Research, Data, and Analysis Focused on Central Texas
Produced by the Capital Area Council of Governments
Over the past 10 years, population in the Capital Area has grown by roughly 50,000 people per year. Noting how newcomers are changing Central Texas is an evergreen discussion topic, but one thing that newcomers and long-time residents have in common is that both buy food locally. And rapid population growth has been good for the Capital Area food industry.
Between 2011 and 2016, total earnings in food retail (primarily grocery stores and restaurants) in the Capital Area grew by nearly 51 percent. Earnings per worker grew by almost 15 percent. Estimated total sales for the food retail sector in the Capital Area in 2015 was just shy of $7.6 billion.[i] Put succinctly, there’s quite a lot of money being spent on food in the Capital Area.
But for all of the attention that goes to locally-sourced produce at grocery stores, farmers markets, and farm-to-table restaurants, it’s worth asking, “Just how much of what we eat actually comes from local sources?” And for those approaching this question from an economic development angle, “How many of those dollars being spent on food are staying in the local economy, as opposed to going to food producers elsewhere?”
To some degree, those figures aren’t surprising. After all, it is not particularly realistic to imagine that the Capital Area produces all of the food that it consumes. However, given the scale of the food economy in the region, it makes sense to explore the sector more to make sure we aren’t leaving money on the table.
Food Production in Focus
If we focus on the food production segment of the value chain (assuming that more production is an excellent way to drive additional processing and distribution), a number of trends come to light. Most notably, the rapid population growth in the Capital Area, and in Austin in particular, has made land both a more scarce and a more valuable commodity. The following map illustrates the loss of agricultural land in Austin from 2006 to 2014. Specifically, the map shows a considerable portion of agricultural parcels within the City of Austin’s full-purpose and extraterritorial jurisdictions was redeveloped in just eight years (red parcels) versus preserved for agricultural use (green parcels). And while we only have the comprehensive GIS land use data to map this change for the City of Austin at this time, parallel trends are already taking place in many other communities near the Austin area.
Looking at the implications for Austin specifically, the bulk of land being used for agricultural purposes lies to the east of central Austin, where productive Blackland Prairie soil reigns and prime farmland is abundant. But intense demand for new housing and commercial development and, in turn, increasing land valuations throughout Travis County have put financial pressure on the eastern margins for those engaged in agricultural production. The resulting loss of agricultural land is not surprising, given those conditions. It is, however, a trend that undermines years of food policy efforts by the City of Austin, including most recently the Food Access Resolution adopted in 2016. Looking forward, Austin must consider how to address the need for economic development in East Austin – as well as the citywide demand for additional housing stock – within the context of stated food system priorities. CodeNEXT, the re-write of Austin’s land development code, will be of critical importance in striking that balance. The Austin/Travis County Food Policy Board, for example, has advanced a set of recommendations for CodeNEXT to ensure the new land development code supports a sustainable local food system, including protecting agricultural land for food production.
Looking with a more regional perspective, many communities throughout the Capital Area have historical ties to food production and feature food as a key characteristic of the community (e.g., wine in Blanco County, locally-grown produce in Elgin, etc.). The following table shows regional sales in 2015 in the food production sector by county, highlighting the important role food production currently plays across the region.
As the map presented earlier illustrates, the development pressures on land currently being used for agricultural purposes are likely to continue spreading. Hence, local jurisdictions throughout the region need to plan out where they want this impending growth to occur as it reaches their communities, decide where they want to preserve land for food production, and then take appropriate policy measures to support those plans.
In short, the data show that there is substantial economic opportunity in the Capital Area’s food sector. As the population continues to grow, demand for food will only increase, and local production of that food offers the chance to keep more of those food dollars in the local economy. However, growth pressures tend to work against the viability of local food production by increasing land values and making redevelopment more profitable. Many of the communities in the region are committed to the idea of local food production. But more work is clearly needed to identify the best ways for the Capital Area, as an integrated region of both prolific rural areas and populous urban areas, to maximize its food production potential—and capture the resulting economic benefit.
[i]: Economic Modeling Specialists International (EMSI)
Every year, new jobs open up, and new people are credentialed to fill those jobs. But how close is the number of vacancies to the number of applicants? It turns out in the Austin MSA, the answer depends quite a bit on the type of job you're looking for.
The interactive graphic below shows occupation gaps (i.e., the farther left on the horizontal axis, the greater the oversupply of labor) according to average wages and education needed. You can also filter results by the amount of training, experience, and education required for individual occupations. Have a look below! (And once again, dots on the left are occupations with an oversupply of labor. Dots on the right have labor shortage - a gap).
