Civic Analytics LLC stopped operating in late 2016. Brian Kelsey returned to public service, joining Mayor Megan Barry’s administration in Nashville, TN. You can still reach him at firstname.lastname@example.org.
I gave an update on the Austin economy today at the Austin CPA Chapter CFO/Controllers Conference. It was good timing, as last week the U.S. Census Bureau published new data from the 2015 American Community Survey to round out the other usual sources.
My slides are available on the CA website. Here are a few highlights:
- 44 consecutive months of 4.0%+ total nonfarm job growth on a year-over-year basis came to an end in April. So we’ve come out of ludicrous speed and are now cruising at a comfortable ridiculous speed, more or less where we’ve been in non-recession years since 2004. Austin has become so accustomed to this level of growth that we often take it for granted–no other major metro in the country has come close to 44 consecutive months at 4.0% or better.
- Total real personal income in the Austin metro grew 22.5% during 2010-2014, ranking third behind Houston (24.2%) and San Jose (22.5%) among large metros. That’s equivalent to adding $15.6 billion in real income to the regional economy–quite a bit of fuel for our housing market and increasingly pricey foodie scene.
- Austin is attracting and retaining so many well-educated and highly-paid people that we almost have to stop measuring in terms of bachelor’s degrees and start counting the advanced degrees. Austin (city) added nearly 30,000 residents with graduate degrees during 2010-2015, with median earnings of $70,000 per year.
- Austin’s tech sector continues to lead nationally, with total employment growing 31% during 2010-2015, fourth highest among major metros with at least 50,000 tech jobs. Travis County ranked fifth among counties. Mobile, apps, and SaaS companies are driving a significant portion of the growth, with employment in Travis County up 115% during that five-year period (#2 nationally behind SF).
We also touched on the usual three challenges:
- Inclusive economic development. 45% of primary working age (25-64) residents in Austin do not have a completed postsecondary degree. 67% of Black residents and 75% of Hispanic or Latino residents age 25+ do not have a completed postsecondary degree, compared to 22% of Asians and 31% of Whites. Median gross rent for a 2BR in Austin (city) is up to $1,243 per month, exceeding what is considered affordable for the housing budgets of Hispanic or Latino and Black families with median family income, as well as the budget at median earnings for all workers age 25+ who have less than a bachelor’s degree. This is how you become one of the most economically segregated places in the country.
- When will housing costs in the urban core start to erode Austin’s competitive advantage relative to the expensive coastal markets? Affordability–relative to pricey markets with comparable economies–has long been one of Austin’s key selling points. There is still a considerable gap relative to California, but are we approaching a point on the curve where some people will opt for smaller markets with growing tech centers in North Carolina, Tennessee, or Utah?
- Trying to tackle big-city/regional issues with a small-city/local toolkit, and, at times, mindset. $6 billion transit plan in Nashville. Multi-billion dollar investment in Denver approved by voters in eight counties. Meanwhile, we are squabbling about seats on our MPO and protesting $720 million in relatively small-scale upgrades–in one city.
Austin is great at many things, but you would think with all those graduate degrees we’d be able to show more progress on regional collaboration.
This story was written by Lori Hawkins and appeared in the Austin American-Statesman.
The tech giant’s California-style campuses, including a new engineering center, are adding thousands of jobs in Central Texas.
Apple Inc., which recently completed its expansive campus in Northwest Austin, has been discreetly building a core engineering team across town, fueling a new wave of growth in Central Texas.
The California-based technology giant is pulling back the curtain on its new engineering center, which sits on a bluff in Southwest Austin, near Capital of Texas Highway and Bee Caves Road.
Apple, the world’s largest computer electronics company, employs about 500 engineers at the seven-story Capital Ridge office building, Johny Srouji, an executive at Apple, told the American-Statesman.
The newly constructed 215,000-square-foot building has the ability to hold 1,000 workers, and Apple intends to fill it, he said.
