It Pays to Educate
There will soon be more than a million newly minted college graduates entering the job market. For most of them, the news is good because expectations for employment are much better than in recent years. Still, for top-tier jobs, the competition is forecast to be fierce.
According to a recent survey by the National Association of Colleges and Employers, the number of this year’s graduates soon to be employed will probably be approximately 17.4% higher than in 2006. Thus, the growth trend started in 2004 is projected to continue with significant expansion by both large and small companies in almost all industries.
Many of the new jobs in the US are likely to be in the West as many companies have established operations there for economical reasons. Of the top 10 large metros expected to see substantial gains in jobs for recent college graduates, Las Vegas holds the top spot with Austin ranking seventh. The continuing technology boom is a major contributor to the job openings in the Texas capital metro area.
To get the brightest and best, some companies are hiring on the spot or offering perks such as signing bonuses to the new graduates. Bonuses are ranging from $1,000 to $10,000 with the average being around $3,500. Other perks often include flexible work schedules or enhanced benefits.
There is also more “wining and dining” this year than in the past. Particularly in hot demand are students with business majors as well as those who have studied to be engineers or have significant computer-related skills.
Along with the increased number of jobs, starting salaries are on the rise. Financial compensation for students with economics and finance preparation is up 12.4%, with the average annual remuneration slightly more than $50,000. New graduates with chemical engineering backgrounds can expect close to $60,000 the first year.
Other areas with substantial hikes over 2006 entry level pay include marketing, up 10.3%, and business administration at 7.5%. The smallest salary gain has been experienced by liberal arts graduates whose average starting pay is around $31,300, a 1.2% hike over 2006.
For students completing their graduate studies, those who have chosen medical careers will likely have the highest annual earnings, upwards of more than $145,000.
Internships, which have been on the rise in recent years, are proving to be a good way to get one’s feet in the door as employers are offering jobs to over 70% of their interns.
Several companies are anticipating hiring more than 4,000 new graduates. Among them are Enterprise Rent-A-Car, Walgreen Company, Lockheed Martin, PricewaterhouseCoopers, and the Peace Corps. Other top employers include law firms, retail businesses, financial institutions, and various government entities.
The demand for highly skilled and prepared workers is expected to continue through the next several years. Thus, education remains a solid investment, especially since those with college preparation are likely to make significantly more money during their lifetimes than those with just a high school diploma.
The jobs that are available, of course, are not going to just fall into the laps of those with shiny new diplomas. A successful job search relies on concerted and focused effort. But as long as college graduates have adequate preparation, put forth the effort to obtain interviews, and network, their picture for employment appears to be bright.
posted @ 07:55 AM CST [link]
Friday, May 18, 2007
Closing the Gaps and Opening the Gates
Research has consistently noted that higher education is of great benefit to both individuals and society. Unfortunately, Texas lags most states in key education-related statistics.
To name just a few. The percentage of the state’s population with less than a high school education is substantially higher than for the US as a whole. Texas is also far behind most states in the proportion of persons with bachelor’s and graduate degrees. While the segment of the Texas workforce with bachelor’s degrees has been growing lately, the pace is still less than that of other large states which are competitive for major new business activity.
In October 2000, a new strategy was implemented to improve the situation. Created by the Texas Higher Education Coordinating Board (THECB) with strong support from various educational, business, and political entities, the approach was named “Closing the Gaps.” The overall plan is to close the educational gaps within the state as well as those that exist between Texas and other states. The four areas addressed in this plan involve student participation, student success, excellence, and research.
The initiative is a well-grounded and realistic assessment of the importance of improving Texas’ higher education attendance, graduation rates, and research participation. Measurable milestones have been incorporated into the program to achieve the needed outcomes.
Recently, my firm, The Perryman Group, was asked to assess the benefits of achieving the goals embodied in “Closing the Gaps” with particular focus on economic gains that would occur as a result of the THECB program.
In general, benefits of increasing participation in higher education endeavors include improved health and financial prospects for individuals and a more productive workforce, as well as less demand for social services. Gains from a more educated populace promote long-term economic development, and enhanced research activity spawns new and innovative advances in multiple arenas.
Our study focused on the overall gains associated with improving higher education attainment from the perspective of the Texas economy. With regard to the benefits of achieving the goals of the “Closing the Gaps” initiative, special attention was given to the incremental increases over and above those that would occur under normal or “baseline” conditions with respect to participation, completion, and research. The analysis examined these net effects over time, accounting for gains in income, output, and productivity, plus reductions in social costs, returns on enhanced research, and economic development emerging from a more educated workforce.