Ever wondered how wages in the Austin Metro Area compare to similar regions? Us too.
The following graphic shows how local wages by major occupation group compare to a range of peer regions. Use the dropdown menues below the chart to select a comparison region and toggle whether or not the graphic controls for cost of living.
One note - the cost of living adjustment considers cost of living at a metro area scale. When controlling for cost of living, the Austin MSA appears to pay wages among the highest of the peer regions analyzed. However, some of this effect is driven by the low cost of living in many of the communities surrounding Austin and Travis County. Limiting the cost of living calculation to a smaller area, such as only the counties along the IH-35 corridor, would have the effect of bringing cost-of-living-adjusted wages in the region more in line with other peer cities.
There is a general understanding among Capital Area residents that the local economy is strong. One of the questions that flows naturally out of a period of robust economic growth is, “How long will this last?” A recent report issued by The Brookings Institute provides useful context for that question by examining what they’ve termed, “advanced industries.” Generally speaking, the Brookings Institute’s group of advanced industries includes high value sectors in manufacturing, energy, and services that utilize high-skill workers. These are industries thought to drive innovation and advance the technological frontier.
When introducing their advanced industries series, the Brookings Institute lays out several justifications for studying the specific advanced industries they identify. The authors note that “From 1980 to 2013, [economic output in] advanced industries expanded at a rate of 5.4 percent annually—30 percent faster than the economy as a whole. Since the Great Recession, moreover, both employment and output have risen dramatically.” (1) So one reason advanced industries matter is that they are highly productive sectors where new jobs are being created at great scale.
Another reason to pay attention to advanced industries is because these industries tend to pay high wages to workers. The same initial Brookings study notes that “In 2103, the average advanced industries worker earned $90,000 in total compensation, nearly twice as much as the average worker outside the sector.” (2) If we in the Capital Area are interested not just in job growth, but also in livable-wage job growth, a richer understanding of the advanced industries creating high-wage jobs seems prudent.
Also, Brookings’ most recent update in their advanced industries research shows that while the sector continues to grow in aggregate, that growth is becoming increasingly concentrated in certain metropolitan areas. In other words, the forces driving the growth of advanced industries are responsive to local economic conditions. This affords us the opportunity to look at advanced industries in the Capital Area in greater detail, with an eye toward understanding the existing landscape of advanced industries in our region and the factors influencing their growth.
To begin, advanced industries represent a sizable sector of the regional economy. The total value of economic output for advanced industries in the 10-county Capital Area was $27.8 billion in 2014—roughly a quarter of the region’s economic output. The sector is also growing in terms of employment. In 2005, there were 95,000 advanced industries jobs in the Capital Area, representing about 12 percent of all jobs in the region. By 2015, the number of advanced industries jobs had increased to over 131,000 and 13 percent of all jobs in the region. In the period between 2005 and 2015, advanced industries job growth accounted for 15 percent of all new jobs added in the region. Moreover, since the end of the Great Recession, advanced industries have been growing at breakneck pace. Between 2010 and 2015, the number of advanced industries jobs in the Capital Area grew by 37 percent.
Looking at advanced industries employment within the region, Travis and Williamson counties collectively accounted for about 123,000 (roughly 94 percent) of the region’s advanced industries jobs in 2015. Advanced industries job growth in counties outside of Travis and Williamson has been slow, with only Bastrop and Hays counties adding more than 1,000 advanced industries jobs between 2005 and 2015. The distribution of advanced industries employment is important beyond county-level bragging rights. One key to mitigating our region’s traffic congestion involves increasing the density of jobs of all skill levels in areas outside of Austin and Travis County.
In addition to an uneven spatial distribution of advanced industries employment in the region, the number of jobs varies starkly across sectors within the advanced industries designation. There are five industries that account for 90,000 (69 percent) of all advanced industries jobs in the region: Computer Systems Design; Management, Scientific, and Technical Consulting; Architectural, Engineering and Related Services; Semiconductor and Electronic Component Manufacturing; and Computer and Peripheral Equipment Manufacturing. Moreover, nearly all of the employment growth in the Capital Area’s advanced industries is taking place in two sectors. Of the 36,000 jobs added between 2005 and 2015, the Computer Systems Design sector accounted for 19,000 of them, and Management, Scientific, and Technical Consulting Services accounted for another 11,000.Reasonable minds can disagree as to whether or not the Capital Area’s advanced industry employment is diversified enough. On the one hand, decline or challenges in one of these industries would appear to have the potential to cause significant economic hardship in the Capital Area. On the other hand, these industries are broad enough that it is difficult to imagine, for example, what a sector-wide downturn in Computer Systems Design would really look like. If the region has a diverse enough group of firms participating in these industries, that may be sufficient to insulate the region against sector-specific economic vulnerability.