“We have been quietly building out this team, which is one of our most important engineering groups,” said Srouji, Apple’s senior vice president, hardware technologies. “They play a very critical and integral role — they are designing chips that go into all the devices we sell.”
The Austin team, which the company began building several years ago, is now Apple’s biggest research and development group outside of its Cupertino, Calif., headquarters. When Apple decided to expand engineering work outside of Cupertino, Central Texas was the natural choice, Srouji said.
“The reason we came to Austin is there is a strong pool of talent,” said Srouji, who previously lived in Austin during stints at IBM and Intel. “There are lots of high-tech companies, and also the University of Texas.”
Apple’s growth in Austin
The Capital Ridge operation is just one piece of Apple’s multi-million dollar investment in Austin. Apple recently completed its sprawling 38-acre campus on West Parmer Lane in Northwest Austin.
The campus, which is responsible for running the company’s business operations for the entire Western Hemisphere, features seven limestone-and-glass office buildings with a combined 1.1 million square feet. The site includes restaurants; smoothie and coffee bars; a full-scale gym with saunas and a wellness center with services including medical, dental and eye care along with acupuncture and massage.
Work done at the site, known as the Americas Operations Center, includes finance, human resources, corporate sales, customer support, information systems and accounting.
Meanwhile, last year, Apple bought the nearby Riata Crossing complex, which has four buildings with 350,000 square feet of space. The company, which had been leasing it, has declined to say what work will be done there.
Apple is in line to receive $35 million in tax incentives from the city, county and state for its Austin expansion. To date, the company has received $10.5 million in incentives payments from the state-operated Texas Enterprise Fund, documents show.
The company says it has already created more than 6,000 jobs in Austin. add the amount of jobs created since the incentives deal. That makes Central Texas Apple’s largest U.S. hub outside of Cupertino.
The ripple effects are already being felt, economic experts say. Austin economist Brian Kelsey estimates that the Capital Ridge operation alone, with 500 engineering jobs, would result in at least $140 million in new earnings and create about 1,000 spinoff jobs.
“For every one new engineering job created at Apple, we could expect to see approximately two additional jobs created in the region,” Kelsey said.
Apple’s investment, Kelsey said, shows the depth of Central Texas’ tech roots, which can be traced back to IBM and chip makers like AMD, before Austin became known as a global software center and a top place to launch a startup.
“Austin’s tech credentials are well established, but most of the headlines lately have been about startups, access to capital, and the like,” Kelsey said. “Apple’s recent investment serves as a reminder that Austin is a key center of innovation for companies of all sizes, including one of the largest employers and most recognized brands on the planet.”
Austin ‘an ideal fit”
Apple began hiring building its engineering operation in Austin in 2010, with a 100-person team. Over the past several years, the group has been spread out at different locations.
Now, the Capital Ridge site will provide a single base for its 500-person team and give Apple room for a major expansion push.
The company said the group has a range of high-level hardware and software engineering expertise, but declined to give specifics. Jobs in Austin currently posted on the Apple website include CAD engineers, CPU microarchitecture engineers, physical design engineers and power integrity engineers.
“The chip development work they do goes into hundreds of millions of devices every year,” Srouji said. “If they miss a beat, we don’t ship.”
The Capital Ridge offers amenities similar to the Americas Operations Center, including a cafe, espresso bar and a wellness center that offers preventative and urgent care, as well as acupuncture, massage and physical therapy. It also has a fitness center with group and private classes and terraces for Friday afternoon beer bashes.
Roger Kay, an analyst with Massachusetts-based Endpoint Technologies Associates Inc., said building and retaining a world class team in Austin is critical to Apple’s continued growth.
“They have an almost infinite need for really good engineers, and the supply is limited,” he said. “They’ve got plenty of money, but they have fished out Silicon Valley pretty much entirely. For Apple to find more talent, they have to reach out further afield.”
Austin, Kay said, is the right place to mine for talent.