What we discovered was quite impressive, particularly with regard to the fiscal impact of “Closing the Gaps.” The endeavor will generate sufficient State revenues to nearly cover the outlays required for its operation through 2015. By 2030, however, the initiative will have provided more than $85.3 billion (in constant dollars) as well as $73.5 billion in receipts to local governments.
With full implementation by 2015, the annual gains per dollar of cumulative State outlays include $11.92 in total spending, $4.77 in gross state product, and $3.02 in personal income. By 2030, the stimulus per dollar reaches $46.36 in expenditures, $18.41 in output, and $11.54 in income. When all public (state and local) and private costs are considered, the annual economic returns per $1 of expenditures by 2030 are estimated to be $24.15 in total spending, $9.60 in gross state product, and $6.01 in personal income.
Although Texas is projected to achieve healthy economic expansion if current trends continue, the payoff to reaching the objectives of the “Closing the Gaps” endeavor is enormous. By 2030, it includes annual gains (in 2006 dollars) of $489.6 billion in total spending, $194.5 billion in gross state product, and $121.9 billion in personal income.
With regard to wage and salary employment, successful completion of the “Closing the Gaps” program will result in an additional 308,635 permanent jobs by 2015 and, by 2030, some 1.02 million new workers beyond what would be expected under normal gains. The net gains in employment will be spread over every region in the state.
Thus, it is easy to see that generating a more educated workforce will be highly advantageous for the state in terms of gross product as well as employment. In addition, “Closing the Gaps” will increase the capacity of Texas to create and attract emerging industries, enhance the state’s productivity and competitiveness, and generate synergies with other strategic advantages enjoyed by the state. Furthermore, it will reduce social costs associated with an uneducated citizenry, enable the state to move to the forefront of workforce quality and research output, and provide impressive returns to the state on the commitment of public resources.
Most important of all, however, is that reaching the goals of “Closing the Gaps” will improve the lives and “Open the Gates” of opportunity for millions of Texans from all socioeconomic backgrounds and promote a better quality of life in thousands of communities across the state. It is difficult to imagine a more noble and worthwhile endeavor.
posted @ 08:45 AM CST [link]
Friday, May 11, 2007
Paying at the Pump
Around this time of year, Texans are faced with a pocketbook dilemma. Even so, almost invariably, the solution to the situation has been “go for it.”
Allow me to explain. The decision we struggle with during late springtime each year relates to whether we want to pay the increased price at the pump or curtail the amount of time we spend in our motor vehicles. In the past, the answer has always been to pay what it takes because we are so in love with our freedom to travel. It appears that the same answer is being given this year even as gasoline prices soar, some to near record proportions.
Paying more for gasoline is not something we like to do, but perhaps if we understand the reasons, it might help alleviate the discomfort to some degree.
The retail price of gasoline is determined by a host of factors. Among them are the outlays for the crude oil, refinery processing, marketing and distribution, taxes, and retail station operations plus the profits (and sometimes losses) made within these steps. The role each plays varies by percentage with the largest (53%) generated by the cost of crude oil, and the smallest (9%) attributed to distribution and marketing. Refining costs and profits and federal and state taxes are responsible for about 38%, equally divided between the two. Oil prices continue to be impacted by the uncertainty and political turmoil in several major producing regions, a phenomenon that seems unlikely to change in the foreseeable future.
Last week, gasoline prices jumped to a record national average of $3.07, which was about 20 cents higher than two weeks earlier. The previous nationwide average high was on August 11, 2006. Texans are fortunate to live in a state that is in the bottom 10 in average prices—$2.87. California residents are paying $3.49 on average!
Retail prices of gasoline have been generally rising for some time. Hurricane Katrina tightened supplies by reducing US crude oil production by approximately 25% and refinery operations about 10%-15%, but the horrific storm was only one factor in the price hike. Global oil demand has been increasing steadily, which has stretched the entire oil market system—production to transportation to refining—almost to its limits. No new refineries have been constructed in the US for some time, and major overhauls requiring the partial shutdown of several have been ongoing, which is certainly not helping.
