2019 Workforce Report Card - Gulf Coast Workforce Board

BAHEP Education and Workforce Development Meeting

Gulf Coast Workforce Board www.wrksolutions.com 1.888.469.JOBS (5627) Workforce Solutions is an equal opportunity employer/program. Auxiliary aids and services are available upon request to individuals with disabilities.

(Please request reasonable accommodations a minimum of two business days in advance.) Relay Texas: 1.800.735.2989 (TDD) 1.800.735.2988 (voice) or 711

PART I:

Current State of Houston’s Job Market

Houston Area Unemployment Rate September 2019

Seasonally Adjusted

3.6% Down from 4.0% from a year ago Slightly higher than the statewide rate of 3.4%

Houston Area Total Nonfarm October 2019

Over-the-year Job Growth

+80,400

Houston MSA Total Nonfarm OTY 120,000

Dec-14 116,700 Aug-19 81,900

100,000 80,000

Aug-14 101,500

60,000

You are here

40,000 20,000 0 -20,000 Aug '14

Aug '15

Aug '16

Oct-16 -7,800

Aug '17

Aug '18

Aug '19

What’s Growing?

Houston MSA Over-the-year Net Growth Aug ‘18-’19 Total Nonfarm

81,900

Professional and Business Services

22,800

Manufacturing

11,500

Other Services

9,700

Educational and Health Services

9,600

Mining and Logging

6,600

Trade, Transportation, and Utilities

6,500

Government

5,500

Leisure and Hospitality

4,700

Construction

3,600

Financial Activities

3,100

Information

Everything but Information

-1,700

-15,000

5,000

25,000

45,000

65,000

85,000

Houston MSA Over-the-year Pct. Growth Aug ’18-’19 Other Services

8.7

Mining and Logging

8.3

Manufacturing

5.0

Professional and Business Services

4.6

Currently fastest growing sector 3x overall job market

Total Nonfarm Educational and Health Services

Financial Activities

2.7 2.4

1.9

Construction

1.6

Government

1.4

Leisure and Hospitality

1.4

Trade, Transportation, and Utilities

Aug 2019 Fastest OTY growth on record for Other Services

1.0

Information

-5.4 -8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

What’s Included in Other Services?

Makeup of Other Services Category Share of Total Automotive Repair & Maintenance 23% Personal Care Services (e.g. barbers, beauty salons, weight-loss centers) 15% Commercial & Industrial Machinery Equip. Repair (ex. Auto and Electronic) 13% Other Personal Services (e.g. non-vet pet care, photo devel., parking lots) 10% Private Households 8% Dry-cleaning & Laundry Services 7% Business, Professional, Labor, Political, & Similar Organizations 5% Civic & Social Organizations 5% Death Care Services 3% Electronic & Precision Equipment Repair and Maintenance 3% Personal & Household Goods Repair & Maintenance 2% Social Advocacy Organizations 2% Grantmaking & Giving Services 1% Religious Organizations 1% Other Services (Total) 100%

Jobs 20,649 13,776 11,893 8,915 7,632 6,264 4,776 4,561 2,870 2,273 1,557 1,486 1,084 847 89,822

Which of These 14 Categories Is Driving Growth in Other Services?

Commercial & Industrial Machinery Equip. Repair

March ‘18 – ‘19 337% growth +857 jobs

Galveston County

What About Mining and Logging?

Houston MSA Mining and Logging vs. Rig Count 3

Mining and Logging YOY Stdz 2

Rig Count YOY T+5 Stdz

1

0

-1

-2

-3

-4 Aug-91

Aug-93

Aug-95

Aug-97

Aug-99

Aug-01

Aug-03

Aug-05

Aug-07

Aug-09

Aug-11

Aug-13

Aug-15

Aug-17

Aug-19

Rig Count vs. Houston MSA Correlated Sectors OTY 2.0

1.0

Rig Count Professional and Business Services Mining and Logging Manufacturing

0.0

-1.0

Suggests job growth reported in 2019 may be over-stated

-2.0

-3.0

-4.0 Aug-14

Aug-15

Aug-16

Aug-17

Aug-18

Aug-19

But there’s good news…..

