Austin unemployment is almost too good. When I attended a local economic a couple of months ago, the economist from Angelou Economics warned us about the unemployment rate getting too low. I think it was 3.5% at that time. At the current rate of 3.2%, he told us it can start limiting the ability of companies to hire the new employees needed to grow and sustain operations, and you also start seeing more job hopping as employers compete for a limited labor pool. The last time it was this low was in 2001, just before our economy and real estate market in Austin took a dive.
How does employment affect the real estate market? Austin businesses will have to start recruiting more employers from outside the region, which brings in more home buyers and renters. No fuels the real estate market as directly as job growth, and we have very healthy job growth in Austin at this time.
Read more about it in the article from the Austin Statesman is below.
Region’s jobless rate hits six-year low
Unemployment in Central Texas at 3.2 percent, job growth strong and steady.AMERICAN-STATESMAN STAFF
Saturday, May 19, 2007In the past month, Frank Venditti has run more than 10 newspaper and online help wanted ads looking for a carpenter and painter.
Venditti, who started Venco Construction Ltd. 18 years ago, says the past two years have been the best ever for his company, which repairs fire and water damage.
But so far, only a couple of applicants have showed up to interview.
“I get a bunch of calls, but maybe one out of 20 will show up,” said Venditti, general manager and owner of the company. “There’s a lot of demand for labor right now, and the guys who come in, they know that.”
The Central Texas job market is tighter than it has been in six years. The unemployment rate last month fell to 3.2 percent, down a full percentage point in the past year and the lowest since February 2001, according to Texas Workforce Commission figures released Friday. Meanwhile, job growth has been strong and steady, with a 4.4 percent rate last month.
That’s left employers with a tougher time finding workers, while job seekers hold the advantage.
“The market has just exploded overall,” said Chad Macy, regional managing director for Spherion Corp., an employment services agency. “As far as the candidates are concerned, they are becoming hard to recruit.”Macy said one job candidate flew from Louisiana to interview for computer programming jobs in Austin.
“On the day that he flew in, we had three interviews with him for three of our clients, and by the time he got home, he got three offers,” Macy said.
Some employers have started offering signing bonuses, while others have reduced the interview process to one day to satisfy candidates, he said.
The demand for workers is coming from both Austin-based companies and the continuing influx of companies moving to the region from other states in a diverse range of industries. Last month, for example, cable television’s Jewelry Channel opened a studio in Round Rock, with plans to hire 135 people this year and as many as 700 within five years.
The region’s work force was at 747,200 last month, up 31,700 jobs from a year ago.
The statewide jobless rate was 4.2 percent in April. The rate, unlike local figures, is adjusted for seasonal hiring patterns such as schools letting go of contract workers.
Texas employers added jobs at a 2.4 percent rate.
“Our sustained job gains and falling unemployment rate exemplify the underlying strength of the Texas economy,” said Diane Rath, chairwoman of the Texas Workforce Commission.
Locally, most of the region’s job sectors, except for software engineering, are adding jobs.
Among the biggest gainers are government, retail trade and construction.
The government sector, which includes local public schools and universities, added 6,400 jobs, a 4.1 percent increase, in April compared with the same month a year ago.
As the region’s population grows, the retail sector is also growing quickly, with new shopping areas including the Domain and the Mueller development. Retail trade was up 5,100 jobs, a 4.1 percent gain compared with April 2006.
Construction is also growing as the area’s housing market remains healthy, despite a sluggish market elsewhere. There were 4,700 more construction jobs this April, compared with the same month a year ago, an 11 percent gain.
My understanding is that the Austin Job market is very spike orientated, exacerbating the
cyclical troughs and valleys. There is a flury of activity, the business PR people froth at the mouth, Austin tops all lists, local and national, than the bottome falls out. I think its due to
the speed of the growth itself, and the ability of the infrastructure, physical and financial,
to sustain itself.
I don’t think any economy can go gangsbusters and sustain itself, unless the powers that
be, Re gov’t, the business community, and all concerned take great pains to steer that
economic vehicle full-speed. We all know how difficult it is to steer a racing car going 180 MPH. All precautions are taken per design, all that is unneccessary per weight and redundancy is removed from the inside and outside of the vehicle, special steering wheels are put in place,
and so on. It goes without saying that there is a far highly likelihood of crashing at high speeds, which is taken into consideration.
Think of Austin’s rapidly accelerating economy as that car. The weight and redundancy that would be removed would be unnecessary gov’t meddling and bureaucratic nonsense that slows down planning and implementation of the same. The special steering wheels would be
the proper overall blueprint of the Austin growth plan in toto, with all concerned groups on
board, from the green folks to the bankers to the developers to the employers. All contingencies that can possibly be thought of per another crash and downturn are covered
so that another slowdown can be eliminated, or at least moderated.
To speed up another cycle without FAR more prep than the last one would be the same as driving blind, and doubly silly in light of the relatively recent downturn that just finished troughing four short years ago.
To finish, here is a link to an article from the Austin Biz Journal strangely reminiscent of
the current situation in almost every way. Let’s hope we’ve learned our lesson since then.
-Scott
http://www.bizjournals.com/austin/stories/2001/08/27/daily46.html