Education
The importance of education beyond the high school level is becoming more and more apparent, and thousands of young people across Texas and the nation are anxiously awaiting news of their applications to various colleges and universities.
Many higher education institutions in the Lone Star State have already made decisions on early applicants, and most schools will determine their fall enrollments over the next couple of months.
A college education is now valued much like a high school education was in the past in that it is considered a “standard” requirement for numerous occupations. More people are striving to attain a degree because many jobs, especially the best paying ones, call for this kind of preparation. Higher education is also beneficial to society because a highly educated workforce is needed to keep pace with the knowledge-based industries fueling much of the economy, both nationally and abroad.
Unfortunately, Texas lags many other states in the proportion of its workforce with college degrees. This situation is a definite disadvantage in the state’s future efforts at economic development.
Total enrollment in US higher education institutions is expected to reach 16 million by 2015. The enrollment goal for the state set by the Texas Higher Education Coordinating Board’s “Closing the Gaps by 2015” program is 1.65 million.
Currently, the number of students in the state’s public and independent institutions totals approximately 1.21 million, an increase of about 192,000 students since 2000 when the Coordinating Board began the special push to prepare more students for the needs of the future. To reach the Board’s 2015 goal, nearly 49,000 new students will need to be admitted into various higher education programs across the state each year. From fall 2005 to fall 2006, only 27,200 additional students enrolled in Texas colleges and universities.
Earlier this month, the Texas Education Agency awarded $3.7 million to eight education entities to help support school districts in planning and operating Early College High Schools that allow students to complete high school requirements and earn up to two years of college credits. This effort should certainly be applauded as it not only assists the students involved but also helps encourage college attendance.
The quality of its workforce is directly linked to the future prosperity of the Lone Star State. For example, many emerging sectors such as nanotechnology, biotechnology, genetics, and materials science (all of which are critical to the state’s long-term growth) are dependant on a continuing supply of highly skilled employees. Similarly, computer, software, networking, and related careers require knowledgeable workers.
Many of the highest-growth occupations of tomorrow, including various health-related, scientific, and engineering fields, will demand people with at least a bachelor’s degree for entry and advancement. Various management and professional positions will have the same requirements. The increasingly complex business world is requiring greater skill levels, and a college degree opens the door to many of the most financially rewarding occupations.
In the future, jobs that necessitate at least some college studies will grow at a faster rate than those where just a high school diploma is sufficient. While the occupational groups generally requiring the highest levels of education constitute about 22.9% of the current workforce, they represent some 39.4% of the projected growth.
The reasoning is sound, and the conclusion is clear: to be an effective and contributing member of the workforce tomorrow, preparation must be made today to obtain the education required.
Recognizing this axiom is only the first step. There is still a major hurdle to overcome—affordability! The recent pattern of rising costs relative to ability-to-pay is resulting in many qualified students not being able to attend or complete college. What can be done about this situation? What should be done?
That’s certainly a matter of vital importance to families across Texas, and one that demands answers. As the State Legislature debates these and related issues in the upcoming session, various potential actions in the area of higher education will doubtless be proposed. One thing that is certain: the value of higher education is enormous, both to individuals and to society as a whole.
posted @ 08:10 AM CST [link]
Friday, January 19, 2007
Weather
There is a saying that suggests if you don’t like the weather, just wait a while and it will change. The last few days have certainly validated that truism as ice storms have wrecked havoc across Texas and several other states—leaving thousands without electricity and causing the deaths of over 50 people in nine states.
Normal activities have been severely disrupted by the onslaught of ice and snow, flooding, and high winds. Businesses have closed and services have been curtailed in numerous parts of the country. While many people have had to endure short interludes without power, more than 300,000 from Texas to Maine have had to huddle in makeshift shelters and darkened homes waiting for lengthy periods for repairs, which in numerous cases have taken much longer than usual. In Oklahoma, more than 92,000 homes and businesses were shuttered for some four days. In some states, members of the National Guard were called in to help with recovery efforts and dissemination of information.
In the Lone Star State, vehicular traffic has been severely disrupted and miles of interstate highways and other motorways have experienced temporary closings. Delays and cancellations in air traffic have also occurred, at times for the lack of de-icing materials. In addition, hundreds of schools have been closed, as have some local and state government offices. Even the inauguration of Governor Perry had to be moved indoors, the first time in some five decades that outside activities, including the parade, had to be cancelled.
