Mid-Decade Checkup
The US Census Bureau recently released the American Community Survey for 2005. This massive data collection and compilation effort sheds new light on the state of the US population. For people like me (data freaks), it’s a treasure trove of tables and statistics and listings and rankings. Even for those among us who aren’t so enamored of percentiles and margins of error, it is an incredibly valuable resource for analysis of how Texans are faring. I’ll spare you a trip through the monstrous Census Bureau website by pointing out a few things I consider crucial to the future prosperity of the Lone Star State.
Let me begin by saying that there’s no one more pro-Texas than I am. I’ve worked long and hard to try to improve the lives of those fortunate enough to live here, assisting communities, businesses, and legislators from the Panhandle to the border and from the Big Bend to the Piney Woods. We’re doing some things incredibly well right now—bringing in new life in industries ranging from next-generation microelectronics to leading-edge biosciences. In fact, Texas has won the Governor’s Cup (a prize for the state with the largest corporate locations) for several years running.
However, there are some other things we aren’t doing quite so well. And without some serious intervention, the long-term performance of the state economy (not to mention the opportunities for all Texans) will decline.
First, the good news: we’re young. The median age of the Texas population is just 33.2 years. The only more youthful state is Utah. Maine’s median age is 41.2, and 13 other states have a median age at least five years older than that of Texas. Not only are there issues involved with an aging population (greater need for certain social services, for example), but there are also big benefits to youth in terms of attracting businesses. No company will intentionally locate in an area without an adequate labor supply. With plenty of young people, we look really good in this area.
I don’t consider our ranking in median household income either particularly good or bad. While it’s a mediocre 35 among the 50 states (plus DC), there’s more to this story than that. The highest income areas are concentrated in the northeast and in places like Hawaii and Alaska. California falls in the top 10 as well. Even so, I’d rather live in Texas on our average (just over $42,000 per year per household) than in New Jersey on theirs (almost $62,000). Differentials in the cost of living—everything from houses to gasoline to winter heating bills—offset much of this gap. And we’re still significantly better off than some others; Mississippi’s median household income is less than $33,000 per year. Much of our shortcoming in this arena comes from the border region, and we have a lot of work to do to assure economic opportunities in that dynamic segment of our state.
But here is the really bad news. Texas ranks almost dead last among all states (and DC) in the percentage of those age 25 or older who have completed high school (or the equivalent). In fact, less than 79% of Texans fit this category. Compare that to the more than 90% in five states or the better than 84% for the US as a whole.
Obviously, these percentages don’t change overnight since we’re dealing with everyone in the state who’s 25 years old or older. In fact, there’s some chance the percentages are going the right direction even now to the degree that more young people are staying in school. Still, the sheer magnitude of the gap between the Lone Star State and some of the others means that we cannot relax our efforts one iota.
Within the state, performance among cities varies widely. More on this at a later date, but it is striking to compare the income, poverty, and education levels of various cities around Texas.
We’re blessed with an abundance of raw materials in the form of a young and growing population. There are other states whose attractiveness for business activity is waning along with the number of young people who will be coming up through the workforce.
Even so, many of these young people are living in poverty and are not graduating from high school. Nor are they tending to pursue college educations or advanced degrees at a rate that would improve things in the long run.
These are not new issues; the case for education has been made over and over and over. The implications are clear. For individuals, the more education you get, the more money you make over your working life. Unemployment is less likely and more rewarding careers are more probable. As a society, the more educated the population is, the more attractive the state is as a location for business activity and the greater the enhancement to overall quality of life.
In spite of all of the great things going on in our state, this mid-decade checkup reveals that we still have a lot of work to do in order to ensure future prosperity.
posted @ 08:05 AM CST [link]
Friday, September 22, 2006
America on the Move
Since the early pioneers landed on the eastern shores of this continent in the 17th century, the desire to move has always been a part of the American psyche. The advice Horace Greeley gave in an 1865 New York Tribune editorial to “Go West, young man” was basically a reflection of that which was already occurring as the nation was rapidly spreading beyond the Allegheny Mountains and across the Mississippi River.
During the 19th century, it was not uncommon for more than half of a community to change residences over a period of 10 years or so; economics were normally the driving force in these moves. When breadwinners died, farms failed, mines closed, or jobs played out, families would just pick up and move in hopes of making a successful new start elsewhere.