Another question worth exploring, and one that also gets at the idea of sustaining employment growth, is whether or not the region’s higher education institutions are producing enough workers to supply these growing fields with workers. Between 2014 and 2015, the Computer Systems Design sector grew by about 3,700 jobs. During the 2014-2015 school year, higher education institutions graduated only 1,841 students from programs designed to serve Computer or Mathematics Occupations. This gap, between jobs and the number of degree completions in the region, highlights why so many of the computer and technology firms in the region recruit nationally so aggressively. Alternately, employment in Architecture, Engineering and Related Services only grew by 427 workers in 2015, while Capital Area higher education institutions produced 2,508 workers ready to enter that field. So, some fields clearly have more severe talent shortage issues than others.
The Brookings Institute’s most recent update ranks metro areas across the country on a range of advanced industries-related variables. The Austin-Round Rock Metro Area tends to rank favorably—somewhere in the top 20 out of 100 total metros, depending on the variable in question. It is no small accomplishment that the Capital Area’s economy competes so well against its national peers. However, the data also show that there are also challenges to be addressed in the region. Can we facilitate advanced industries job growth in areas of the region where more employment is needed? Can we insulate ourselves from over reliance on a few key sectors? And can we train enough local workers to fill many of the advanced industries positions that are being created? How we answer these questions will go a long way toward determining the health of advanced industries in the Capital Area in the coming years.
This issue of Data Points looks at the Activity Centers identified in the Capital Area Metropolitan Planning Organization’s (CAMPO) 2040 Plan and examines the balance between development that creates new jobs vs. new residents in those Activity Centers.
As the Metropolitan Planning Organization (MPO) for the Capital Area, CAMPO is required to produce a long-range plan with a 25-year time horizon. The 2035 plan introduced the concept of Activity Centers for the region, and the 2040 plan refined those Centers somewhat, arriving at the map shown below.
CAMPO's 2040 Activity Centers
Source: Capital Area Metropolitan Planning Organization, CAPCOG, U.S. Census Bureau
s stated in the CAMPO 2040 Plan, “Activity Centers can increase the overall connectivity of the transportation system, particularly within Centers, and can increase choices among transportation modes and routes.” Put another way, the Centers concept aims to concentrate development in strategic locations in order to facilitate:
Implicit in the Activity Centers concept is the idea that centers should feature a combination of development types, creating both jobs and residents and giving the Center as a whole a mixed-use functionality. Again, the argument in support of this idea is that if commuting represents the primary transportation activity for most Capital Area residents, locating more housing and employment in Activity Centers maximizes the efficiency of the transportation network that connects where people live and work.
Communities can support this kind of development through zoning designations. Tax incentives and density bonuses can be offered to developers in order to encourage the desired development types within the Activity Center Area. The end result should be concentrated mixed-use development that is also aligned with transportation and transit plans, effectively marrying the planning of locations for home and work with the transportation network that connects them.
Analyzing Development in CAMPO's 2040 Centers
So, if that’s the theory behind the Activity Centers concept, it is worth examining how the region is putting that theory into practice. The following map shows the 2040 CAMPO Centers overlaid on top of Census Blocks that intersect the Center at some point. So, to examine trends in the CAMPO Center areas, we’re using the census data, with the orange census blocks shown in the map serving as proxies.
Source: Capital Area Metropolitan Planning Organization, CAPCOG, U.S. Census Bureau
You’ll see that these proxy areas are a better fit with the Centers in some cases than in others. However, as the Centers can be assumed to reflect the bulk of development activity within the census block areas we’re using as proxies, there is reason enough to consider these proxy areas as instructive.
To examine development in the Activity Centers, this analysis focuses specifically on Jobs-Worker Balance. Jobs-Worker Balance compares the number of jobs located in a specific area to the number of employed residents that live in that same area. The mathematical formula for computing the statistic is:
So what Jobs-Worker Balance tells you is, “how closely does the number of jobs in an area compare to the number of workers who live in that area?” Calculating the statistic using the formula above, a Jobs-Worker Balance of 1 indicates that an area is perfectly balanced between jobs and residents. A value of 0 indicates an area is composed entirely of either jobs or residents. This particular statistic does not differentiate between areas that are heavily job-centric or heavily resident-centric, but there are examples of both in the region, such as Downtown Austin or Austin Bergstrom Airport (heavily job-centric) or housing developments in largely rural areas (heavily resident-centric.)
