Austin, Texas Leads the Nation in Job Growth

(CBS)  The Brookings Institution just looked at how well cities had emerged from the recession. The rankings are based largely on job creating and housing.

Five of the top 10 are in Texas, with the state capital Austin leading the list. CBS News senior business correspondent Anthony Mason reports.

Every time the Austin, Texas company "Bazaarvoice" adds a new employee they bang a gong.

The gong rang 240 times last year at Bazaarvoice. The 5-year-old company hosts and analyzes website customer feedback for clients like Best Buy and Macy's.

Kelly Grey was the latest hire this week, after moving to Austin from Connecticut with her husband and two kids.

"The economy is doing better here," Grey said. It took Grey just a month to find a job as a client manager.

According to a recent survey, Austin weathered the recession better than any other place in the country, and now leads the nation in job growth.

Welcome to Jobstown, USA

Projects like Samsung's $3 billion expansion of its Austin plant have added hundreds of jobs. Austin's unemployment rate (7.1 percent) is more than two full points below the rest of the country.

Bazaarvoice CEO Brett Hurt thinks Austin's doing something different.

"There's an amazing creative energy here," said Hurt.

Thousands of talented graduates pour out of the University of Texasevery year. The state has no income tax, and Austin has low taxes and house prices and a rich cultural scene.

Dave Porter's job at the Chamber of Commerce is to entice companies from more expensive states like California.

"We are very aggressively recruiting," he said. California has a "bulls eye right on it."

California-based SunPower is not leaving the state, but the solar company is opening an operations center in Austin after the city offered up to $900,000 in hiring incentives. SunPower plans 450 hires.

About 80 percent of jobs created in Austin come from local companies. At the Austin Technology Incubatorat the University of Texas, Isaac Barchas gives very young companies office space and helps them find funding.

For Austin, nurturing new companies is paying off in jobs.

"It's really like taking shots on goal," Barchas said. "You want to have as many shots as you can, because you never know which ones going to put the ball in the back of the net.

"When you score the benefit is huge," Mason said.

"When you score the benefit can be another Dell or another Google or another Intel."

Austin's entrepreneurs say there's no secret to their success. It's just an entire community committed to job creation.

[mgenovese]

You forgot Austin's largest online tech community (20,000 Austinites) at http://door64.com. It's a community focused on tech jobs and promoting our local technology scene.

[SWampFox-82nd]

Screw you Auston, Texas!!!!!!!!!!

[MiGustanLosLibros]

It's "Austin" not "Auston", but I couldn't agree more.

[djtejas]

What's your problem, other than the one of the obvious that you are illiterate?

[MiGustanLosLibros]

Jobs? In Austin? What type of jobs? Jobs which offer long-term stability and provide a potential employee with opportunities for professional growth and advancement? No, you won't find many of THOSE jobs here. What you will find are plenty of service industry (restaurants, bars, hotels, etc) jobs which pay poorly, often do not have benefits, and won't invest you or your resume with marketable skills. But that's OK, because if you're in Austin you're probably also in a band or here to make "art" or some other such thing. Keep in mind that even the jobs Austin can offer you (the aforementioned low-paying service sector jobs) are going to be very, very difficult to obtain. Why? Because you will be competing with hordes of university graduates from the local public university which consistently enrolls over 50,000 students (that's undergraduate and graduate enrollment combined). Quite a few of those students opt to remain in the Austin area because they think it's so "hip" and "happening", therefore, an employer can feel comfortable offering substandard wages to a candidate, regardless of experience and education, because they know that if you won't take the job, the person interviewing after you probably will. The glut of applicants with diplomas (BAs, Master's, and yes doctorates) means that your pieces of paper will not offer any type of advantage. You have an MBA? Great! So does your waiter. A doctorate? Fine, you'll probably get along well with the manager of our sandwich shop.

What's most distressing about the aforementioned is that it is the way things are in Austin during GOOD times. The current state of the market has exacerbated these tendencies, along with an influx of people fleeing more distressing conditions. Don't believe all that you read about Texas and Austin being "recession-proof" or concentrating on job creation. Things are better here when compared to California or Michigan, but other than that, prepare to be disappointed.

Tomorrow, Texas's Comptroller will release the numbers on Texas's budget deficit. The figures have only grown since the knowledge of a deficit was made public. The number started out in the low teens and is now estimated to at the very least be beyond $20 billion dollars. That's not a number made up by Texas "haters" or Paul Krugman. It's a number being acknowledged by Texas legislators. There were will be dire consequences felt at all levels. Austin's News 8 channel has shown two pieces about the potential closing of elementary schools because of the upcoming budget shortfalls and their heightened impact a la the Texas budget cuts. One of Austin's largest employers is the State of Texas. And low and behold, the State of Texas is getting ready to lower the boom on many a Texas agency. Layoffs are looming, cuts are imminent. That's not a political or ideological statement, it's a fact. When people lose their jobs as a result of these cuts it will mean diminished consumption, which is significant in light of the fact that Texas relies very heavily on its sales tax (remember there is no state income tax here).