Following World War II, the US became known as a mobile society because approximately 20% of the population moved from one location to another every year. In 1947, 28.70 million Americans moved—more than 20% of the total population. Since that time, the number of residence changes has risen annually due to the nation’s continually expanding population, but the percentage of people moving has actually dropped.
During the decade of the 1990s, an average of 42.71 million people changed homes per year—16% of total US residents. With approximately 40 million movers per year since 2000, the percentage of residence changes has dropped to around 14%. Next week, the US Census Bureau is expected to release a new report that shows more than 39 million Americans changed their address from 2004 to 2005. This represents a slightly smaller proportion of the US population, and the rate is expected to continue to dip slightly over the next few years as moves diminish and population grows.
Moreover, the number of people actually changing communities is much smaller. More than half of the moves being made today are housing related. Some 10% result from a transition from renting to buying a house, and another 20% involve looking for cheaper housing. About a quarter of the residence changes are caused by family needs, including changes in marital status. Only about 16% of the total moves are work-related, but when the move involves a longer distance (from one county to another or to a different state) more than a third of the time the reason is employment.
During the past few years, six out of every 10 movers remained in the same county with about 19% changing states. So, of the approximately 40 million Americans who move, only about 7.5 million of them actually cross a state line. This proportion has been remarkably stable over 60 years.
American moves today, of course, are omni-directional, depending on the circumstances that dictate the change of address. Still, there has been a predominant shift from the North to southern and western states over the past several years. As a result of this pattern (and differences in growth rates in the populations already there), 24 of the current top 25 fastest growing cities with populations over 100,000 are located in California, Florida, Arizona, Texas, and Nevada. And these five states compose over 30% of the total US population. As economic growth in these areas continues, so will the influx.
Apparently, even though Greeley’s advice to “Go West” was given more than 140 years ago, relocating in order to enhance one’s opportunities can still be wise counsel. However, our willingness to pick up and move is not a new phenomenon. It’s not even a trend that’s increasing in any notable way. Yes, we’re a mobile society, but the fact of the matter is that we always have been.
posted @ 01:02 PM CST [link]
Friday, September 15, 2006
Texas Is Number One
At sporting events, people often hold up sponge hands with one finger pointing upward indicating that a particular team is Number One! In some cases, it’s only wishful thinking; in other situations it’s a validation of fact.
From 1845 until 1959, when Alaska joined the Union, Texas was the number one state in the US in terms of geographic size. Even though we no longer hold that title, there are still numerous areas in which Texas is the nation’s leader.
Right off the bat, you can probably think of several. Texas has the greatest amount of proven crude oil reserves, produces more natural gas than any other state, and is the nation’s largest wind energy generator.
And how about business expansions and relocations? Texas won the Governor’s Cup from Site Selection magazine in both 2005 and 2004 for being the top state in the number of new projects resulting in capital investment of at least $1 million.
Texas also has the most center-lane highway miles and ranks best in the nation in tort reform. There are many, many others I could mention, but let me get to the one about which this column is specifically focused—exports.
In 2002, Texas became the largest exporter in the US, surpassing California, the perennial leader up until that time. In 2002, Texas’ exports of $95.40 billion were 3.45% more than California. Every year since, the gap has widened.
During the first seven months of this year, Texas exports, which accounted for 14.40% of the total amount of US international trade, were 15.29% more than goods and services shipped from California.
In addition to being the top exporting state, Texas contains the nation’s busiest maritime international trade port (Houston) and the most active inland port (Laredo). Texas is also the nation’s largest exporter to Mexico (41.57% of the US total so far this year).
Texas exports to 218 foreign nations, and Mexico has been the Lone Star State’s largest trading partner for many years. Commerce with our southern neighbor continues to increase.
Data for the first two quarters of this year indicates that Mexico received 38.33% of Texas total exports. This reflects 14.56% more than that sent to Mexico for the same six-month period last year. The value of Texas products and services exported to Mexico thus far this year exceeds the total of the state’s shipments to the next top 13 nations.
About 7.9% of total private-sector employment in Texas is directly related to exports. That’s about one out of every 13 jobs in the state. Approximately 23% of all manufacturing jobs are associated with the exporting of goods. Some 28,300 companies ship products to foreign countries through Texas locations, and about 90% of these enterprises are small to medium-sized with less than 500 workers. About two-thirds of all new job creation in the state is tied in some way to international trade.
