1. The Changing Face of the Texas Labor Market Texas Labor-Management Conference San Antonio, Texas May 28, 2003 Richard Froeschle, Director Career Development Resources(CDR) rich@cdr.state.tx.us (512) 491-4941

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

4. Short Term Trends and the Economy Overall job growth not occurring. 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, retail (“going to the mall”) High energy prices increase production costs, limit consumers. Lower prices help consumers/business

6. 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

7. 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.

8. What do labor economists agree on? 1.There will be no shortage of opportunities in the knowledge sector for those with the education and intelligence to perform in it 2.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

9. 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”

10. 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

11. 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?

12. Fewer Jobs in Goods Producing Sectors…

13. Airlines, Oil & Gas, Computer and Accounting Services Shedding Jobs

14. Education, Health & Govt. Buoy Economy

15. U.S. Industries Adding Most Jobs 2000-2010 1. Computer and Data Processing1.80 mil 2. Retail Trade1.60 mil 3. Eating & Drinking Places1.48 mil 4. Offices of Health Practitioners1.24 mil 5. State and Local Education1.07 mil 6. Misc. Business Services1.00 mil 7. Construction824 thou 8. State and Local Government808 thou 9. Wholesale Trade776 thou 10. Health Services, NEC689 thou 13. Residential Care512 thou 14. Hospitals509 thou 16. Nursing/Personal Care Facilities394 thou

16. 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

17. 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

18. Texas Exports 2001 Computer/Electronics$25.7 billion27.0% Chemicals$14.6 billion15.4% Machinery, ex. Electrical$12.8 billion13.5% Transportation Equipt$11.3 billion11.8% 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%

19. 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

20. Technology Meets Apparel Manufacturing

21. Technology Meets Barbeque…

22. More Output…Not More Workers U.S. Projections 2000-2010 (annual) Industry SectorOutputEmployment Computers & Related7.0%1.6% Chemicals3.3%.4% Industrial Machinery6.1%.5% Transportation Equipment3.7%1.1% Motor Vehicles4.4%0.8% Electrical Equipment5.3%0.6% Fabricated Metal Products3.6%0.8% Plastics and Rubber4.0%1.4% Telephone Communications6.5%1.2% Computer Data Processing8.0%6.4%

23. 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

24. 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 8.3411.62 10.91 11.1 BIG INCREASE 100-249 11.5214.64 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

25. 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”

27. Changing Nature of Work: New Paradigm for Career Ladders 1.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

28. 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% 1.7%$91,424 Doctoral Degree 1.0% 1.1% 1.6% $52,146 Masters Degree 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

29. A Changing Texas Labor Market (6) 9. Globalization is 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

30. How Globalization Impacts the Labor Market—The 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

31. Population Pyramids for Anglo and Hispanic Ethnic Groups in Texas, 2000 Male Female AngloHispanic

32. Educational Attainment Concerns Hispanics are much less likely to complete HS (62.8%) than Blacks (86.8%) or Whites (94%) Hispanic drop out rates (28.6%) are twice as high as Blacks and four time higher than Whites Hispanic and Black 15-17 year olds are more likely to be below modal grade Hispanics HS grads are less likely to be enrolled in college than Blacks or Whites and much less likely to have received a Bachelor’s degree.

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. Occupational Growth in Texas Fastest Growing 2000-2010 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.

35. 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

36. The Workplace of the Future... The factory of the future has just one man and one dog. The man’s job is to feed the dog. The dog’s job is to keep the man from touching the equipment.