Research, Data, and Analysis Focused on Central Texas
Produced by the Capital Area Council of Governments
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.
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.
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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).