Now, enough with context and methodology. Let’s get to talking about what the data show for our region, specifically, “What does the Jobs-Worker Balance look like for the Centers in the most recent data (2014)?” And, what can the data tell us about the trajectory of Jobs-Worker Balance in these Centers?”
Analyzing Development in CAMPO's 2040 Centers
The first of the two maps that follow shows Jobs-Worker Balance as of 2014 for each of the CAMPO Activity Centers. One point that stands out is the considerable variation in Jobs-Worker Balance across Centers. Some centers are near perfect balance, while others are nearly perfectly imbalanced. Many of the more balanced Activity Centers are in downtown areas of communities outside of Austin. For example, the crescent of communities in the eastern part of the 5-County region—ranging from Lockhart to Bastrop to Elgin to Taylor—all show very balanced Activity Centers. Communities along IH-35 to the south of Austin—Buda, Kyle, and San Marcos—also show very balanced Activity Centers.
Source: Capital Area Metropolitan Planning Organization; CAPCOG; U.S. Census Bureau, LEHD Program
Those Activity Centers in the region that are very unbalanced (shown in red) tend to be locations with high levels of employment relative to residential development. Downtown Austin, for example, shows to be very unbalanced. The Centers roughly corresponding to The Domain (SH-183 & Mopac) and Jollyville (Mopac & SH-45), are also job heavy locations. The Centers along the SH-130 corridor also appear as unbalanced, though the low levels of development in these Centers relative to some of the others, allows for small changes to have dramatic effects on overall Jobs-Worker Balance in the Center.
The next map shows the change in Jobs-Worker Balance over the 2005-2014 time period. Change in Jobs-Housing Balance is shown in absolute terms, rather than percentage terms. So, for a Center showing a change of 0.3, the interpretation of that change is that the Jobs-Worker Balance statistic increased by 0.3 over that time, which is not necessarily the same as a 30% improvement in balance. And, as the formula for Jobs-Worker Balance has a maximum value of 1, all positive changes can be interpreted as moves toward a more balanced Activity Center.
Source: Capital Area Metropolitan Planning Organization; CAPCOG; U.S. Census Bureau, LEHD Program
The prominence of Centers that appear in yellow (those showing improvements in Jobs-Worker Balance between 0.41 and 0.6) in the map is encouraging for numerous reasons:
On the whole, it would appear that the Austin MSA is doing a fairly good job of creating Jobs-Worker Balance within the CAMPO Activity Centers themselves. There isn’t uniform balance across all of the Centers— and there are Centers that are very unbalanced—but for a relatively young concept introduced in a planning document that doesn’t bind municipalities to any particular development pattern, the balance is encouraging.
Also, however, it’s important to note that these Centers are not necessarily indicative of whole communities. While the Center may represent the immediate vicinity surrounding the primary traffic point in a community, whether the community remains balanced beyond the Center is not shown on these maps. The Centers are an excellent start to smart growth policies in the region, but they are just that—the start of planning in order to effectively connect the region’s workers and employment locations.
As the population of communities surrounding Austin continues to grow, new regional job centers will emerge and grow as well. The best way for the Capital Area to remain on the fast economic growth trajectory it currently enjoys is to ensure that its workforce acts regionally, allowing workers to throughout the region to access their best job opportunities with minimal transportation constraints. Communities can support the development of that effective transportation system by taking a proactive role in managing development, encouraging development that is balanced in its creation of new jobs and residences, more densely concentrated in Activity Centers, and supporting regional transportation planning that connects these Centers through multiple transportation modes.
As the Capital Area works to address challenges related to middle-skill and middle-wage jobs, Data Points is taking a close look at the manufacturing sector, one of the key historical sources of those jobs throughout the country.
The History of Manufacturing in Travis County
Those job gains have come in across a wider range of manufacturing sectors, helping to diversify manufacturing employment beyond electronics and semiconductors.
And while total employment has declined precipitously from its peak in 2000, the number of manufacturing establishments has largely stabilized near peak levels. Following employment trends, establishments in Travis County are growing more diverse, operating in sectors ranging from food and beverage manufacturing (108 establishments in 2013) to fabricated metal and machinery manufacturing (132 establishments in 2013).
Outlook for the Future of Manufacturing in the Capital Area
Turning from history to the future, how will manufacturing in our region continue to evolve? How will dynamics like rapid population growth, the rising price of land, and an increasingly diverse economy shape the region’s goods producing sectors? We may not have all the answers yet, but there are several interesting factors to consider.