Texas’ top 10 exporting sectors in 2006 are computer and electronic products, chemicals, non-electric machinery, transportation equipment, petroleum and coal products, electrical equipment, primary metal manufacturing, fabricated metal products, agricultural products, and plastics and rubber products.
The Lone Star State’s second quarter export growth was 3.7% above the first and marked the third successive quarter of export expansion. As Texas continues to sustain the forward momentum of its international trade, it doesn’t appear that the Lone Star State will be relinquishing the export leadership title anytime soon. In an increasingly global economy, that is a very good thing.
posted @ 07:03 AM CST [link]
Friday, September 8, 2006
A One-Man Economic Engine
It’s always nice to see a young economics major do well and make an impact on his profession. And if he can be the very best at what he does, all the better. Such an individual is Eldrick Woods.
Most folks, of course, know him best as “Tiger.” The now world-famous moniker was given to a very young Woods by his father, Earl, a former Green Beret, to honor a member of his South Vietnamese combat unit who saved his life during the Vietnam War.
Tiger did in fact major in economics while attending Stanford University, but, alas, decided to pursue a different career path. His economic impact, however, is certainly unsurpassed in the golf industry and rivals that of the Gilded Age tycoons and high-tech wunderkinds in their arenas.
Two weeks ago, Tiger celebrated his 10th anniversary as a professional golfer. His debut at the Greater Milwaukee Open in August 1996 wasn’t very impressive; he finished 60th and earned only $2,544. Since that meager start, however, the number of wins and the amount of money he has earned from those victories has soared.
But it’s not just the money Tiger has personally earned ($8.6 million just in 2006—so far) or the multi-million dollar endorsement contracts (well over $70 million) he has signed that have made him a household name. Rather, his impact has more to do with how he has influenced the game of golf, indeed the entire sporting world. A recent Harris poll ranked Tiger Woods as the most popular athlete in the US, replacing Michael Jordan who had held that spot since 1993. He is also often rated as one of the most influential of all celebrities.
Because of the multifaceted influence Woods has had on the game of golf, it would be difficult to quantify the exact dollar amount he has generated for the sport over the past decade. Still, his economic imprint is evident throughout the golfing world.
Since Tiger joined the PGA tour, there has been explosive growth of purses. The player who was 60th in the Deutsche Bank Championship that Tiger won on Monday (his 5th consecutive victory, by the way) earned almost five times what Tiger received in 60th place in 1996. More telling is the expansion of total PGA tournament purses over the past decade—from $70.7 million to $256.8 million. And while Tiger is certainly not the only reason for the increases, his personal popularity and level of success (and the resulting effect on the numbers of television viewers, advertising revenue, and value of endorsements) cannot be denied.
Because of the quality of his play, Tiger has also forced his competitors to work harder and has caused a technological revolution in equipment, including clubs and balls. Many golf course designers have even tweaked greens or lengthened links to “Tiger-proof” them—usually to no avail. In the midst of the rapid period of innovations, equipment revenues and profits have soared.
Furthermore, Tiger has changed the way golfers prepare for the game. It used to be if you could walk 18 holes without fainting, you were as fit as you needed to be. Tiger’s success is partially attributable to his physical training regimen which has transformed his former skinny track running body into the physical specimen we see today. As a result, players from the high school level and up are seeking to improve their physiques in hopes of better scores. This kind of preparation, which has required the development of enhanced equipment, is enabling golfers to hit the ball 50 or more yards farther than a few years ago. It is also redefining the clientele and opportunities for workout facilities.
Because of Tiger, golf has a much broader appeal; it is no longer the inconsequential sport it used to be in the minds of some people. Today, playing golf is cool. And not just in America. People throughout the world are learning to play the game, due in part to the hundreds of new courses that have been constructed—over 200 just in China. Once again, an economic impact of major proportions.
Tiger’s most impressive impact on the American public probably relates to television. When he plays, TV ratings are up 35-50 percent on average. Greater audiences naturally translate into more revenues for the networks which, in turn, pony up huge sums for the rights to broadcast the tournaments. The trickle down benefit of those monies is evident on a broad economic scale.
