More than just smarts: Austin and Houston have created the most mid-skilled jobsin the country
We've heard a lot in the past decade about the two Americas, from John Edwards' campaign platform to the Occupy movement. And while money defines the haves and the have-nots, in today's economy there is just as often a split between those with college degrees and those without.
The Wall Street Journal profiled Austin last month as the rare "brain hub" that also creating jobs for mid-skilled workers. According to Praxis Strategy Group, these jobs are defined as requiring a two-year associate's degree or similar work experience, with median salaries of $38,000 per year. Austin has seen 25 percent growth in mid-skilled jobs in the past decade, or an additional 50,000 positions — the highest increase in the nation, with a rate of growth that's four times the national average.
Austin has seen 25 percent growth in mid-skilled jobs in the past decade, or an additional 50,000 positions — the highest increase in the nation, with a rate of growth that's four times the national average.
According to the WSJ chart measuring middle-skill job growth, only one other city can match Austin's accomplishment, and it's Houston. Where Austin has seen 25 percent growth in these jobs in the past 10 years, Houston has seen 23 percent growth. To compare, Dallas has only seen one-percent growth, and the next highest city is Nashville at 13 percent. Considering its significantly larger population, the statistics imply that in raw numbers, Houston has created by far the most mid-skilled jobs in the country.
Tory Gattis argues in his Houston Strategies blog that there's a reason Austin's economy gets more attention:
The reason we don't get the same media hype as a place like Austin is that our brain hub is hidden inside of a much larger overall metro economy driven by things like the port and manufacturing (both of which also drive a lot of middle class jobs). Our brain hub is also not concentrated in the media's darling industry, technology, but broken up across energy, medical, and NASA. Both factors muddle up Houston's story (not to mention the energy boom), thus the Journal's preference for Austin's simpler story even though our stats are almost tied."
Of course, Houston's story is also more muddled because despite plenty of high-knowledge industries, the city isn't really a "brain hub," as traditionally defined. Although census data says the city has seen large growth in residents with a college degree, Portfolio ranked Houston No. 121 nationally in their "brain power index," with just under 28 percent of residents holding at least a bachelor's degree. The same study ranked Austin No. 20 for a population in which nearly two in five people hold a bachelor's or advanced degree.
Why have Austin and Houston succeeded in creating mid-skilled jobs? According to the WSJ, cities that invest in high-tech industries create lower-skilled jobs in a sort of trickle-down effect.
Enrico Moretti, an economist at the University of California, Berkeley, notes that highly educated cities see faster wage growth for less-educated citizens as well as the high fliers. One reason is that that many lower-level employees use the most productive technologies and act as complements to more-expensive and highly-educated workers, making it much easier for companies to raise their wages faster than overall inflation."
Another force, Mr. Moretti notes, is called 'human capital spillovers,' a fancy way of saying that many 'middle skill' workers begin to acquire skills that are much more valuable than their overall education level might suggest."
Despite the Wall Street Journal's optimistic take, the accompanying chart shows that Austin and Houston really are exceptions to the rule. Most American cities have had a very difficult time adding mid-skilled positions, especially since the economic downtown. A recent Marketplace story demonstrated the two vastly disparate sides of the ultimate brain hub, Silicon Valley:
"For the objects of the tech industry's affection, life on the leafy streets of Palo Alto has never been better. But for non-techies, not so much. ... There are lots of families here ... living in the shadow of a job boom they're not part of. The unemployment rate in the heart of Silicon Valley is still higher than the national average for most of this recession. And just across a little bridge from Palo Alto, on the other side of Highway 101, things are much worse. The border of East Palo Alto is probably less than a mile from Mark Zuckerberg's new house, but it is a different world. There are fewer trees, empty lots are strung with razor wire. Officially the unemployment rate is 20 percent."