Somehow, people, Texans especially, are unwilling (or perhaps culturally unable?) to acknowledge something very simple: Texas did not dodge the recession. The model it touts (low taxes, low social services, low infrastructural investment, low-regulation to attract business...very Third World) does not inure you from the hurt. It makes the hurt come later. Is California's model the answer? No. The real answer is probably somewhere in between. There needs to be a willingness to acknowledge that commercial investments at the expense of the public infrastructure and human investments (i.e. education, healthcare) is not exactly a recipe for long-term success. If Texas chooses to invest in the creation of low-wage, unstable employment, then perhaps the high rates of high school dropouts and low rates of post-secondary training and education are indeed irrelevant. Someone has to be willing to be the cog to work a job with no growth opportunities. Texas (Austin included) is betting on that.

[djtejas]

Not a recipe for long term success? Then why have people from all over the country been moving to Texas for the last 40 years? Maybe they should all just go home then?

[andrew_white]

Exactly!! You don't know how good it is to hear that!
My own experience moving to Austin in mid 2007 mirrors that of MiGustanLosLibros: I moved there from another state in hopes of getting employed and ended up working retail for several months. Most the people I worked with had a bachelor's degree (as do I), and one had a masters. There was someone begging for change on almost every street corner (albeit normal). I kept applying for other jobs and got a few rejections and then nothing (Dell finally emailed me several months after I moved away and asked me to come in for an interview).

After going broke, I moved to Fort Worth and had no luck whatsoever getting a job there either, after two months of searching. I even tried becoming a substitute teacher and went to a teacher job fair--the teacher's strike in Dallas ruined that for me as well.

Love Austin, but I'm sick and tired of hearing how everyone should move there to escape the recession! Life is harder now than it was in 2000, for everyone middle class or lower. Enough with the lies and deception already.

[curse914]

by bwinski January 7, 2011 10:19 PM EST
Since I used to live in Austin, still have friends that live there that I talk to frequently, I, and they, find your deification of texas a fictional delusion! texas is a rat pit. Austin is just a smaller rat pit.. You did, correctly mention, that texas does NOT have an income tax...correct..BUT, you failed to mention that the sales tax in most areas of the state are close to 10%; AND the property taxes are ASTRONOMICALLY HIGH; AND, you failed to mention that school taxes are OUTRAGEOUS (plus the education is geared more toward the 1850's than modern, 21st century America); AND, that all other hidden taxes (for roads, police, your car, your house, etc) are probably 3 to 4 TIMES what they are in most other states.

You might also want to point out that it was just revealed THIS WEEK, that texas is now faced with a 20 to 25 BILLION BUDGET/TAX REVENUE shortfall and will be forced to either RAISE TAXES ON EVERY texan OR, CUT 20 to 25 BILLION OUT OF CURRENT STATE SPENDING to balance their budget - which is mandated by state law. This obviously was NOT the intention of this highly biased report and should DISCOURAGE MANY PEOPLE from even considering a move to this rat pit under ANY circumstances...

Oh, and in closing, it's wilting hot in the summer to the point of actually cracking home foundations; humidity rarely falls below 80%; AND, and they also have Terrible HURRICANES!
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Texas and the "bifurcated" regressive tax system, much like Washington State that rewards the wealthy for their status, but not contribution to the economy since their money can traverse the globe without penalty, yet labor is incarcerated for such movements of "capital."

_snip_

Washington state has the most regressive tax system in the country, according to a study by the Washington, D.C.-based Institute for Taxation and Economic Policy.

People earning less than $20,000 annually pay 17.3 percent of family income toward sales and excise taxes and property taxes, the report said. People making between $99,000 and $198,000 each year pay 7.6 percent toward their tax bill. Meanwhill, people in the top 1 percent of earners - those making more than $537,000 a year - pay just 2.9 percent, the report said.

_snip_

A temporary, resultant and unsustainable shift in monies and bodies to the states friendly to upper echelon citizens via tax laws and other regressive incentives. Just another phantom "growth" pain, but the limb is still missing.

[curse914]

by tmittelstaed January 8, 2011 1:50 AM EST
Austin's job growth isn't because the community is geared to creating jobs. It is because the government practices corporate welfare - they essentially pay companies millions in the form of tax abatements and infrastructure and other giveaways to come there. Of course the money has to come from somewhere and it does - the taxes of the people who work at these companies. Ultimately the only people who really benefit are the company owners.

Much is made of low property values but there is a reason for that - the reason is people don't want to live there. If they did then they would flood the city and housing prices would soar sky-high. This is because of the law of supply and demand.

And as for the research university graduates, sure they pour out of there and work cheap - but the second they get experience and are worth something, they find jobs with other companies and move away - and then are replaced by the next fresh-out-of-college research graduate.