His impact on charities is also phenomenal, including but certainly not limited to his own foundation to which he contributes a notable portion of his earnings. Many golfing events benefit local charities and when crowds attend them to watch Tiger, there is more money available to assist those in need.
Furthermore, Tiger’s impact on golfing fashion is remarkable. When Tiger wears it, the items almost fly off the shelves, along with other golfing paraphernalia, video games, books, and teaching aids associated with him. Once again, the cash registers ring. And when considering Tiger’s influence, you can’t leave out the clinics he provides young players to help prepare them to take the game of golf even further in the future. This portion of his economic legacy will live well beyond his days as a world-class player.
Whether you love him or hate him, it’s hard to deny his impact. A number of people have their jobs because of his direct or indirect influence on the golfing industry. In fact, almost everything associated with Tiger Woods has an economic benefit to someone. And at age 30, he’s only just begun. May all economics majors be so lucky.
posted @ 06:36 AM CST [link]
Friday, September 1, 2006
Staying in Touch
Remember when kids used to tie a string between two cans and use the device to try to talk to each other? According to my recollection, the process seldom worked well (if at all). Perhaps you can also recall when people had to almost shout on long-distance telephone calls so that the person on the other end of the line could hear them.
Well, those kinds of things don’t happen very much nowadays, but they are good reminders that people will go to almost any extreme to stay in touch. And today, it’s quicker, easier, and more economical than ever, thanks to continuing advancements in cell phone technologies.
Dr. Martin Cooper, the inventor of the modern portable telephone, made his first call in 1973. Of course, cellular communications had been introduced in 1947 in police cars, but Cooper and his associates at Motorola took the first steps in broadening the concept and expanding the possibilities of mobile telephones.
Today, virtually every aspect of our lives and our economy is impacted daily by cell phone usage and other telecommunications avenues. In my business, a cell phone is a necessity as I need to stay in almost constant contact with my associates, clients, and others with whom I am involved in projects and various other endeavors.
Practically anywhere in the world you go, you see people staying in touch with others via a cell phone; sometimes talking, other times text messaging. Years ago, one of the first things people did when they left a long meeting or class was to go outside and light up a cigarette (at least according to old movies and very old television commercials). Now they turn on their phones to catch any messages they may have missed. For some people, cell phones have become a standard accessory, regardless of where they are or what they are doing.
Cell phones, which started out as portable or mobile telephones, have, through the years, experienced a significant evolution, indeed, a revolution. Filled with unique options, they have become so much more than just voice communication tools. The most popular options, of course, relate to music downloads, picture taking, and television reception, as well as games and Internet access. In addition, cell phones with certain kinds of chips can even be used to pay for purchases, check in at airports, monitor locations, or serve as electronic tickets to live concerts.
In the 1990s, mobile commerce was a popular buzzword, but the reality failed to grab hold. Since that time, significant progress has been made in standardizing devices, establishing operating protocols, and creating efficient and effective infrastructure. As a result, the formerly visionary use of cell phones for business and personal needs is now commonplace.
Almost every day, new advanced functions are being added to the growing proliferation of cell phones. The innovation and versatility of cellular telephones is only limited by imagination, demand, and technology, and those appear to be almost limitless. Since its widespread introduction at the commercial level in 1983, wireless phone utilization has expanded in the US upwards of 35% annually. The number of these devices in operation in America topped 180 million a couple of years ago and continues to rise dramatically. They are used by people of all ages and demographic characteristics.
Not only is the popularity of mobile phones growing exponentially in the US, but in India, China, and many European and African nations, cellular-led communications services, along with their many extra features, are fast becoming essential. In developing countries where roads, postal systems, and landline telephones are sometimes unavailable or unreliable, they are becoming indispensable for both personal and business purposes.
As a result of the work of Dr. Cooper and the many who have followed in his footsteps, staying in touch has never been easier. Rather than pushing through crowded cities or traveling over great distances in order to conduct business, today, practically any communication can be accomplished while walking, jogging, driving, eating, fishing, or just rocking on the front porch.
Although it would be difficult to calculate the value of the contributions cell phones have made to our economy over the past three decades, it is certain that without them, the level of success we currently enjoy would have been much more difficult to achieve.
posted @ 08:17 AM CST [link]