If demand rises and supply cannot keep up, gasoline inventories sometimes slip. When that occurs, wholesalers grow concerned that supplies will not be sufficient over the short term and, therefore, bid higher for available product. Such an approach is typical of all commodity markets, but the problem with fuel is that there are few alternatives available. While consumers have the opportunity to substitute between food products when prices shift, there are essentially no fuel options for existing vehicles.
Even if the price of oil was stable and, of course, it has not been lately, fluctuating from $60 to $70 per barrel, retail gasoline prices normally climb before and during the summer when good weather and vacations beckon Americans to the road. The cost is typically about 10-20 cents higher during the spring and summer than earlier in the year.
Then there’s the matter of pipeline and transportation distribution. States closest to the Gulf Coast area, where about half of US gasoline is produced, normally have lower costs than those that must have their product transported by pipeline, ship, or truck. Kinks in the transportation system can also cause localized shortages and, thus, increases in bids for the available supply. Sometimes even when there is surplus supply in one region, the transportation is not adequate to support the flow of supplies, and prices remain comparatively high.
Environmental matters are another aspect of gasoline pricing as they require different gasoline formulations to reduce the emission of toxins. This complexity can be a strain for refineries at certain times of the year, as well as cause transportation and storage problems.
And, finally, competition in the local market plays its role. Though small in comparison, it is still highly important in the overall production and supply system.
As you can readily see, there are many aspects involved when it comes to determining what we pay for gasoline. Unfortunately, this information may not make you feel better when you fill your car up the next time, but at least you’ll have some idea as to why the price is so high.
posted @ 07:55 AM CST [link]
Friday, May 4, 2007
Changing of the Guard
Some fifty or so years ago, the baby boom was in its infancy, and so was I. It was also a time when Americans began purchasing products not available during World War II. The result was corporate expansion and job growth.
Television land was where a lot of Americans traveled every evening, first in black and white and then in full color after 1954 (my family didn’t get there until the late ’60s). Personages like Edward R. Murrow, Ed Sullivan, Lucy, and even Lassie were warmly welcomed into our homes. Poodle skirts and hula hoops were everywhere, and dancing wasn’t dancing unless it was featured on Dick Clark’s American Bandstand.
My, how times have changed, and they continue to change. Even the meanings of words change. Take for example, Pogo—it’s been a comic strip character, a jumping stick, a dance, a website on which to play games, and even an acronym for a government entity. Nothing ever seems to stay the same.
And speaking of names, another significant change that has been in the news lately is the fact that Google has been chosen as the most powerful global brand of 2007. Who would have thought a company that just a few years ago was something nifty and fun would one day surpass Microsoft and even Coca Cola in the brand stakes? Even the word Google has entered our vocabularies as both noun and verb.
Such a change, of course, is a representation of the continual emergence of new ideas in the almost unlimited field of technology. The fact that Google was able to take a private company and make it a public one without losing its focus speaks volumes and indicates that we might see more of these kinds of moves in the future.
Sometimes changes can sneak up on us. However, if we take the time to look closely, we can usually discern the steps that have occurred which led to the change.
As for another sign of change in our global environment, we recently learned that Japan’s Toyota Motor Corporation sold 2.35 million vehicles worldwide in the first quarter of this year, topping General Motors’ sales of 2.26 million. Although this marks the end of an era of dominance by the big three automakers, it didn’t occur overnight.
Toyota has been gaining on General Motors for the past several years. At a time when the American corporation has been struggling to bolster earnings with job cuts and plant closures, Toyota has been expanding rapidly riding the growing popularity of its fuel efficient cars and reputation for quality.
While the numbers only reflect sales for one quarter, they could foreshadow a unique challenge to General Motors, the undisputed world leader for nearly 76 years. As the giant automaker moves to celebrate its centenary anniversary next year, it faces the possibility of being deposed as the world’s largest manufacturer of motor vehicles.
General Motors and Toyota are global players, and each is working to enter markets in various countries around the world. An important thing to remember in this development, of course, is that thousands of people work for both firms and have a vested interest in their efforts to strengthen and enhance their companies.
We are most fortunate to have both General Motors and Toyota manufacturing facilities in Texas. Whether the Toyota surge will continue will not be evident for some time, but for right now, the Japanese manufacturer has signaled that change could be imminent.
In the meantime, these organizations will undoubtedly strive to make better products and keep Texans and Americans on the road in style.
posted @ 08:08 AM CST [link]