Citrus crops and fresh-cut flowers supplies have been devastated in California, and shoppers will soon feel the pinch of higher prices as they make plans to purchase Valentine’s Day bouquets and create Super Bowl spreads. Damages to the fruits could surpass the $700 million loss the state experienced in the December 1998 freeze. Inflated prices of other crops that have fallen victim to the wintry weather may soon follow.
In many areas of Texas, the ice storm has damaged trees and property, causing significant monetary losses. Fortunately, the development and planting of trees less susceptible to this kind of weather over the years has tended to reduce the severity of the problems, thereby lessening cleanup costs to individuals and communities.
While the recent weather problems have certainly not caused as much damage as some previous natural disasters, they nevertheless have been disruptive to our routine activities. Over the past quarter century, there have been 67 billion-dollar weather disasters in the United States, only three percent of which have been related to ice storms. During that period, Texas has experienced several natural weather disasters, with perhaps the flooding in 1994 ($1.2 billion damage and 19 deaths) and 1998 ($1.1 billion damage and 31 deaths) the most costly in recent years.
From an economic standpoint, the key thing to note about the difficulties we have been facing is that they slow down the efficiency we are used to in our daily business activities. We are accustomed to a well-oiled economy in which deliveries and supply systems function with monotonous regularity. When this massive logistical process is interrupted, store shelves empty and assembly lines stall. Once the skies are clear, however, things will return to normal very quickly.
Perhaps the best way to look at the situation was penned by Percy Bysshe Shelley when he wrote, “O, Wind, if Winter comes, can Spring be far behind?” The economic disruptions we are facing today will certainly be overcome tomorrow—such are the miracles of the modern global economy.
posted @ 07:44 AM CST [link]
Friday, January 12, 2007
Minimum Wage
Thanks in part to the 100-hour agenda plans of the Democrat Congress, the idea of increasing the minimum wage is now high on the national agenda.
There are, of course, myriad misconceptions related to the situation. And, as with most political issues, there seem to be voices both in favor and against the concept. Opinions are often based on different studies or interpretations of economic indicators related to such a move.
Those in support point to reports which show such a hike in minimum wage has no significant impact on overall employment. Those who oppose quote from studies that obviously tend to show the opposite scenario. Moreover, some voices being raised are speaking primarily from a partisan perspective or from a standpoint of perceived enlightenment. In addition, there are those who are addressing the matter from a purely emotional standpoint. In the midst of all of the seemingly contradictory information, it can be difficult to sort through to what’s really best for the economy (and for those attempting to find employment within it).
So, what is the situation with raising the minimum wage level? Let’s take a look.
Currently, federal regulations dictate that all “non-exempt” employees (a designation which covers most hourly folks) will be paid at least $5.15 per hour. Five states have no minimum wage laws, and 29 states have laws that call for minimum wages higher than the federal stipulation. In cases where both state and federal regulations exist, an employee is entitled to receive the higher of the two. Texas is among 15 states in which the federal and state requirements are the same.
The United States, of course, is not the only nation that has minimum wage rules. In fact, our statutory minimum wage law was authorized in 1938, some four decades after New Zealand and Australia. Currently in the European Union, approximately 70% of the countries have government policies regarding the lower wage level. The others rely on employer groups and trade unions to establish minimum earnings.
The minimum wage does not increase automatically with inflation or some other index. In fact, it’s been almost a decade since this subject has been on the front burner. There have been only four hikes since 1990; the first two bumps of $0.45 each occurred in 1990 and 1991 and placed the bottom salary at $4.25. In 1996 and 1997, modifications to the Fair Labor Standards Act lifted the minimum salary to the current level. According to some economists, when adjusted for inflation, the federal minimum wage is at its lowest level in a half century.
So, exactly what is the effect of increasing what employers must pay, and how much do the poor really benefit? This is where the studies tend to disagree. For many years, economists believed that increasing the minimum wage would create unintended hardship on families on the bottom rung by reducing the numbers of jobs available.
Here’s the logic. A profit-maximizing employer will hire additional workers as long as the value they generate is greater than their cost. So if the cost of an employee goes up without a comparable rise in their value to the firm and they become more costly than they’re worth, the job will be eliminated. If an increase in the minimum wage forces employers to pay more per hour, this argument posits, they will tend to hire fewer people at the lowest levels and will work to eliminate those positions.
