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

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Brian Kelsey's presentation at the Temple Economic Development Corporation's Annual Business Appreciation Banquet on April 23, 2014

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

  1. 1. Miracle or Myth: The Real Story of Job Creation & Economic Development in Texas April 23, 2014
  2. 2. 2 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
  3. 3. 3 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
  4. 4. Texas is leading the U.S. in job creation 4
  5. 5. 5 June 09 Feb 2014 Change Percent Texas 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
  6. 6. Texas has the fastest growing economy in the U.S. 6
  7. 7. 7 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 Percent Texas $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%
  8. 8. People are fleeing California for Texas in droves 8
  9. 9. 9 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 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Outmigration from California to Texas, 1996-2011 (# of Households)
  10. 10. 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Net Migration, California to Texas, 1996-2011 (# of Households) 10 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
  11. 11. 293 615 1,737 4,556 0 1,000 2,000 3,000 4,000 5,000 Washington Georgia District of Columbia Colorado Net Migration from Texas, 2000-2011 (# of Households) 11 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
  12. 12. Most new jobs in Texas are low-wage 12
  13. 13. 115,318 13% 225,887 26% 514,476 60% 0 200,000 400,000 600,000 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) 60% of new jobs in Texas since 2009 are in occupations that pay < living wage for family of 1 adult & 1 child 13 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
  14. 14. Economic growth in Texas is due entirely to oil and gas extraction 14
  15. 15. 15 • 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
  16. 16. 16 What would the impact be of a 20% decrease in OGE industry sales? Jobs Mining, Quarrying, & Oil and Gas Extraction -54,808 Government -29,192 Retail Trade -22,721 Health Care and Social Assistance -22,632 Construction -21,773 Professional, Scientific, & Technical Services -17,082 Accommodation and Food Services -15,924 Finance and Insurance -12,241 Real Estate and Rental and Leasing -9,191 Manufacturing -8,011 Arts, 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.
  17. 17. 17 What if OGE industry sales were $0? Jobs Mining, Quarrying, & Oil and Gas Extraction -274,040 Government -145,961 Retail Trade -113,603 Health Care and Social Assistance -113,162 Construction -108,867 Professional, Scientific, & Technical Services -85,412 Accommodation and Food Services -79,618 Finance and Insurance -61,203 Real Estate and Rental and Leasing -45,955 Manufacturing -40,055 Arts, 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.
  18. 18. Texas EDCs 18
  19. 19. 19 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.
  20. 20. 20 17% 28% 43% 59% 0% 10% 20% 30% 40% 50% 60% 70% Hispanic/Latino Black White Asian % Pop Age 25+ with Completed Postsecondary Degree, 2012 2000 Asian 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.
  21. 21. Temple Economy 21
  22. 22. 22 • 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.
  23. 23. 23 • 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
  24. 24. @civicanalytics http://civicanalytics.com 512-731-7851 brian@civicanalytics.com Brian Kelsey, Principal & Founder 7600 Burnet Road, Suite 108 Austin, Texas 78757

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