Cultivating Community Wealth: Wealth in Our Changing Texas Economy

This post is part of an eight-week series on Cultivating Community Wealth.

“…[I]n the absence of change, the Texas labor force as a whole will be less well educated, work in lower status occupations, and have lower incomes in 2050 than in 2010.”
–Murdock, et al. (2014), p. 65

Following last week’s theme of Wealth and Inequality, this week we take a look at the Texas Economy and changes anticipated in the next 35 years. Former state demographer Steve Murdock and co-authors note in their 2014 book that Texas’s fastest growing demographic groups have traditionally had below-average education and incomes, which could imperil the state’s economic growth and tax its infrastructure, including health care facilities. However, improving education levels and thus incomes can create a stronger, more prosperous state economy with greater opportunity and equality.

Murdock et al note that the state’s population is expected to more than double from 25.1 million in 2010 to 55.2 million by 2050, assuming 2000-2010 net migration patterns. Most of that growth is due to the number of Hispanics increasing from 9.5 million to 30.7 million over that period. The number of non-Hispanic whites will increase only slightly from 11.4 million to 12.0 million. Non-Hispanic blacks will increase from 2.9 million to 5.2 million. Non-Hispanic Asian and other races are projected to increase from 1.4 million to 7.3 million. Will migration over the next 35 years equal population during the last decade? Even if net migration is only half its 2000s level, total population is expected to reach 41.3 million, 22.3 million of whom are expected to be Hispanic (Murdock et al., 2014, p. 21).

The population groups that are expected to grow fastest have tended, on average, to have lower levels of education, income, and wealth. Murdock et al.’s analysis finds that while 48.1% of all workers in Texas had a high school diploma or less education in 2010, 53.1% will have those education levels in 2050. The shares of workers with bachelor’s degrees and higher is projected to decrease by 1.4%. Similarly, the shares of workers in management, education, legal, and healthcare practitioner positions are expected to decline. Do we need the same percent of educated positions in a larger population, or can economies of scale come into play? Maybe not and maybe. But the end result is that workers’ median income is expected to decrease by 12.7% from $29,179 to $25,479 in 2010 constant dollars (chapter 4).

Texas ranked 11th among states in percent of the overall population and percent of children in poverty in 2013 (Census Bureau, 2014). As the second most populous state, Texas also ranked second in the number of people in poverty. Lower real incomes clearly will not improve the lives of Texans. It may be tempting to think that income losses will be concentrated in the growing population groups with low education and income. However, reduced spending by households will ultimately hurt Texas businesses and thus employees from all socio-economic and demographic groups. Higher poverty may also place additional strains on the state’s tax revenue, safety nets, and other infrastructure, including health care and transportation. Furthermore, the costs of inequality and the need to the need to improve the prosperity of all, including those on the economic margins, have been discussed in prior posts and are central to the WealthWorks curriculum. And one has to ask at what point a widening margin ceases to become the margin and becomes simply the page on which the state’s history is written.

Yet, Texas and Texas communities can cultivate a more prosperous economy, primarily through investments in workforce skills and education. Murdock et al. note that several Workforce Investment Act programs are already underway in Texas. Importantly, high schools and community colleges across the state have increased flexibility to meet the needs of students and the workforce. Workforce skills are important, but growth in higher-status, higher-paying occupations requires a college education, and such education will likely require increased resources to meet the financial needs unmet by students’ families (chapter 6). On the other hand, “In the absence of improvements in skills and education, the labor force will be less competitive and poorer in the future than it is today,” (Murdock et al., 2014, p. 65).

While the state’s metro areas lead population growth, rural communities will see similar dynamics. Murdock’s team projects that the population will get older. Many rural communities have seen aging populations for some time. Many rural communities are experiencing the growth and migration of racial and ethnic groups similar to the overall state trends. John Bailey (2014) at the Center for Rural Affairs found that rural areas had greater Supplemental Nutrition Assistance Program (SNAP) participation than metro or micropolitan areas.

Community leaders may influence state policy. They can certainly build a stronger economy within their own community by focusing on opportunities to enhance the local workforce through partnerships with school districts, community colleges, the Texas Workforce Commission, and other organizations. As I interact with community leaders around the state, I notice that they either list a dependable workforce as an asset or an unskilled, unreliable workforce as a barrier to economic development. Improving human capital is an important way to strengthen local economies and create lasting wealth. The next two posts in this series discuss specific strategies for cultivating community wealth.
Resources:

Murdock, Steve H., Michael E. Cline, Mary Zey, P. Wilner Jeanty, and Deborah Perez. 2014. Changing Texas: Implications of Addressing or Ignoring the Texas Challenge. Texas A&M University Press: College Station, Texas.

Bailey, Jon. 2014. Supplemental Nutrition Assistance Program and Rural Households. Center for Rural Affairs. Lyons, NE: July. http://www.cfra.org/news/140730/snap-benefits-and-rural-households

Census Bureau. 2014. Pov46. Poverty Status by State. 2013 Current Population Survey, Annual Social and Economic (ASEC) Supplement. Washington, DC. https://www.census.gov/hhes/www/cpstables/032014/pov/pov46_001_10050.htm Access 9/18/14.pstables/032014/pov/pov46_001_10050.htm Accessed 9/18/14.

Rural Wealth Creation
www.rurdev.usda.gov/Reports/rd-ERR131.pdf – USDA-ERS report related to the book
http://www.choicesmagazine.org/choices-magazine/theme-articles/rural-wealth-creation/theme-overview-rural-wealth-creation – Choices Magazine issue on the subject of rural wealth, mostly by book authors

WealthWorks
http://www.wealthworks.org/

Wealth Creation and Rural Livelihoods
http://www.wealthworks.org/ – includes a forum and listserv

Pender, John, Alexander Marre, and Richard Reeder. 2012. Rural Wealth Creation: Concepts, Strategies, and Measures. U.S. Department of Agriculture, Economic Research Service. Economic Research Report Number 131. Washington, DC: March.www.rurdev.usda.gov/Reports/rd-ERR131.pdf

 

About Rebekka Dudensing

Dr. Rebekka Dudensing is an Associate Professor and Extension Economist - Community Economic Development with Texas AgriLife Extension and Research in the Department of Agricultural Economics at Texas A&M. Her research interests include the evaluation of economic development opportunities, taxation and public/private goods issues, entrepreneurship, and regional economic cooperation.
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