With all of the public sector job cuts coming, will the private sector pick up the slack? This Statesman story paints a picture that I think is a tad bit too optimistic.
Government employment, which includes local school districts and higher education, made up 22 percent of total nonagricultural jobs in the Austin area in 2010, according to the Texas Workforce Commission.
In the past five years, government employment has grown by 14 percent, helping offset losses in other areas such as manufacturing, which fell by 17 percent in the same period.
As the state capital, Austin has always had “this terrific stabilizing factor” of public sector employment, said Jon Hockenyos, president of TXP Inc., a consulting firm specializing in economic analysis and public policy.
But Texas’ projected state revenue shortfall of as much as $23 billion means deep cuts in public sector jobs.
Local school districts already are preparing to cut positions, including more than 1,000 in the Austin district, hundreds more in Round Rock and more than 140 in the Georgetown district.
The Texas Education Agency already has eliminated more than 100 jobs, and other agencies also have trimmed positions.
The University of Texas, one of the region’s largest employers, also has cut jobs.
Those losses mean that private-sector employers will have to pick up the slack to keep the area’s economy going.
It’s a tall order: Central Texas had 770,500 jobs in 2010, 1.5 percent more than in 2009. But the region still is short of its peak of 775,800 jobs in 2008.
And the unemployment rate hovered around 7 percent all of last year.
Last year, preliminary estimates from the Texas Workforce Commission indicated a higher job growth rate. The revised figures — part of the commission’s annual process, using more specific data — surprised some economists but didn’t alter their overall assessment of the Austin economy.
The story is filled with mostly anecdotal evidence of growth in small businesses. Which I’m sure is happening, and which I hope is going to exceed everyone’s expectations. But this story focuses exclusively on the Central Texas region, which will have a lot more of those opportunities than, say, rural areas, where job losses in school districts are unlikely to be offset. It also doesn’t take into account losses in county and municipal employment, which will surely add a lot more to the total. It’s for all those reasons that I thought the initial projections of job growth by the TWC were too blue-sky. I’d love to be wrong about this, but I’m still feeling pretty bearish overall.