“Thanks to Dell, AMD, NXP and Samsung, all that very specific talent that Apple needs resides in Austin,” he said. “It’s an ideal fit.”
Well if you’re going to get scooped on a story, at least let it be by somebody you read and respect, with better data.
Jonathan Rothwell, formerly at Brookings and now a senior economist at Gallup, has published a working paper, Explaining Nationalist Political Views: The Case of Donald Trump, which sorts through many of the questions I raised in my first piece about the 2016 Election. The Washington Post published a summary of Rothwell’s findings, but I recommend reading the paper itself, as qualifiers usually don’t come through clearly enough in mainstream media coverage of academic research.
Rothwell used Gallup Daily Tracking survey microdata from approximately 87,000 interviews conducted between July 2015 and July 2016, in which American adults were asked how favorably they viewed Trump, as well as a series of identifiers, such as political views and party affiliation, race/ethnicity, educational attainment, occupation, and more. Rothwell then cleverly linked the responses to sub-county level geographies to compare with Raj Chetty’s economic mobility data.
Rothwell’s use of Gallup survey data gets around many of the primary vote data limitations I discussed in my piece. For example, Rothwell was able to directly examine the relationship between a respondent’s view of Trump and his or her socioeconomic and demographic characteristics, rather than having to infer connections, as I did, based on what a county, as a whole, looks like and how residents of that county voted, in the aggregate. Rothwell’s analysis provides a degree of precision that is not possible using county-level vote totals and Census data. Further, Gallup data made it possible for Rothwell to apply weights to the sample to make it nationally representative.
There are many interesting aspects of Rothwell’s analysis, but the key passage is on p. 11 of the paper:
“These results do not present a clear picture between social and economic hardship and support for Trump. The standard economic measures of income and employment status show that, if anything, more affluent Americans favor Trump, even among white non-Hispanics. Surprisingly, there appears to be no link whatsoever between exposure to trade competition and support for nationalist policies in America, as embodied by the Trump campaign.”
The reference to trade competition is in response to a popular argument that Trump’s support is fueled by workers–specifically, white, male workers–in economically distressed communities tied to long-term stagnation or decline in manufacturing and other “blue-collar” employment, a perceived impact of trade liberalization. Rothwell’s analysis found no such evidence, when controlling for demographic characteristics, party affiliation, etc.
And later (p. 12):
“. . . this analysis provides clear evidence that those who view Trump favorably are disproportionately living in racially and culturally isolated zip codes and commuting zones. Holding other factors constant, support for Trump is highly elevated in areas with few college graduates, far from the Mexican border, and in neighborhoods that standout within the commuting zone for being white, segregated enclaves, with little exposure to Blacks, Asians, and Hispanics.”
There’s plenty to debate in the paper–check out twitter for scholarly disagreement about model specification, robustness, and multicollinearity–but I don’t find much that’s debatable in Rothwell’s conclusions, based on my analysis of the county-level presidential primary returns, flawed as they may be as a data set. In fact:
- White Alone, Not Hispanic or Latino share of total population and educational attainment among White Alone, Not Hispanic or Latino males age 25 or older are statistically significant predictors of Trump’s share of the total primary vote at the county level, consistent with Rothwell’s findings.
Here is the urban-rural split of Trump’s share of the total primary vote compared to Clinton and Sanders for counties included in my data set where White Alone, Not Hispanic or Latino residents make up 50% or more of total population and 50% or more of White Alone, Not Hispanic or Latino males age 25+ have no college:
And, to Rothwell’s point about contact theory (pgs. 8-9, 12), here is the same table as above, but this time showing counties where White Alone, Not Hispanic or Latino residents make up 90% or more of total population and 65% (mean + 1 SD among majority white counties) or more of White Alone, Not Hispanic or Latino males age 25+ have no college:
Only 200 counties, but go back and compare these tables to the one in my last piece and you’ll find that my analysis is generally consistent with Rothwell’s findings.
