax returns used as proxy for households, 2000-2011.

Texas has a net loss of households to 3 states & Washington DC since 2000

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Most new jobs in Texasare low-wage

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Jobs in occupations paying < living wage for 1 adult ($8.76)

Jobs in occupations paying < $10.10 per hour

Jobs in occupations paying < living wage for 1 adult & 1 child ($18.41)

0 200,000 400,000 600,000

115,31813%

225,88726%

514,47660%

60% of new jobs in Texas since 2009 are in occupations that pay < living wage for family of 1 adult & 1 child

Depends:

Source: EMSI. Living wage data from MIT’s Living Wage Calculator. Analysis uses median wage by occupation, 2013. Texas added 856,437 jobs total.

Most jobs pay enough to support one adult, but not a single parent family

Share of New Jobs Created in Texas by Wage Range, 2009-2013

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Economic growth in Texas is due entirelyto oil and gas extraction

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• 4,400 establishments• 250,000 jobs• $132 billion in revenue• $75 billion in exports• 5.3 jobs multiplier• Responsible for 13% of total job growth

in Texas since 2009

Oil & Gas Extraction (NAICS 2111)

Source: EMSI. Share of total job growth calculated using direct employment plus multiplier effect.

Myth: Oil and gas extraction is a big part of the story but not the whole story

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What would the impact be of a 20% decrease in OGE industry sales?

JobsMining, Quarrying, & Oil and Gas Extraction -54,808Government -29,192Retail Trade -22,721Health Care and Social Assistance -22,632Construction -21,773Professional, Scientific, & Technical Services -17,082Accommodation and Food Services -15,924Finance and Insurance -12,241Real Estate and Rental and Leasing -9,191Manufacturing -8,011Arts, Entertainment, and Recreation -4,180

266,000 jobs lost

$16.4 billion in earnings lost

66,000 workers age 55 and older would

be impacted

Source: EMSI. OGE is Oil and Gas Extraction (NAICS 2111). Table shows selected industries only.

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What if OGE industry sales were $0?

JobsMining, Quarrying, & Oil and Gas Extraction -274,040Government -145,961Retail Trade -113,603Health Care and Social Assistance -113,162Construction -108,867Professional, Scientific, & Technical Services -85,412Accommodation and Food Services -79,618Finance and Insurance -61,203Real Estate and Rental and Leasing -45,955Manufacturing -40,055Arts, Entertainment, and Recreation -20,899

1.3 million jobs lost (1 out of 10)

$82.1 billion in earnings lost

330,000 workers age 55 and older would

be impacted

Source: EMSI. OGE is Oil and Gas Extraction (NAICS 2111). Table shows selected industries only.

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Texas EDCs

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Texas EDCs need to take a more active role in workforce development

Source: Area Development Online, Texas Comptroller.

Availability of skilled labor is now #1 site selection factor.

Texas EDCs spent $736 million (2% of $34 billion in total tax collections for state) in 2011.

0.8% of EDC expenditures were for job training.

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Hispanic/Latino

Black

White

Asian

0% 10% 20% 30% 40% 50% 60% 70%

17%

28%

43%

59%

% Pop Age 25+ with Completed Postsecondary Degree, 2012

2000Asian 54%White 36%Black 21%Hispanic 12%

Education inequality is serious threat to state’s future economic prosperity

Source: US Census Bureau, 2012 American Community Survey, 1-Year Estimates, 2000 Census.

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Temple Economy

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• Job growth of 5.2% (6,500 jobs) since end of recession ranking 16th among 25 Texas MSAs

• Temple is 34th fastest growing city 50K+ pop in TX since 2010 (%)

• Temple sales tax base nearing pre-recession levels (likely exceeded $900 million in 2013)

Killeen-Temple-Fort Hood, TX MSA

Source: US Bureau of Labor Statistics, Current Employment Statistics, Not Seasonally Adjusted (jobs). US Census Bureau, Population Estimates, Texas State Data Center (population). Texas Comptroller.

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• Texas more miracle than myth but state cannot afford complacency

• EDCs are in a unique position to mobilize regional partnerships & develop innovative solutions for education & workforce training

• Time for big ideas is now

Summary

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Brian Kelsey, Principal & Founder7600 Burnet Road, Suite 108Austin, Texas 78757