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Apple deal would bring jobs, but number of local hires is not clear

Friday, March 16, 2012 by Michael Kanin

A potential agreement to bring electronics giant Apple’s Americas Operations Center to Austin could provide some badly needed jobs for area residents. According to documents filed with the city’s Economic Growth and Redevelopment Services, Apple, Inc. projects that 93 percent of the positions that would be created by the facility would result in local hires.

 

However, that number may not be quite as high as Apple has listed. At a special called Austin City Council meeting on Thursday, Council Member Bill Spelman tried to tease out the true figure. In the end, he told In Fact Daily that the number will likely be closer to 60 percent than the 93 percent figure listed in Apple’s filings. Still, Spelman was sufficiently impressed by the idea that 60 percent of Apple’s prospective hires would be Austinites.

 

“Sixty percent actually a pretty good number over a 10-year period,” he said. “(One scholar) did an analysis of incentive agreements and concluded that over something like a 10-year period, 80 percent of your hires end up being people who weren’t there in the first place. So, if 60 percent of our hires actually are people who are living here right now, and we’re actually having that big an effect on our unemployment problem, that is a much better effect than the average.” 

 

According to state figures, the unemployment rate for the Austin-Round Rock-San Marcos area is about 6.8 percent, or more than 56,000 people.

 

Governor Rick Perry announced the potential Apple agreement one week ago. In addition to $21 million in state funds reaped through the Texas Enterprise Fund, city officials would extend $8.6 million annually for 10 years in grants. That figure would cover Apple’s property taxes.

 

In return, Apple says it will bring roughly 3600 jobs to the city over a 10-year period. According to documents filed with the city, the bulk of the jobs, roughly 2,350, would be entry level and would earn employees an average of $40,000 a year. The 10-year period would kick in after the company received the certificate of occupancy on the new facility. Construction is estimated to take four years.

 

Apple plans to spend $304 million on the expansion in Northwest Austin. As Mayor Pro Team Sheryl Cole pointed out, the new center will be in the Round Rock ISD.

 

There would also be 20 executive-level positions (at an average of $211,000 a year), 250 managers (at an average of $114,000 a year), 165 supervisors (at an average of $64,000), and 850 employees listed simply as staff (at an average of $83,000 a year). According to city staff, Austin would net roughly $14.6 million in benefits from the deal.

 

At the meeting, Spelman grilled the city’s Emerging Technologies Coordinator Eve Richter over the calculations done by staff to determine local hiring rates. His line of questioning eventually produced answers from Richter that referenced a “black box” – statistical  lingo for a multi-variable calculation used to determine a set figure.

 

After the hearing, Spelman told In Fact Daily that Richter “said a few too many things about this being a black box for me to be really comfortable.” He promised a closer look at the calculations. Still, he signaled his support for the deal – even at a figure below 60 percent Austin hires. “Fifty-fifty was about where I was expecting from the beginning,” he said. “That’s, I think, good enough to support this.”

 

Mayor Lee Leffingwell had already indicated his likely support for the project. And none of the Council members indicated that they had major problems with the proposal. And, Leffingwell’s opponent, former Council Member Brigid Shea, also said she was in favor of the deal. (See Whispers)

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