- Using data from EMSI, which provides estimates of total employment by industry for small counties where QCEW data is suppressed, I can find no statistically significant relationship between Trump’s share of the total primary vote and any measure of manufacturing employment I could think of testing, including the industry’s current and past shares of total employment in the county, change in industry employment over various time periods, or change in number of male workers in the labor force relative to manufacturing jobs available.
Again, generally consistent with Rothwell’s findings.
There are some interesting exceptions and regional differences, especially when comparing Trump to the other two main candidates. I’ll get into that next time.
We like to take the occasional detour into politics, especially when there’s an economic development story to be told. In the past we’ve looked at Mitt Romney’s infamous makers and takers argument, Rick Perry’s Texas Miracle, and creative class support for Obama. Successful politicians, our storytellers-in-chief, are particularly adept at turning immensely complicated issues into palatable soundbites because complexity and uncertainty have a way of stoking demand for easy answers–the convenient truths–that shape the narrative, as they say.
Sloganizing complex forces shaping voter perceptions of the economy and their place in it is hardly a new political tactic, but for those of us who pay attention to rural economic development and labor market issues, 2016 seems to be a marked departure from the usual talking points. The 2004 election made “offshoring” of jobs somewhat of a national issue, but I don’t recall much of an urban vs. rural flavor to the debate. The red state/blue state narrative, articulated beautifully by local journalist Bill Bishop in The Big Sort, certainly included economics, but was really more of a statement about social and cultural factors–an epilogue, of sorts, to the culture wars of the 1980s and 1990s. Indeed, we’d still be talking about how Tim Russert broke the Internet on election night if Twitter were around in 2000.
Politicians and pundits love to characterize every presidential election as a critical inflection point, the proverbial crossroads that represents some deliberate attempt on the part of the electorate to choose a distinct path forward. Most elections probably don’t live up to that billing with the benefit of hindsight. We’ll see what the historians say about 2016. But the convenient truths of the 2016 presidential election are not hard to spot, and our ability to sort out what’s real from what’s being used as political cannon fodder may help determine economic and labor market policies affecting Rural America in the next administration.
I’ve been combing through results of the presidential primaries, and, through that process, developed a new appreciation for people who do that for a living. Speaking of, I need to thank Joshua Darr, assistant professor of political communication at LSU, for the pointer to Ben Hamner’s election data warehouse on Kaggle. Most of the major news outlets host interactive maps of election returns, but for obvious reasons don’t make it easy to assemble your own data sets to work with.
There are several caveats to keep in mind when working with primary data. First, primaries are not reliable predictors of turnout for the general election. Turnout for the primaries this year was high by historical standards, approaching the record participation in 2008, but turnout for the general in November could throw off conclusions drawn from primary results in any number of ways.
In addition, the way in which primary elections are held and results are reported in several states make it challenging to assemble a complete and accurate national data set. The majority of states report primary results at the county level, making it easy to match returns to other data sources, such as the American Community Survey. However, some states report results using different sub-state geographies that do not line up nicely with counties, such as congressional districts or townships, or, in a few cases, not at all (e.g., Republicans in Colorado).
So, with apologies to AK, CO, CT, KS, ME, MA, MN, ND, RI, VT, WY, as well as the District of Columbia, I’m going to use a data base of primary results in 2,720 counties, matched to various data from the 2014 ACS 5-Year Estimates, to make a few observations about the 2016 presidential election over the course of the next few weeks. Given the states omitted from the analysis, combined with the inherent shortcomings of primary data, the purists among you will no doubt be left wholly unsatisfied. But we work with what we have. Finally, two pieces of background reading I want to mention because they motivated me to take this on:
Nate Cohn in the NYT: Donald Trump’s Red-State Problem
Alan Greenblatt in Governing: Can Counties Fix Rural America’s Endless Recession?
