Monday, December 19, 2011

Houston a "brain hub" creating middle-class jobs?

The Wall Street Journal recently profiled Austin's power to create middle class jobs, something the rest of the nation is struggling with.  But not Houston.  If you check out their graph, you'll note that Houston and Austin are neck-and-neck in middle-skill job growth since 2001 at ~25%, and well ahead of the rest of the pack, including Dallas (surprisingly).  Let's look at the key excerpts first, then discuss if Houston is following Austin's model:
AUSTIN, Texas—As the nation grapples with stubbornly high unemployment, Texas's political and high-tech capital shows one way to create good jobs for people who didn't go to college: Attract highly skilled entrepreneurs, and watch the companies they start hire lower-skilled workers
The Texas state Capitol in Austin, a city that in the past decade has added 50,000 'middle-skill' positions that pay roughly $38,000 a year. 
Praxis Strategy Group, an economic-development consultancy, estimates Austin added 50,000 "middle-skill" positions in the past decade. These are jobs that require a two-year associate's degree or the equivalent work experience, and pay a median wage of $17.30 an hour, or $38,000 a year. That pace of growth is roughly four times faster than the nation's as a whole, three times that of New York and Portland, Ore., and twice that of Phoenix.
Austin's success in creating middle-class jobs runs against the grain of national trends. As America's shift from manufacturing to the service sector has accelerated, economists have noted a hollowing out of such jobs.
One consequence of the economy's shift away from production toward brain work is that companies are constantly seeking new ways to break down high-value intellectual tasks into smaller, cheaper bits. Much the same way that assembly lines created millions of new jobs by reducing mass production to a sum of tasks, employers in Austin and elsewhere are constantly breaking down higher-skill jobs to "create new middle-skill, middle-income specialties," according to a recent report by the McKinsey Global Institute.
Enrico Moretti, an economist at the University of California, Berkeley, notes that highly educated cities see faster wage growth for less-educated citizens as well as the high fliers. One reason is that that many lower-level employees use the most productive technologies and act as complements to more-expensive and highly-educated workers, making it much easier for companies to raise their wages faster than overall inflation
Another force, Mr. Moretti notes, is called "human capital spillovers," a fancy way of saying that many "middle skill" workers begin to acquire skills that are much more valuable than their overall education level might suggest.
The WSJ has a companion blog post on "brain-hub cities", with the following distinction between two types of them:
William Frey, a demographer at the Brookings Institution in Washington, notes that there are two types of high-educated metro. The first are old stalwarts like Washington, San Jose — the heart of the Silicon Valley — and Boston. Those cities are already highly educated — each has a greater than 35% share of college degree or higher workers, versus 28.2% nationally — yet have still seen big gains in their share of college educated population. That’s not so much because young and educated workers are moving there, although many are. What’s driving those gains is the fact that many lesser-educated workers are leaving — either by dying or moving to less expensive cities
The second type of educated city are places like Raleigh and Austin that have had fast growing populations but, thanks in part to their relative affordability, have seen a more diverse mix of educated and less-educated workers moving there. Because they’re adding all sorts of people, those places are middle of the pack when it comes to their share gain of college educated workers. But, when measured in raw numbers of college-educated people moving there, they were the nation’s number one and two most popular destinations.
Now, you don't often hear of Houston as a "brain hub", but I'd argue we fall pretty clearly into the second camp there.  The reason we don't get the same media hype as a place like Austin is that our brain hub is hidden inside of a much larger overall metro economy driven by things like the port and manufacturing (both of which also drive a lot of middle class jobs).  Our brain hub is also not concentrated in the media's darling industry, technology, but broken up across energy, medical, and NASA.  Both factors muddle up Houston's story (not to mention the energy boom), thus the Journal's preference for Austin's simpler story even though our stats are almost tied (tied on a percentage growth basis, which means in reality Houston has created many more absolute numbers of middle class jobs, probably close to triple Austin's).

The question is, do we have a similar dynamic to Austin as described in my bold highlights in the main story?  Do our brain jobs in energy and medical drive the same type of middle-class job growth in the ways they describe?  I suspect yes, but don't have a lot of experience in either industry, so I'll throw it to my readers.  Thoughts welcome in the comments.

