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Job declines linked to affordability, immigration policies in chamber report

Monday, August 21, 2017 by Chad Swiatecki

When considering a recent decrease in the number of jobs available in the Austin area, a top official with the Austin Chamber of Commerce points to slow action at the city and state levels to keep Central Texas attractive for business.

The chamber’s July job postings report notes a decrease of 3,300 available jobs in the area compared to July 2016 with the July 2017 area openings dipping below 40,000, the first time the July frame has fallen below that number since 2014.

There’s still not much cause for alarm in the Austin economy, as the area’s unemployment rate is a low 3.4 percent and key sectors like technology and health care are maintaining a strong demand for new workers to fill well-paying positions.

Yet, Drew Scheberle, the chamber’s vice president of talent development, sees policies that need to be enacted or reversed to keep stronger economic headwinds at bay. At the city level, Scheberle said Austin needs to revamp its economic incentive agreements to make them more attractive since there’s been one approval – to the health care giant Merck Sharp & Dohme – since 2014.

“Council also has a dysfunctional permitting office that, while it’s gotten somewhat better, is making it take longer to get housing into the market,” he said. “There’s still lots of people and cities that would love to change places with Austin on job creation, but we’re seeing jobs created tied strongly to population growth instead of exporting of goods and services. That means jobs in hospitality and education that increase with population, and that makes you more vulnerable to macroeconomic forces.”

Scheberle said the state legislature’s lack of action on property taxes will create even more upward pressure on the cost of housing in Austin, and the federal government’s aggressive stance on immigration is almost certain to reduce the number of foreign-born students in advanced technical programs at the University of Texas. For reference, in recent years, UT’s engineering master’s degree and Ph.D. programs have been made up of more than 50 percent foreign-born students, with the number trending upward.

The city is currently looking at how to revise its incentives packages, known as 380 Agreements, to encourage growth of small businesses and improve the earning power of existing workers, instead of trying to attract larger corporate campuses for global corporations such as Apple.

Scheberle said the recently confirmed Merck deal to build an information technology hub with 600 high-paying jobs opens the door for other health care companies to look at Austin and UT’s Dell Medical School as a locus for their industry.

“You can’t overstate the importance of Merck, because they needed an anchor client in the Dell district, and it’s a case like when Facebook came to Austin and that told Silicon Valley as a whole they should be looking at Austin,” he said. “We’ve heard lots of interest in other (health care) companies wanting to get in here early and the creation of a tier-one medical school is a big opportunity for us to diversify the economy.”

While the overall demand for tech and other talent has decreased in recent months, Austin companies are still having difficulty filling open positions, in part because affordability issues are starting to impact the migration of new workers into the area.

The chamber held a workshop on Thursday aimed at attracting, retaining and “upskilling” current employees so high-paying jobs don’t go unfilled. More than 350 attendees from 75 companies attended the event at the Sheraton Austin.

Will Coombes, vice chair of the chamber’s talent council and a vice president of user experience design for Visa’s Austin office, said Austin is still seen as an aspirational destination for many workers across the country but mobility, affordability and other quality-of-life issues are “creating some caveats in people’s minds.” Coombes said the tight labor market throughout the Austin area hasn’t demonstrated a significant drag on the area’s economy yet, but he and other business community leaders are trying to address the labor shortage before it can throttle overall growth.

“There’s been no cascade effect yet, but you do see some warning signs like the Federal Reserve Bank in Dallas noting some negative impacts on our growth,” he said. “That’s why workshops on upskilling labor matter, why bringing in talent is top of mind for the chamber, and why CodeNEXT as a way to address housing stock and affordability has strong support in the business community.”

Photo by David Ingram made available through a Creative Commons license.

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