The overarching narratives I want to explore deal with race/ethnicity and education characteristics of voters supporting the two nominees, Hillary Clinton and Donald Trump, although Bernie Sanders will make a few appearances, as well. In particular, I’m interested in this idea that non-college, working-class whites, reacting, in part, to declining economic prospects, are breaking for Trump in a significant way, and whether or not there are differences between urban and rural counties.
But before we can get to any of that, we need a basic understanding of how people voted in urban and rural counties. The USDA Economic Research Service classifies counties on an urban-rural continuum. The first three rows in the table below are counties located in metropolitan statistical areas (MSAs). Rows four through nine are non-MSA counties, with rows eight and nine representing counties USDA ERS considers “completely rural.” Here’s a breakdown of the popular vote for Clinton, Trump, and Sanders, on that urban-rural continuum:
Approximately 60 million votes were cast in the primaries, which means we have about 87% represented in our data set. Trump received 45% of the Republican primary vote and 23% of the total popular vote. Clinton got 55% of the Democratic primary vote and 28% of the total popular vote. So the county data set we’re using here with 11 states and DC missing is tilted by about one percentage point in favor of Trump, and it short changes Sanders by about two percentage points (he won 22% of the total popular vote). Keep that in mind as we continue this thread, but it shouldn’t have too much bearing on the themes we’ll discuss.
As always, feel free to fire away with questions or comments and I’ll try to work them in. Thanks for reading. More soon.
This story was written by Claudia Grisales and appeared in the Austin American-Statesman.
Toyota’s major operations helping drive thousands of auto industry jobs in the state.
SAN ANTONIO — Like the state’s burgeoning auto industry, the Toyota Motor Manufacturing plant in San Antonio has come a long way since its first Tundra truck rolled off the line nearly 10 years ago.
The plant came to Texas when the state’s major auto industry operations were mostly limited to a General Motors plant in Arlington. That’s changed dramatically since.
In addition to growth at its San Antonio plant, Toyota is now centralizing its North American headquarters and other operations in Plano. The news came on the heels of a GM announcement last year it would infuse its Arlington plant with a $1.4 billion expansion.
Put it all together, economics experts say, and Texas is a becoming a key player in the auto industry.
“During what has been a very challenging period overall for the auto industry, Texas has fared pretty well,” said Austin economist Brian Kelsey, founder and principal at economic research firm Civic Analytics. “The industry’s future here appears to be bright.”
The state’s manufacturing sector is seeing a nice bump from the growth of Texas auto industry operations as the tally of related executive jobs grow, experts say.
Austin economist Angelos Angelou, who says the Toyota plant’s economic impact has been “phenomenal,” estimates that the automaker’s manufacturing facility and its new Texas headquarters could generate more than $3 billion to $4 billion in personal income totals for the state.
Angelou predicts more job growth in the North Texas area such as the Dallas-Forth Worth metroplex or somewhere along the Interstate 35 corridor between North and Central Texas.
At this rate, “I think the state could possibly attract another (auto) manufacturer,” said Angelou, founder and principal executive officer of Angelou Economics. “It will be more on the way I would say.”
Texas currently has about 38,000 jobs in motor vehicles and parts manufacturing, Kelsey said. That ranks seventh among all states for such jobs, up from 10th in 2003, Kelsey said.
As of 2014, the auto industry added an estimated $4.8 billion to state gross domestic product, he said. While that figure is dwarfed by larger sectors such as energy, it is becoming an increasingly viable source for jobs.
Only two states have fared better when it comes to adding jobs in the sector since 2003.
“We’re still a relatively small player in the market compared to the industrial Midwest, but, among southern states, only Tennessee and Alabama have added more jobs than Texas in motor vehicles and parts manufacturing since the Toyota announcement in 2003,” Kelsey said.
In terms of states with a larger share of auto industry jobs, only Alabama has seen a faster job growth rate than Texas, Kelsey said.
Since 2003, “only Alabama has grown faster” than Texas in terms of states with at least 25,000 such jobs, he said.
