The Changing Face of the Texas Labor Market

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The Changing Face of the Texas Labor Market

• Texas Labor Market Information Conference
• Austin, Texas
• June 11, 2003
• Richard Froeschle, Director
• Career Development Resources(CDR)
• rich_at_cdr.state.tx.us
• [phone]

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Why Do We Care About Changing Workplace Practices?

• Affects education, skill and training
  requirements to get people employed
• Affects the composition of available job
  opportunities by industry and occupation
• Provides a context for employer contact,
  communicates understanding of evolving business
  environment
• Affects job search strategies, job hunting
  behaviors, career development planning

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Economic forecasting is a field that gives
Astrology a good name!
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Short Term Trends and the Economy

• Overall job growth is very slow. Services are not
  making up for lost manufacturing jobs/wages.
  Watch personnel supply services!
• Manufacturing jobs hardest hit, esp. telecom.
  Globalization increases price competition,
  challenges to market share. Commoditization
  Outsourcing
• Capacity utilization at 20 year lows. No need for
  new investment in plant and equipment
• Terrorist threats continue to dampen growth. War
  terrorism affect some industries more
  airlines, travel/lodging, surveillance/security,
  defense, retail (going to the mall)

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Short Term Trends and the Economy (part 2)

• Low interest rates good for some sectors,
  housing, financial services, autos
• Low stock prices smaller profits lead to
  corporate cost containment. Bad stock market
  returns affect insurance industry, consumer
  wealth effect, tempers business expansion plans
• Government, health services, education leading
  job growth engines
• Overall consumer uncertainty and confidence
  levels fall and rise with war threats, gas
  prices, layoffs, corporate corruption, stock
  job market malaise

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Harry Truman is purported to have said,

• All my economists say, on the one, or on the
  other handwhat I really need is a one-handed
  economist.

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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 skillsfor survival
  and growth
• 3. Those without some specialized knowledge or
  skill are likely to suffer declining real wages

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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,
  constructionno 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

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A Changing Texas Labor Market

• 1. If its not a recession, its 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

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Fewer Jobs in Goods Producing Sectors
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Airlines, Oil Gas, Computer and Accounting
Services Shedding Jobs
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Education, Health Govt. Buoy Economy
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A Changing Texas Labor Market

• 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?

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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

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Opportunities More Jobs in Services

• Texas Absolute Job Growth 1999-2002
• 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

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Job Declines in Goods Producing Sectors

• Texas Industries Losing Most Jobs 1999-2002
• Agriculture/Forestry Support
• Computer/Electronic Manufacturing
• Apparel Manufacturing
• Transportation Equip Manufacturing
• Fabricated Metal Manufacturing
• Chemical Manufacturing
• Oil Gas Extraction
• Food Beverage Stores
• Administrative Support Services
• Federal Government

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Texas Exports 2001

• Computer/Electronics 25.7 billion 27.0
• Chemicals 14.6 billion 15.4
• Machinery, ex. Electrical 12.8 billion 13.5
• Transportation Equipt 11.3 billion 11.8
• Electrical Components 4.8 billion 5.1
• Petroleum Products 3.7 billion 3.9
• Fabricated Metals 3.2 billion 3.4
• Plastic Rubber Prod 2.8 billion 2.9
• Food Kindred 2.6 billion 2.7
• Primary Metal Manuf. 2.1 billion 2.2
• Agricultural Products 1.9 billion 2.0

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A Changing Texas Labor Market

• 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

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Technology Meets Apparel Manufacturing
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A Changing Texas Labor Market

• 5. More jobs in small firms. Greater use of
  outsourcing, leased or temp workers and
  independent contract labor means fewer and
  shorter career ladders within a firm
• 6. For those working within companies, workplace
  practices are changing. Organizational structure
  moving from pyramid to flatter pyramid to hour
  glass, so fewer ports of entry for low skill
  workers

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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
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Changing Nature of WorkNew 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

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A Changing Texas Labor Market (6)

• 7. Globalization is changing economic theory,
  business practices and labor supply options

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Why Do We Care About Globalization?

• Must understand effects of global capitalism on
  the job creation and destruction process
• To engage employers, must understand the market
  factors they face
• Better understand what jobseekers face, what
  employers are telling them
• Better prepare jobseekers to meet the skill and
  attitude needs of employers

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Global Labor Market of the 21st Century

• Creative destructionThe process of simultaneous
  job creation and job destruction as new skill
  sets are required and old skills become outdated.
  The same employers will be both hiring and laying
  off continually regardless of labor market
  conditions to enhance productivity and
  competitive edge. Joseph Schumpeter
• See Churning in a Hypothetical Economy from
  Technology Workers in the New Texas Economy

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How Globalization Impacts the Labor MarketThe
Basics

• Globalization new digital technology opens
  producer/consumer markets around the world
• Increased customer access to producers leads to
  global price competition, driving employer need
  for greater productivity, lower prices
• Increased price competition leads to cost
  containment pressures
• Cost containments leads employers to new supply
  chain practices, concerns over labor costs,
  alternative labor options

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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 (L-1visa), H1B, global
  outsourcing, contract workers

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Recognizing Growth Potential in your own
Regional Economy

• To whom does the industry sell and are those
  sectors expanding?
• Is the industry cost structure competitive? e.g.
  are labor costs competitive relative to value
  added? Relative to market scope/niche?
• Do they have Positive Pricing Power in their
  marketplace (setting prices ore responding to
  prices)? PPP results in higher profits!

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A Changing Texas Labor Market

• 7. A changing industry mix is resulting in
  changing occupational demand and skill sets, with
  an emphasis on lifelong learning.

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Occupational Growth in Texas Fastest Growing
2000-2010

• 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.

• 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

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Occupational Growth in Texas Most Jobs Created
2000-2010

• 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

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The Workplace of the Future...

• The factory of the future has just one man and
  one dog. The mans job is to feed the dog. The
  dogs job is to keep the man from touching the
  equipment.