There is also the argument that the increments to minimum wage are far less than the salary boost which would be required to pull most people out of poverty. The bottom line is that this train of thought would tell us there is a risk that some of those with the lowest skill levels and least potential productivity will find themselves minimum-waged right out of a job. And better for these people to have any job than no job at all, say the most hard-core believers of the ”minimum wage is bad” argument.
There is, of course, evidence on the other side of the argument such as published research from Princeton University economists that shows no depreciable change in unemployment trends between two neighboring states in the east with different minimum wage rates. And employment statistics following the 1997 raise also revealed no unemployment ripple effect was created by that legislation (though it’s impossible to isolate that one specific condition).
Clearly, there are certain social goals which are contrary to economic goals. The Washington-based Economic Policy Institute indicates that about 15 million Americans would be directly affected by an increase in the minimum wage, and almost half of these are the sole source of earnings for their entire family unit. Improving the lot of these people is a goal with merit. However, that’s really not the issue. The essential question is not whether we want to reduce poverty (certainly YES), but rather whether an increase in the minimum wage is the best way to do so.
posted @ 10:30 AM CST [link]
Friday, January 5, 2007
Fueling Future Economic Growth
The United States’ economy is healthier than it’s been in a long time. While there are, of course, potential clouds on the horizon, the current status is clearly positive. One reason for this strong performance is explosive growth in several industry groups which will generate spillover activity throughout the economy. Here are just a few of the likely bright spots for the coming year (and beyond).
Among the sectors projected to serve as economic growth engines in 2007 are those related to biotechnology, pharmaceuticals, health care, energy, and security. The information sector, due primarily to the continued evolution and proliferation of microelectronics and the demand for customer service representatives, is also predicted to see strong expansion. Internet content and commerce, though not expected to have as robust a performance as over the past two years, is also likely to experience further increases.
The biotechnology sector involves industries ranging from organic products to pharmaceuticals. Of late, genomic developments have been making headlines. While Texas is behind some other geographic areas in terms of the size of the biotech presence, notable strides have been made. Key locations in Austin, College Station, Houston, San Antonio, and the Dallas-Fort Worth Metroplex and elsewhere will help cement the Lone Star State’s position as a site for biotech. With the enormous growth expected in the industry, Texas will benefit from the development of biotech and related fields.
One particularly exciting emerging area is nanotechnology. We’re on the cusp of some amazing developments in this field (which deals with extremely small scale materials), at least for someone of my generation. Nanotech is going to revolutionize the way we live in countless ways, and the firms who are first to the market should see exponential growth. Texas is working hard to attract this kind of activity, both in terms of research and commercial development. While it may be a few years before we bear the real fruits of these labors, there are already important strides being made.
Pharmaceuticals will also likely see economic gains. The entire system of medicine delivery is evolving, with leading edge drug therapies contributing to a flurry of activity. Health care in general continues to be a strong source of economic expansion. As the US and Texas populations age and the introduction of new therapies spur additional demand growth, the provision of health care will generate substantial economic gains.
Oil prices remain at elevated levels, with little meaningful relief in sight. Texas’ energy sector has seen a resurgence in the past few years that is likely to be maintained in the years to come. With the need for oil and natural gas rising, related industries ranging from exploration to imaging to refining will see ongoing vitality. The development of wind power is also leading to economic gains, particularly in selected geographic areas. Global demand for energy continues to open opportunities for highly trained workers in this area, although the current labor market for those having the necessary skills remains tight.
The widespread economic growth is also fueling entrepreneurial activity. Many people are making the most of the new year by taking the plunge into establishing their own business through franchising. (Over the past three years, nearly 900 concepts began franchising.) According to an International Franchise Association study, franchising—in some 75 different industries—provides about 18 million American jobs and accounts for $1.53 trillion of US output. Other bright and energetic folks are translating ideas into reality at an impressive pace.
As noted, there is an abundance of evidence that points to expectations for continued economic expansion in 2007. Some slips and falls may occur as we traverse the next 52 weeks, but I am confident our economic strength will be sufficiently resilient to recover from any problem areas and remain healthy. That’s my prediction, and I’m sticking to it.
posted @ 07:59 AM CST [link]