‘An auto-producing state’
By next year, Toyota could bring the combined number of Texas workers at its San Antonio plant and workers for its new North American headquarters in Plano to more than 11,000.
Of that, the Toyota Texas plant has about 7,000 workers, which includes 3,200 direct Toyota employees. The rest are employees who work for 23 on-site suppliers located on the campus, said Mario Lozoya, Toyota director of government relations and external affairs.
“Texas sells a lot of trucks, so it was the right decision to build trucks in Texas,” Lozoya said reflecting on the plan during a recent media tour of the plant.
Angelou estimates Toyota has created as many as 15,000 to 20,000 direct and indirect jobs jobs in Texas.
“They have basically solidified Texas as an auto-producing state,” he said. “Toyota has been a savior of the auto industry in Texas and single-handedly transformed the state as a place for auto manufacturing.”
When Toyota made its 2003 announcement it would build a truck plant in San Antonio, the automaker said it had plans to employ 2,000. In November 2006, its first Toyota Tundra rolled off the line, followed by the Toyota Tacoma in 2010.
The plant’s progress in Texas has not been without its setbacks.
The 2008 recession forced the plant to shut down for three months. The Japanese earthquake and subsequent tsunami in 2011 triggered new challenges for operations.
And a storm in May blew a hole larger than a football field in the plant’s roof that required significant repairs.
Still, the facility is on track to make up for that lost production and bulking up on worker hours to boost output. The plant, which is capable of cranking out 200,000 trucks or more, added a third shift of workers and is now on track to produce 250,000 trucks this year, said David Crouch, vice president of administration and production control for the facility.
“Basically the parking lot empties and then the parking lot starts to fill back up,” he said of the plant’s employee lots now. “And actually we’ve had to build a new parking lot on the east side of the plant because we ran out of parking space.”
‘Doing very well right now’
Toyota is also in the midst of moving 4,000 workers to its new North American headquarters to Plano by the first quarter of 2017 — consolidating workers from at least four U.S. cities. Those who decide not to relocate will be replaced by newly hired workers, Lozoya said.
“The philosophy is we will be able to work together in a better way,” he said of the new headquarters.
Angelou said the state has also navigated many challenges in its pursuit of the auto industry, such as when GM has entertained a closure of their Texas facility. But economic development efforts, in the end, appear to be paying off, he said.
“With the GM facility in Arlington, there were times when they were thinking of closing it,” he said. “We’re not Alabama or Indiana, but you know it’s a huge industry. It’s doing very well right now. And I think we have two of the greatest auto manufacturers in GM and Toyota.”
This story was written by Mose Buchele and appeared on kut.org.
If it seems like most of the people you meet in Austin just moved here from some other state, it turns out, many of them have.
The numbers – analyzed by Brian Kelsey of the Austin-based economic research firm Civic Analytics – come from the IRS, which tracks where people file their tax returns from year-to-year.
Kelsey says Travis County ranked third among U.S. counties receiving the most new residents from other states – about 265,000 people came from out-of-state between 2011 to 2014.
Obviously, this isn’t something unique to Travis County – other big Texas counties get plenty of out-of-town transplants – but, he says, it feels more noticeable here.
“The interesting thing about Travis County is that newcomers coming from other states make up a larger share of the total population here,” he says. “Part of that [difference] is because Travis County is a smaller county than, say, Dallas County or Harris County. Given a hundred people you run into off the street, you’re more likely to run into somebody from another state than some of those other places.”
What’s more, only about a third of Travis County newcomers from 2011 to 2014 were from Texas – compared to 60 percent in Dallas and a near-50-50 split in both Bexar and Harris counties. Kelsey says that’s a relatively new trend.
“If you go back 10 years – even five or six years – the majority of people moving into Travis County were from other parts of Texas…based on this new data that’s actually now flipped,” he says.
Like last year’s analysis, which only examined 2012-2013 data, Florida tops the list of states other than Texas that sent the most citizens to the Austin area, followed by California, Georgia, New York and Illinois.
