The Changing Face of the Texas Labor Market

1. 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@cdr.state.tx.us (512) 491-4941

2. 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

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

5. 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”)

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

8. 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.

9. 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 skills…for survival and growth 3. Those without some specialized knowledge or skill are likely to suffer declining real wages

10. 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”

11. 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

12. Fewer Jobs in Goods Producing Sectors…

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

14. Education, Health & Govt. Buoy Economy

15. 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?

16. 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

17. 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

18. 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

19. 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%

20. 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

21. Technology Meets Apparel Manufacturing

22. 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

23. 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

25. Changing Nature of Work:New 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

26. A Changing Texas Labor Market (6) 7. Globalization is changing economic theory, business practices and labor supply options

27. 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

28. Global Labor Market of the 21st Century Creative destruction—The 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

29. 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

30. 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

31. Recognizing Growth Potentialin 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!

32. 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.

33. 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. Occupational Growth in Texas Fastest Growing 2000-2010

34. 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 Occupational Growth in Texas Most Jobs Created 2000-2010

35. 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.