December 23, 2015 Brian Kelsey

2015 Wrap

A few thoughts on Austin, economic development, and Civic Analytics as we close out 2015:


Uncertainty about the state of the Texas economy looking down the barrel of sustained lower oil prices led some prognosticators toward the end of 2014 to forecast “moderating” growth in Austin during 2015, which for us is somewhere in the 2.0%-2.5% range. Well, as the great economist John Kenneth Galbraith once said, “The only function of economic forecasting is to make astrology look respectable.” Total employment in the Austin-Round Rock MSA is up by 34,000 jobs through November (3.7%), compared to 26,600 jobs (3.0%) this time last year, according to the latest report from the Texas Workforce Commission. We’re slightly off pace compared to 2013 (4.1%) and 2012 (4.5%), but, barring something very strange turning up in the December report, we are going to finish the year well north of 2.0%-2.5%, proving, yet again, that there are better ways to spend your morning than listening to economists feebly attempt to predict the future. Texas, meanwhile, stands at 1.1% for the year.

Make sure to look for Dan Zehr’s summary of 2015 in the Statesman. Dan’s been on top of the latest data releases all year, providing helpful context with interviews and interesting longer-form stories. We’re lucky to have him.

But despite Austin’s enviable position at the top of most “best of” lists, equitable or inclusive economic development continues to elude us. This is not a challenge unique to Austin, of course, but our population growth rate and influx of higher income households magnify the challenge. We got a few stark reminders this year with new data from the U.S. Census Bureau. First, there’s this thoroughly depressing map of concentrated poverty among children using new data from the 2014 ACS five-year estimates. Darkest shaded areas are 50%+ children in poverty.


Wages have been trending upward, at least at the average, but there is still wide disparity among race/ethnicity groups in Austin. Average earnings for Hispanics (69%) and Blacks (65%) are less than 70% of what Whites are earning in Travis County. The last time that ratio exceeded 70% was nearly 20 years ago. Average earnings (wages, salaries, self-employment income; no benefits) for Whites in Travis County are $60,932 per year, compared to $41,332 for Hispanics and $39,620 for Blacks. To put that into perspective, using the affordability guideline of no more than 30% of income spent on housing costs, Black workers in Travis County, on average, can afford to spend about $991 per month on housing costs (rent or mortgage, utilities, etc.), compared to $1,523 per month for Whites. With average rents of more than $1,000 per month across most of central Austin, combined with no significant improvement in wage/income inequality among race/ethnicity groups, we’ll continue to struggle as a community with the pernicious effects of economic segregation into 2016 and beyond.

We also got a fresh look at The Human Capital with new ACS data on educational attainment. Much of Austin’s (city) transformation over the last ten years can be attributed to growth in the very well educated, very high income part of the population. ACS (one-year) estimates indicate that Austin added more than 39,000 people age 25 or older with a graduate degree between 2006 and 2014. That’s 53% growth in Austin’s graduate degree population in less than ten years. Put another way, for every four people age 25 or older that Austin gained between 2006 and 2014, one of them had a graduate degree.

For context, compare Austin to two outliers, San Francisco and Washington DC, in terms of highly concentrated, very well educated, very high income populations, and then one peer city in Raleigh, NC (my hometown). Austin’s graduate degree holding population growth rate of 53% during 2006-2014 exceeded Raleigh (42%), Washington DC (41%), and San Francisco (32%). Numeric growth is even more telling. Austin’s numeric growth of 39,197 graduate degree holders during 2006-2014 was more than San Francisco (34,409), more than double Raleigh (14,393), and nearly as many as the most extreme outlier, Washington DC (41,322).

Austin’s dramatic increase in very well educated population means, of course, an equally dramatic increase in very high income households. Median earnings for Austin (city) residents age 25 or older with a graduate degree are $63,089 per year. Average earnings are more than $90,000, based on residents of Travis County age 25 or older with a bachelor’s degree or better (city-level, graduate degree specific data not available). If we assume that people with a graduate degree earn closer to the average than the median, that’s a potential gain of about 39,000 people earning $90,000+ per year added to the city’s population in only eight years, 2006-2014. Indeed, according to Census estimates, Austin (city) gained 13,770 households with income of $150,000 or more during 2006-2014, a 41% growth rate, compared to Washington DC (40%), San Francisco (28%), and Raleigh (34%).