You can read Kelsey’s full analysis here.
The majority of people moving to Travis County are now coming from other states, according to new data from IRS.
An estimated 265,000 people moved to Travis County from other states in 2011-2014, third-highest among counties behind Maricopa (Phoenix) and Los Angeles. On its own, that doesn’t sound all that exciting, or surprising. During periods of strong economic growth big places tend to attract a lot of people, especially from other big places, and Austin is experiencing the best economy in a generation.
As others have pointed out, several Texas counties are among the leaders nationally in attracting new residents from other states. So why, then, does it “feel” different in Austin compared to other high-growth places? Why does it seem like there are so many more out-of-state transplants here fueling population growth? Confirmation bias in the form of staring at Florida or California license plates while sitting in traffic or getting outbid on a house from an “out-of-state buyer paying cash” may have something to do with it. But there is ample evidence in the recently released IRS data to suggest that perceptions reflect demographic reality.
- Five Texas counties ranked among the top twenty counties nationally in number of movers from other states in 2011-2014: Travis (#3), Harris (#5), Dallas (#10), Tarrant (#14), and Bexar (#16). But of that group, out-of-state movers made up a clear majority (66%) of total domestic movers in only Travis County, i.e. 34% of people moving to Travis County from somewhere else in the US came from some other county in Texas. Bexar County (San Antonio) and Harris County (Houston) were about evenly split between in-state and out-of-state, but Dallas County (62% in-state) and Tarrant County (60% in-state) tipped strongly in the other direction. Same goes for Williamson, Collin, Denton, Fort Bend, and most other large, fast-growing suburban counties around the state.
- Of the 24 counties on the receiving end of 100,000 or more out-of-state movers in 2011-2014, five stand out as outliers, with (1) out-of-state movers making up 60% or more of total movers into the county; and (2) out-of-state movers (summed 2011-14) representing a relatively large share (10% or more) of total residents:
- Travis County, Texas (Austin) – total out-of-state movers in 2011-14 were 23% of total residents, by far the greatest concentration among large counties with the most out-of-state movers and nearly all counties of any size with significant military presence, a key driver of out-of-state migration.
- El Paso County, Colorado (Colorado Springs) – military (Fort Carson, Peterson and Schriever AFB, Air Force Academy, NORAD), US Olympic Training Center.
- Clark County, Nevada (Las Vegas) – well, Vegas.
- Honolulu County, Hawaii – this one shouldn’t need any explanation.
- Mecklenburg County, North Carolina (Charlotte) – among fastest growing places in US, a major finance center, located on the border of two states.
- Out-of-state movers to Travis County outnumbered out-of-state movers to 24 states and Washington DC, and came within 1,000 movers, or 0.4%, of Oklahoma.
New migration data always makes a big splash, as politicians are quick to take credit (or deflect blame), and several moving companies have gotten into the game lately. For Austin, it’s yet another reminder that you are living in the best economy you’re likely to experience–that is, if you are able to keep up.
This article was written by Josh Wright at Emsi.
Austin, Texas, is a tech-driven metro. There’s no getting around that fact. Of the major tech markets in the US, only San Jose has a higher share of tech jobs than Austin. But as our friend Brian Kelsey showed in new research, manufacturing is also a huge player in the central Texas economy.
Really, though, it’s tech-driven manufacturing that’s leading the way in Austin … and in other prominent tech economies.
Kelsey’s study, commissioned by the Austin Regional Manufacturing Association, used Emsi data to show that manufacturing is the largest contributor to regional GDP in Austin among non-government industries, comprising 10.3% of total regional gross domestic product. And productivity—as measured by value-added per worker—is more than $193,000 in manufacturing, 73% higher than productivity across all industries in Austin.
But here’s the kicker: Nearly 60% of manufacturing’s contribution to regional GDP in Austin comes from the information technology and analytical instruments cluster. The large sub-industry groups in this cluster are semiconductors ($3.1B), computers/peripherals ($2.1B), and electronic components ($721M).