Update: The Houston Chronicle picks up the story with an editorial: "Houston's well-positioned to create good jobs"

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Monday, December 12, 2011

290 rail, IAH A380, city GDP, H-town Hackerspace, K12's future, and more

OK, the smaller miscellaneous items just keep stacking up:
  • Check out TX/RX Labs, Houston's Hackerspace.  I just think it's awesome that Houston has something like this.  Very cool and expanding fast.
  • Peter Wang writes about a nightmare traffic experience at CityCentre for a holiday party, noting that New Urbanist/"Livable Center" developments in Houston will still need to accommodate large volumes of cars at peak periods since we just don't move that many people by foot, bike, or transit (like classic "old urbanist" cities would).
  • IAH is getting Airbus A380 service, and is just the sixth U.S. city to do so!  (on Lufthansa from their Frankfurt hub) I remember meeting an airport official a few years back that was skeptical about IAH getting A380 service (or, more importantly, needing to pay big $ to upgrade the airport to accommodate it), but I think the global energy boom is changing the equation.
  • Don't hold your breath on 290 commuter rail says Bill King after a thorough analysis.  Here are the scary numbers:
"But even taking the report's ridership projections at face value, the real stumbling block to this project is the cost. Without the link to downtown, the start-up capital costs are estimated to be $290 million, with an annual operating cost of more than $6 million. This equals a capital cost of $96,000 per rider and an annual operating cost of more than $2,000 per rider, a level that is clearly not viable
If one assumes that somehow the inevitable neighborhood opposition to an extension through the Heights could be overcome, and a link to downtown completed, the report projects the total capital costs would be $544 million with annual operating costs of $21 million. This would still be about $50,000 in capital costs and more than $2,000 in annual operating costs per rider."
"Metro service today has 5-minute intervals between buses and goes nonstop to downtown. The proposed commuter rail line would have 20-minute intervals and stop at 10 stations, then require a transfer to a bus to get downtown."
  • A WSJ profile of the world's most fabulous airport in Singapore, including rooftop pool, butterfly garden, and tons of other amenities.  IAH, take notes if you want to be the hub of choice for international travelers...
  • Houston is the country's #5 metro in terms of GDP at $379B, behind NYC, LA, Chicago, and DC, but ahead of SF, Dallas, Boston, Philly and Atlanta.  That makes *just our city* the 31st-largest economy in the world and larger than Austria, Argentina, or South Africa.
  • Forbes “Best State for Business” pegs Texas at No. 6, but No. 1 in the economic climate category.
  • If you want to understand the high-tech future of K-12 education, read this book.  Short, quick, easy read, but one that will amaze you with the potential revolution.  It even has a book jacket endorsement from HISD superintendent Terry Grier (but don't let that stop you if you're not a fan of his).  I plan on doing a future post with a more detailed book review, but wanted to get it out there now in case anybody's looking for a little holiday reading material for when you're traveling or stuck at the in-laws'...  ;-)

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Wednesday, December 07, 2011

WSJ says really nice things about Texas

Wall Street Journal columnist Daniel Henninger had some very nice things to say about Texas in a recent column about Rick Perry.  For my excerpts, I'm going to skip the Perry stuff and just focus on the Texas accolades.  It'll make you proud.
Rick Perry says Texas is the most successful state in America. He's right. Texan economic output exceeds Mexico's and Australia's and rivals India's. ...
(that last stat blows me away considering that we have 25 million people vs. 1,200 million (1.2 billion) people in India!
Texas, unlike California, isn't America's most beautiful state. Through October this year, parts of Texas had 90 days of 100+ temperatures. Yet companies and people keep moving into the high heat of Texas. ... 
In 1990, one of the world's biggest companies, Exxon Mobil, left New York City for Dallas. Exxon's former CEO, Lee Raymond, says the move in part was indeed about costs and New York State's notoriously overbearing tax authority. But it was also about working amid a culture of competence. "It's just the attitude in Texas of getting things done and doing them well," he says. 
Mr. Raymond remarks that the economic policies that in time trapped the Northeast and Rust Belt in spirals of decline never touched Texas. But this is about something beyond low taxes and no unions: "In Texas the people tend to be farmers or individual businessmen, and they have this attitude: We have to make do with what we have and work together to get things done and survive. It's can-do. That attitude permeates everything there."
Ed Trevis, a smaller fish, is also happy. A California-educated Brazilian immigrant and tech entrepreneur in Silicon Valley for 25 years, Mr. Trevis moved Corvalent Corp. to Austin for similar reasons. He had to hire a firm just to do California's compliance. "In California," he says, "you are always doing something wrong." 
"What I found in Texas is that from the standpoint of running a business, cost of living, education, the labor pool, quality of life, it just blew other states out of the water." I heard this constantly—people enjoy being in business in Texas.
Texas' pro-business bias goes back about 175 years—and never died. "It's just that they believe in the whole Horatio Alger myth down here," said Mr. Booth. "It's hard to understand if you haven't lived here." 
And so Perry's Paradox: Rick Perry is a success because he nominally presides over an American tiger state, a genuine free-market economy that doesn't much need—or want—his tender loving care. ... 
This much is obvious: Texas, not California, better be the American future...
Well, at least economically.  Let's hope California's weather - and not Texas' - is America's future, most especially in this horribly hot-and-dry drought year...

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