Austin job creation re-accelerates as companies invest in expansion


Potential for business-friendly tax overhaul helps spur investment and job growth in November.

Metro area unemployment rate ticks up to 2.7 percent, due mainly to large influx of workers into labor force.

Central Texas employers eased their way into 2017, scaling back on job growth as skilled workers became harder to find and uncertainty emanated from Washington.

But they’re buzzing again now.

Job creation rates jumped in recent months, even as the labor market grew even tighter. The Austin business-cycle index, a gauge of metro-area economic activity compiled by the Federal Reserve Bank of Dallas, has returned to growth rates not seen since early 2016. And, with a new business-friendly federal tax bill signed, sealed and delivered, some local companies have accelerated major investment plans.

In November, the growing potential for a federal tax overhaul and the re-accelerating local economy helped spur a jump in job growth around Austin. Local employers added about 10,100 jobs during the month, almost double the typical rate of growth for a November, according to preliminary data released Friday by the Texas Workforce Commission.

“The biggest thing I can tell you driving that is the tax legislation,” said Scott Haigler, managing partner for the Austin office of RSM, a national tax and audit consulting firm. “There was more confidence as that process moved quickly and they got that tax bill put together.”

The expanding local payrolls helped absorb an even larger wave of people entering or re-entering the Austin labor force, which expanded almost four times faster than the average pace for a November.

While regional unemployment rolls ballooned in a month in which they usually decline, the number of employed Central Texans also increased, rising at more than double the average rate for the month, according to the commission data.

The metro area’s unemployment rate ticked up to 2.7 percent in November from 2.6 percent the prior month, largely due to the big influx of workers into the labor force.

The commission does not immediately release seasonally adjusted workforce numbers at the metro level. However, adjustments for those seasonal labor patterns compiled by the Dallas Fed put the adjusted Austin-area jobless rate at 2.8 percent in November, up from 2.7 percent the prior month.

The seasonally adjusted statewide unemployment rate dropped to its lowest point in at least four decades, falling to 3.8 percent in November from 3.9 percent the prior month, the commission said. The national rate held steady at 4.1 percent.

While the longer-term impact of the tax bill won’t be known for months, employers in the metro area anticipate a stronger pace of hiring during the first three months of 2018, according to the ManpowerGroup Employment Outlook Survey.

A quarter of survey respondents said they planned to hire more employees from January through March, the report said, and two-thirds expected to maintain current staffing levels. The report’s net employment outlook, at 21 percent for the start of 2018, is 9 percentage points higher than a year ago.

Several local companies already have pulled the trigger on major business investments, in many cases to take advantage of coming tax changes, Haigler said. Within the past week alone, he’s had at least two clients make significant equipment orders — including one manufacturer that bought six pieces at more than $1 million each.

“They need people to operate that,” he said, “so they’ll likely end up hiring because they’re going to expand.”

In other cases, though, that capital spending might offset the need for additional labor. Another RSM client, a warehousing company, expects its new equipment will help make existing employees more productive, he said.

Still, Haigler said, he expects the regional labor market to remain extremely tight, so Central Texas almost certainly will continue importing talent.

“We have the luxury of Austin,” he said. “People want to live here.”

As demographics and expanded business investments heighten demand for workers with new skills — and make existing employees more efficient — Austin could see continued strong job and productivity growth in 2018.

Labor productivity in the region already exceeds most U.S. metro areas, according to a recent analysis by the Brookings Institution. Part of that stems from the deeper integration of digital skills into a broader set of jobs across the region. Measured by the average penetration of digital tasks into jobs, Austin ranks seventh out of 379 metro areas in the country, Brookings researchers found in a separate study.

Few sectors have seen the impact of digitalization and automation as directly as manufacturing. In Austin, the transition to ever more advanced factory equipment and processes has fueled a resurgence in payrolls.

While still far short of the 90,900 factory jobs they had in December 2000, Central Texas manufacturers have expanded payrolls 5.6 percent in the past 12 months — and 12.7 percent since bottoming out in November 2009, according to commission data.

Local factories added about 900 jobs in November, bringing total payrolls to 58,700 positions.

Those gains didn’t appear to come from any particular source, showing instead “a reflection of the strength of the industry,” said Tiffany Daniels, director of communications and community engagement at Workforce Solutions Capital Area.

“Many of our manufacturers have and will continue to make the shift from traditional manufacturing to advanced manufacturing,” Daniels said. “The companies now need workers with highly technical skills.”

Because of that transition, factory managers have echoed many of the concerns expressed by various employers throughout the region, all noting a shortage of workers with the right skills.

That has pushed wages up across the metro area, particularly in certain fields with high-demand skills. Average weekly earnings in the Austin metro area have increased 3.2 percent since last November, according to preliminary data from the U.S. Bureau of Labor Statistics.

Many of Austin’s high-tech companies continue to look outside the region for the necessary skills, but local workforce officials have put a growing emphasis on training local residents for better-paying jobs, such as nursing and advanced manufacturing.

“As one of the key industries to be served by the Austin Metro Area Master Community Workforce Plan launched earlier this summer,” Daniels said, “it is imperative for the workforce community to find ways to educate job seekers on the ‘new’ manufacturing jobs available and to help them access appropriate and expedited training opportunities.”

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