So, yes, Austin is a mecca for tech-centered manufacturing. But we were curious if the same thing was true for other big tech markets, so we looked at our regional GDP numbers by detailed industry to check.
Manufacturing GRP for Large Tech Metros
Regional gross domestic product (or GRP) looks at the value-add a particularly industry brings. It includes earnings, profits generated, and tax revenue generated. And it’s a great metric to assess when analyzing basic industries (i.e., those that export products and services and thereby generate income from outside the region).
Manufacturing is a classic example of a basic industry, and for a sampling of well-known tech markets—the same nine metro areas used by Kelsey in his Austin tech talent study—the sector (mostly) plays a critical role.
While manufacturing is important to Austin’s economy, five of these top metros get a higher share of value-added from the sector. Manufacturing accounts for 27% of San Jose’s GRP and 25% of Durham-Chapel Hill’s.
(Note: We used 2014 GRP data while Kelsey’s report used 2013 data.)
San Jose’s Largest Contributors to Value-Added
San Jose is the center of Silicon Valley, so that large of a contribution from manufacturing might surprise you. However, like Austin, the bulk of value-added from manufacturing is tech-focused. Below is the top five detailed industries (6-digit NAICS) based on their share of San Jose’s total 2014 GRP.
- Internet publishing and broadcasting and web search portals (10.1% of total GRP)
- Electronic computer manufacturing (8.9%)
- Semiconductor and related computer manufacturing (7.4%)
- Software publishers (4.5%)
- Custom computer programming services (3.7%)
Only two of five largest GRP-contributing industries in San Jose–electronic computer and semiconductor and related–are in the manufacturing sector. But when paired with semiconductor machinery manufacturing, they make up 17.6% of San Jose’s gross regional product.
Durham-Chapel Hill vs. Raleigh
Just 24 miles separate Durham from Raleigh. They form a core part of the Research Triangle and share a lot of the same industry traits, but Durham-Chapel Hill is far more reliant on manufacturing.
While manufacturing jobs in Durham-Chapel Hill declined 16% from 2009-2015, the sector still employs about 10% of the metro area’s workforce and contributes a quarter of regional GDP. By comparison, manufacturing only makes up 5% of employment and 10% of GRP in Raleigh.
Durham-Chapel Hill’s five leading GRP industries give a good glimpse on what’s driving its economy:
- Pharmaceutical preparation manufacturing (10% of total GRP)
- General medical and surgical hospitals (5.6%)
- Computer terminal and other computer peripheral equipment manufacturing (5%)
- Biological product (except diagnostic) manufacturing (5%)
- Colleges, universities, and professional schools (state government) (4.4%)
Durham-Chapel Hill, home to Duke University and University of North Carolina, has a heavy biotech focus, with pharmaceutical preparation manufacturing and biological product manufacturing in the top five. Large biopharma companies in Durham-Chapel Hill include GlaxoSmithKline and Merck.
Computer and semiconductor manufacturing have a presence in Durham-Chapel Hill, but not nearly as much as in San Jose or Austin.
Raleigh, on the other hand, has some biotech (biological product manufacturing is in the top 10 in GRP), but it’s driven more by software publishers, wholesale trade, and wired telecommunications carriers.
Manufacturing’s Role in Workforce Development
Manufacturing not only makes an big dent in regional GDP, it also plays a significant role in regional workforce development. Kelsey’s report concludes with the key occupations that staff manufacturing firms in Austin and a nice section on regional workforce strategies that is applicable to almost every community and region.
With the rising cost of housing in Austin, providing as many living-wage employment opportunities as possible to local residents is an important goal for economic and workforce development, especially in areas of the region where educational attainment rates are lower compared to the population as a whole. Manufacturing should be viewed as a critical piece of the solution to many of the challenges—economic segregation and educational attainment inequality—facing Austin, and ARMA can play a pivotal role in driving public-private partnerships to address those challenges.