Many communities in Oregon used to think this way. When the Oregon Lottery started up in 1984 it was during a very severe recession. The lottery was passed by the politicians dedicating 100% of lottery proceeds to economic development. For years the lottery did exactly what Austin is doing, using the money to pay for companies to move into state. We ended up with things like for example lottery proceeds rebuilding the Bon Marche shopping center into Symantec Corp's tech support call center in Eugene, when Bon Marche went bankrupt. The deal was Symantec would stay in the community for 10 years in exchange for this being done. Of course, what ended up happening is 6 years into the deal Symantec pulled out for greener pastures and threw all the college kids who worked there out of work, and reniged on the agreement (they paid a piddly fine for this) This kind of thing happened to many, many communities in the state, with many, many companies. In fact just about the only significant company who has upheld their tax-breaks-for-jobs economic development agreements in Oregon has been Intel. We are still waiting to see if OHSU screws us over, fortunately they look like they won't. But these days there's little interest in paying companies to come to the state. Now, the economic development money is being poured into developing industries that can't move - such as the wine industry. Maybe not so many jobs in the beginning right out of the chute but when the tax abatements sunset, those employers will be contributing full rate into the tax system, they won't be leaving to another community who wants to corporate welfare them.

Oregon's experience with government economic development agreements like what Austin is doing is that the only ones worth going into are with very large companies, with thousands of employees who have a lot of high-priced jobs. If the CEO of Intel or OHSU were to attempt to pull out they have hundreds of top earners with million-dollar houses who would see that they would end up being unable to sell their McMansions, and those people would tell the CEO's to pound sand, they would quit and take their brain trust elsewere. That is probably what is keeping those CEO's from doing the economic development dance. But for every other company, particularly the 50-100 person company whith regular wage slaves in it, well the CEO's of those companies will flit from community to community, moving every few years to get the best deal - and not give a fig that their employees are being dragged along with them. They know those employees are a dime a dozen and they can just get more of them in the new community they go into. Meanwhile the community spends years shortchanging it's infrastructure until it's a complete congested hell-hole to live in, and then all of the companies fly away to greener pastures and you end up with what has happened to Detroit. Austin will learn this lesson.

========================================

Bump, this guy is spot on. The Corporate State can survive a little while with Welfare from a dwindling Class of people, then it all comes apart.

Data analyses by cheap college grads does not make a sustainable economy.

[djtejas]

Interesting, you think everything will leave for greener pastures...why has all the growth and people moving to Texas been going on for 40-50 years now?
I lived and worked in Oregon...their problems with business leaving has nothing to do with how Texas works with companies. Oregon hates outside companies coming to their state. And when they are allowed to do business in Oregon, they make it as difficult as possible to do business. That is why they leave.
I worked for an international company that had site in Eugene and we were forced to close because we could not compete with the global market in our industry. The city of Eugene made it so difficult for us to expand in the way we needed to become more competitive. The company tried it's best to stay open, but in the end had to close because of the economic situation.

[curse914]

by mollydtt January 7, 2011 8:22 PM EST
It's just one small tech business, not the only one.
Actually, I was reading in the local paper that there is a shortage of applicants for tech jobs here. Many local tech businesses in addition to IBM, Samsung, Dell, etc.
I do wish, however, that Austin would get a real public transportation system. Driving is no picnic, and that is a real downside if you don't live in a central neighborhood.

==========================================================

Molly, my point is what exactly does a tech company that analyses data do to create sustained job growth? They are service based in nature. A circular economy is not an "economy," and will be a blip in a race to the bottom. Contractors building homes for other contractors is CIRCULAR and eventually Ouroboros eats its self.

The hole concept that economies can grow infinitely is absurd, much less that service based economies are functional. 150 years of industrialized "growth" is not much of a resounded endorsement of the sustainability...of our culture and ultimately the species as we **** where we sleep and infect open wounds "necessary" for "growth."

[omega42]

y Indiwade January 7, 2011 10:27 PM EST
I think the Liberals in the country must be dying of embarrassment to know that the Conservative TEXAS leads the Nation in Job Growth and in Productivity and in world exports. I guess the Liberals will want to move to TEXAS now and destroy it like they did Calf and New York.
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Nobody with more than half a brain would willing move to Texas unless they had a gun sticking in their rib cage. Oh and as far as Texas economic output, CA has a GSP that is almost as much as TX and NY combined.

[djtejas]

Good, we don't need people with half a brain like you...

[djtejas]

Actually Austin is a very liberal city, nothing like the rest of the state.

[johngrins]

How ironic that the exact same day there is this puff piece on Austin Texas, there is a very concerning editorial in the New York Times by Paul Krugman about the sham and failure of conservative economic principles in Texas. CBS lets revisit this story in 6 months when the smoke and mirrors clear and interview a few people in the bottom 98%.

[bantamei]

As a Texasn I say QUIT MOVING TO TEXAS AND TAKING OUR JOBS!!!!

[propitiation]

It is very hard right now getting any type of job in the Los Angeles area of California!

This State is a mess!