First, the increasingly regional nature of the local economy has been a boon for manufacturing opportunities. While manufacturing of semiconductors and electronics components has declined in Travis County, it has blossomed in the rest of the MSA. Between 2001 and 2016 the First, the increasingly regional nature of the local economy has been a boon for manufacturing opportunities. While manufacturing of semiconductors and electronics components has declined in Travis County, it has blossomed in the rest of the MSA. Between 2001 and 2016 the number of jobs in that sector in the rest of the MSA grew from just under 3,000 to about 7,750—an increase of about 161%. Overall, manufacturing employment in the Non-Travis counties of the MSA has increased from 13,564 in 2001 to 18,659 in 2016.
Other efforts are also underway to strengthen manufacturing in the region. Texas Workforce Commission and Austin Community College are proving to be a powerful partnership to provide targeted skills development to companies in need of workers with specific manufacturing capabilities. Commercialization of research coming out of the University of Texas and Texas State has the potential to create new high-growth manufacturing companies in the region. And looking at future workers, House Bill 5 and an increased emphasis on technical/vocational training in high school offers a mechanism for training a new generation of skilled manufacturing workers.
One seemingly large loss to the future competitiveness of manufacturing in the region is Union Pacific’s decision to pull out of the Lone Star Rail project. While there has been much discussion of that project’s potential benefits through the provision of commuter rail, the creation of a new freight line running through the eastern part of the MSA offered interesting potential for manufacturing in the region. The apparent loss of that potential feels like a missed opportunity to jumpstart manufacturing in a part of the MSA that is hungry for middle-skill job opportunities.
In short, manufacturing is no sure bet to be the provider of middle-skill employment opportunities in the Capital Area that it once was. However, there are reasons to be optimistic about the sector’s future, and working to identify opportunities to support manufacturing in the region may be an economic development strategy that bears considerable fruit.
Between 2003 and 2013, the Austin-Round Rock MSA saw population grow by over 500,000 people and employment grow by more than 220,000 jobs. For this issue of Data Points, we thought we’d ask the question, “Where did we put all those people?” The maps below show changes in employment and residential densities in the MSA between 2003 and 2013.
Note: For the purposes of the commuting discussion that follows, the Resident Density Maps include only residents that are employed.
Source: U.S. Census Bureau, LEHD Program
With respect to jobs, the map highlights the primacy of Travis County in the local economy. The vast majority of employment density falls in Austin-proper, illustrating why so many workers in the region must cross a county line to commute to and from work every day. Looking more closely, though, one can see that employment grew more dense along IH-35, particularly in Hays and Williamson County. Along IH-35, the cities of Kyle, Buda, and Georgetown, as well as the areas around them, show marked increases in job density. In Williamson County specifically, one can also see significant employment density growth in Cedar Park and along Highway 79, which connects Round Rock, Hutto, and Taylor. Looking east from Austin, one can also see job growth taking place in Bastrop County. It is most dense along Highways 71 and 290, but employment density seems to have increased throughout much of the western half of Bastrop County.
The changes in population density follow similar patterns, with high density areas growing near the major highways and freeways in the region. However, while jobs in the region are fairly concentrated, housing is far more spread out. Moderate levels of population density essentially cover all of the suburban or rural areas in the MSA. This view is in line with what CAPCOG has observed throughout the region: Generally speaking, Texans like their space. Mixed-use and multifamily developments are often viewed as common sense features of a downtown space, but individual personal preferences lean heavily toward single-family housing, driving the need to spread residential development across the region.
The Downside? Congestion.
Given this distribution of jobs and population, it is not surprising that the region suffers from congestion issues. Solving that issue will require dramatic gains in one (or more likely, all) of the following areas:
The Upside? An Opportunity for Suburban and Rural Communities
For the communities outside of Austin and along major corridors, the data shown on these maps present a tremendous opportunity. The regions residents have spread out faster and farther than employment has. Put another way, the workers who are helping to fuel the dramatic economic growth the region has seen in recent years either already reside, or are soon to be represented in much larger number, in communities outside of Austin. Several communities, particularly in Williamson and Hays Counties, have already begun to capitalize on this phenomenon by showing prospective companies that a high-skilled workforce already resides in their community, even if it currently commutes to somewhere else.
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Data Points is a blog dedicated to policy and planning issues in the Capital Area of Central Texas. It is produced by staff at the Capital Area Council of Governments (CAPCOG).