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

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

TEDC 2013 Annual Conference2020 Vision | San AntonioOctober 17, 2013

October 17, 2013 | TEDC 2013 Annual Conference

Miracle or Myth?“We’re sending the message that this is a state where you can risk your capital and know that you can have a chance to have a return on investments. It’s a reason that we’re leading the nation in job creation.”

“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, as a matter of a fact, it’s just common sense.”

Governor Rick Perry

“Texans would be well served if Gov. Perry spent a little more time in Texas fixing the state’s systemic economic problems and a little less time boasting to out-of-state voters and businesses about a Texas miracle that never was.”

DNC spokesperson

St. Louis Post-Dispatch via Associated Press

Sources: Newsmax, The Washington Times


Summary

• Evaluating performance of the Texas economy through lens of wealth creation reveals much more nuanced picture than “miracle/myth”

• Growing lack of seriousness about connection between public investment & performance of state & local economies is a serious threat

• Educating residents & businesses about EDC return on investment is critical priority


The “Miracle”


Explaining the Texas “Miracle”

• Primary industry resiliency—manufacturing & energy—combined with multiplier effect

• Growth in regional offices, especially leading up to recession during 2004-2007

• Population growth accelerated the expansion and dampened the downturn


Post-Recession GDP Growth ($)

Source: US Bureau of Economic Analysis, 2009-2012. Data in table is in millions of dollars. Not adjusted for inflation.


Job Creation

20022003

20042005

20062007

20082009

20102011

20122013

-6%-5%-4%-3%-2%-1%0%1%2%3%4%5%6%

US

Source: EMSI, US Bureau of Labor Statistics. Full-time, wage & salary jobs only (QCEW).

Texas


Job Creation


Expansion2004-2007

Recession2008-2009

Recovery2010-2013

Texas 908,382 -303,219 882,621

US 6,087,873 -6,197,819 5,986,592

TX Share 15% 5% 15%


Post-Recession Job Change (#)

Source: US Bureau of Labor Statistics (CES), June 2009-July 2012. Data in left table is in thousands of jobs. Not seasonally adjusted.


Job Creation


Expansion2004-2007

Recession2008-2009

Recovery2010-2013

US TX US TX US TX

Management of Companies and Enterprises 8% 38% -2% 2% 10% 13%

Mining, Quarrying, and Oil and Gas Extraction 27% 36% -10% -11% 25% 40%

Professional, Scientific, and Technical Services 13% 20% -4% -4% 9% 14%

Construction 9% 19% -17% -11% 5% 12%

Accommodation and Food Services 7% 12% -3% 0% 9% 14%

Retail Trade 3% 7% -5% -3% 4% 8%

Manufacturing -3% 5% -12% -9% 4% 7%


Job Growth in Regional Offices, 2004-07



Job Growth in Manufacturing, 2004-07



20022003

20042005

20062007

20082009

20102011

20122013

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

US

Population Growth

Source: EMSI, US Census Bureau

Texas


Net Migration to Texas (# People), 2000-10

20002001

20022003

20042005

20062007

20082009

20100

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

Source: Internal Revenue Service, 2000-2010. Data includes only tax filers.

Total, 2000-10 People % Pop

Florida 1,146,917 6.1%

Texas 939,184 3.7%

Georgia 607,872 6.3%

North Carolina 554,912 5.8%

Arizona 548,539 8.6%

Illinois -533,582 4.2%

California -1,160,601 3.1%

New York -1,319,239 6.8%


Net Migration to Texas (# People), 2000-10

Source: Internal Revenue Service, 2000-2010. Data includes only tax filers.


The “Myth”


“Miracle” talk concealing blind spots?

• Texas ranks 35th in jobs per 100 residents—is job growth keeping pace with population?

• Texas is well outside top states in measures of wealth creation—(1) are we creating enough high-paying jobs? (2) is workforce adequately prepared for growing skill requirements?

• 40 counties in TX have higher unemployment than US, including 15 at 10% or greater


Enough Jobs? (Jobs Per 100 Residents)

Source: US Bureau of Labor Statistics (CES). Data seasonally adjusted.