[Sidebar: People ask me sometimes when they find out I’m from Raleigh why Austin and Raleigh “feel” different, despite experiencing similar rates of population and economic growth. I suspect there are many explanations for that, but one of the main differences is earnings. Numeric growth of $150,000+ income households in Austin was nearly three times that of Raleigh during 2006-2014, and average earnings for bachelor’s+ residents in Austin are considerably higher than Raleigh, $93,480/year versus $79,416/year. This may partially explain why Austin “feels” different than Raleigh in terms of housing costs, foodie scene fueled by discretionary income, etc.]

The question facing The Human Capital now is at what point housing costs in Austin rise high enough to discourage even the very well educated, higher income population from moving to and/or staying in Austin, especially given the increasing number of smaller markets that offer many of the same amenities at a much lower price tag (e.g, Durham, Grand Rapids, Chattanooga). Austin is still a bargain compared to outliers like San Francisco and Washington DC, but we need to be cognizant of how far we’ve diverged from traditional points of comparison like Raleigh. Trust me, economic developers in Raleigh-Durham, Charlotte, Nashville, and other peer markets are well aware of it.

Economic Development

Serving as economic development consultant for the National Association of Development Organizations (NADO) is among the most enjoyable and rewarding work we do. This year was no exception, as we launched a new economic development district training program in partnership with the EDA Austin Regional Office, helped roll out the new CEDS guidelines, and collaborated with a group of dedicated RDO planners in Minnesota taking on the challenge of a statewide economic development strategy. And speaking of EDA Austin, congratulations to Jorge Ayala, the newly appointed Regional Director. The office is in good hands. Congratulations, as well, to my former EDA colleague, Paul Corson, for embarking on a new writing endeavor, Rumination Paradox. I can’t say I enjoyed everything about my year in Washington in 2011, but meeting Paul was a bright spot.

The new CEDS guidelines from EDA provide unprecedented flexibility to economic development districts (EDDs) in terms of how they create and implement a regional strategy. Many EDDs are already taking advantage of it, exploring new formats, leveraging web-based data platforms, and using the CEDS as a vehicle to lead coordinated, integrated regional planning efforts. Yet, we still lack a proper compliance mechanism–the proverbial carrot or stick–to ensure that EDDs take advantage of this “opportunity to excel,” as one of my former bosses liked to put it. I had hoped that the Jobs Accelerator program, or one of the other EDA-led inter-agency initiatives, could be used as an incentive to provide more funding to entrepreneurial EDDs embracing new and innovative approaches to the CEDS, but that hasn’t happened so far.

While there are many EDD leaders, in the NADO membership and elsewhere, who can be spotlighted as a way to encourage others, without sufficient carrots and/or sticks we shouldn’t assume that the much-improved CEDS guidelines will result in widespread, immediate improvement. We’ll be doing our part to contribute to the state of practice through continued work with NADO, as well as kicking off the first-ever regional CEDS in Sonoma County and Mendocino County, CA, in early 2016.

Civic Analytics

It’s been a fun year. What started out as a one-man economic development consulting shop in 2012 has grown into a multi-disciplinary team engaged in projects that I never would have imagined three years ago.

This year we designed and built a data platform and planning tutorials on free, publicly-available technology, lowering the barrier to entry for data and GIS-minded EDDs wanting to add value to their communities but lacking the resources to pay for and maintain expensive proprietary licenses. We helped quantify the perceived shortage of technology workers in Austin, not to pile on to the mostly unproductive debate over the so-called skills gap, but rather to create a data-driven call to action to improve workforce development opportunities for everybody, as well as a sound methodology for measuring and tracking progress over time. We’re suckers for a good experiment, and were thrilled to partner with RideScout on investigating potential mobility solutions in downtown Austin. We were part of the planning team that helped the Texas General Land Office submit a $283 million application for Phase 2 National Disaster Resiliency Competition funding. We keynoted the EMSI national conference. We even helped a bank with CRA compliance.

Most important, Meredith and Isabelle joined the team. We’re lucky to have them.

Civic Analytics has never been a traditional planning firm, in economic development or any other field. While every project shares a common theme–using data and technology to help community leaders make informed decisions–we’ve evolved from writing plans and reports for clients to helping clients build organizational capacity to improve the way planning is done, and develop the skills and experience to put plans into action themselves. We’re glad to help clients create a plan, but we would much rather help create better planners.

Thanks for your interest in our work.

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