States 2012

1. District of Columbia 115.7

2. North Dakota 61.4

3. Nebraska 51.8

4. Minnesota 50.7

5. Wyoming 50.3

6. South Dakota 49.7

7. Massachusetts 49.3

8. Iowa 49.1

9. Wisconsin 48.6

10. Vermont 48.4

35. Texas 41.8

Texas Counties 2012

1. Kenedy 117.6

2. Carson 77.1

3. Loving 70.4

4. McMullen 63.9

5. Gregg 63.8

250. Wilson 15.0

251. Bandera 14.4

252. Clay 13.7

253. Newton 11.9

254. San Jacinto 7.9

48. Bexar 42.0


Wealth: GDP Per Capita ($)

Source: US Bureau of Economic Analysis, 2012.Adjusted for inflation ($2005 chained).


Wealth: Per Capita Income ($ Adj)

Source: US Bureau of Economic Analysis, 2011.Adjusted for inflation ($2005 chained)

and purchasing power parity.


Unemployment Rate (%)

Source: US Bureau of Labor Statistics (CES), July 2013.Not seasonally adjusted.


Unemployment Rate (%)Starr 15.0Zavala 14.9Sabine 14.3Willacy 13.8Hale 12.0Maverick 11.8Presidio 11.8Newton 11.1Hidalgo 10.8Loving 10.6Jefferson 10.2San Augustine 10.2Matagorda 10.0Orange 10.0Cameron 10.0

Source: EMSI

Source: TWC, August 2013. Not seasonally adjusted.

40 counties in Texas currently have higher unemployment rates than US (Aug 2013).


Unemployment by Education (%)

Jan-92

Nov-92

Sep-93Jul-9

4

May-95

Mar-96

Jan-97

Nov-97

Sep-98Jul-9

9

May-00

Mar-01

Jan-02

Nov-02

Sep-03Jul-0

4

May-05

Mar-06

Jan-07

Nov-07

Sep-08Jul-0

9

May-10

Mar-11

Jan-12

Nov-120

2

4

6

8

10

12

14

16

18

20

High School Diploma Bachelor's Degree +No High School Diploma Some College/Associate Degree

Population Age 25+ TX US

No High School Diploma 21% 16%

High School Diploma 25% 28%

Some College/Assoc Deg 28% 28%

Bachelor's Degree + 26% 28%

Source: US Census Bureau (ACS), 1992-2013


Population Age 25+ by Education TX County No HS Diploma HS Diploma TotalLiberty 26% 40% 66%Cameron 37% 25% 61%Hidalgo 36% 24% 61%Webb 37% 23% 60%Walker 19% 38% 57%Henderson 19% 36% 55%Ector 26% 28% 54%Hunt 17% 35% 52%Angelina 19% 33% 52%Harrison 16% 35% 51%Bastrop 18% 33% 51%Potter 24% 26% 51%San Patricio 23% 27% 51%

31% of job openings in TX between 2013 and 2020 will

require postsecondary education (including 10%

< four-year degree).

68% of job openings in occupations with median

wage of at least $18 per hour in TX between 2013 and 2020

will require postsecondary education (including 17%

< four-year degree).

Source: US Census Bureau (ACS), 2012

Source: EMSI, BLS


http://taxfoundation.org/article/2014-state-business-tax-climate-index


The Opportunity


Population by Age Cohort

Age Group% Pop US

2013

Share of TotalPop Growth

2001-13% Pop TX

2013

Share of TotalPop Growth

2001-2013

Next generation (< 25) 33% 16% 37% 31%

Primary working (25-44) 26% -4% 28% 16%

Mid-late career (45-69) 31% 77% 28% 46%

Retired (70-79) 6% 5% 5% 5%

Elderly (80+) 4% 7% 3% 3%

Texas accounted for 16% of total US population growth during 2001-2013, but 32% of the next generation (< 25) age cohort.


Economic Development


Key Priorities

• Get away from miracle/myth debate & raise awareness about what data is really saying about state and local competitiveness

• Clearly make case for greater investment in assets that drive economic development

• Improve understanding of EDC activities and ROI to Type A and Type B corporations


Source: Area Development Online, 27th Annual Corporate Survey


Texas EDC Expenditures (2010-11)

http://www.texasahead.org/lga/EDC_Reports/edcr2011/edcr2011.pdf

EDCs spent approximately $735.6 million in 2011 (60% Type B, 40% Type A), compared to $33.8 billion the state received in total sales and gross receipts tax revenue (2%).


Brian KelseyCivic Analytics LLC3420 Executive Center DriveSuite 300Austin, TX [email protected] 512-731-7851

@civicanalytics

http://civicanalytics.com

Thanks to EMSI for making data available for this presentation.

mailto:[email protected]

http://www.economicmodeling.com/

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

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