Houston MSA Construction OTY QCEW vs. CES 25,000 20,000

Mar-19 15,200

Construction QCEW Construction CES

15,000

Difference: 12,600 jobs

10,000 5,000 0 -5,000 -10,000

Mar-19 2,600

Suggests job growth reported in 2019 may be under-stated

-15,000

Mar-14

Apr-15

May-16

Jun-17

Jul-18

Aug-19

2019 Workforce Report Card

www.wrksolutions.com 1.888.469.JOBS (5627) Workforce Solutions is an equal opportunity employer/program. Auxiliary aids and services are available upon request to individuals with disabilities.

(Please request reasonable accommodations a 48minimum hours in of advance.) two business Relaydays Texas: in advance.)

1.800.735.2989 Relay Texas: (TDD) 1.800.735.2988 1.800.735.2989(voice) (TDD) or 1.800.735.2988 711 (voice) or 711

History of the Report Card 2011

2019 edition: 7th iteration

2010

2007 2006 2005

19 19

2015

Gulf Coast Workforce Board Report Card

A tool to gauge the region's competitiveness compared to similar metropolitan areas across the U.S. and engage stakeholders to create awareness regarding keys issues affecting the region

20

PART I: Report Card Background & Gulf Coast Indicator Performance

8 Comparison Metros Seattle

Denver

Phoenix San Diego

Dallas

Atlanta

San Antonio

Gulf Coast (Houston) 22

Miami

45 Indicators across 6 Major Measures Macro Economy & Industry Dynamics (6 Indicators)

Income Wealth & Poverty (10 Indicators)

23

Employment & Unemployment

Labor Force Composition

(5 Indicators)

(7 Indicators)

Quality of Life

Educational Achievement & Investment

(11 Indicators)

(6 Indicators)

The 2019 Results Area

24

Macro Economy Employment & Labor Force & Industry Unemployment Composition Dynamics

Income, Wealth, & Poverty

Quality of Life

Educational Achievement & Investment

Gulf Coast

B

C

B

C

B

C

Atlanta

C

B

B

B

B

A

Dallas

A

A

B

B

B

B

Denver

B

A

B

A

B

A

Miami

C

B

B

C

B

C

Phoenix

B

B

C

B

B

B

San Antonio

A

B

B

B

B

B

San Diego

B

B

B

B

B

A

Seattle

B

B

A

A

B

A

Gulf Coast Grades 2015 vs. 2019

Measure Macro Economy & Industry Dynamics Employment & Unemployment Labor Force Composition Income, Wealth, & Poverty Quality of Life Educational Achievement & Investment

25

2015 Report Card

2019 Report Card

A A

B C

B B

B C

B C

B C

Since the Last Report Card • Late-2014 fall in oil prices resulted in 2 years of no job growth across Gulf Coast Region • Hurricane Harvey causes damage to +100k structures but minimal long-term impact to job market • National economy and comparison areas saw continued positive momentum post-Great Recession

26

The Good News

Areas of Progress Since 2015 Report Card Faster growth in number of business establishments

28

Areas of Progress Since 2015 Report Card Faster job growth and falling unemployment

29

Areas of Progress Since 2015 Report Card Rising ‘real’ household incomes

30

Areas of Progress Since 2015 Report Card Fewer families in poverty and less reliance on public assistance

Poverty

31

Wealth

Areas of Progress Since 2015 Report Card Growing share of population with high school diploma, associate’s, or bachelor’s degree and higher

32

Areas of Progress Since 2015 Report Card Higher region-wide adjusted cohort high school graduation rates 90%

89.3%

89.3% 89%

88.6%

88.6%

2012-13

2013-14

88.8%

88.1%

88%

87.3% 87% 86% 85% 2010-11

2011-12

Source: NCES - Cohort entered fall four years prior to referenced school year. *Includes 40 of 76 Gulf Coast Region school districts for which data were available representing 95% of regional high school enrollment.

33

2014-15

2015-16

2016-17

PART II: Automation & AI: Implications & Recommendations for the Gulf Coast Region Workforce

Assessing the Impact of Automation/AI on the Gulf Coast Workforce

35 Gulf Coast Workforce Board

Technological Bottlenecks Limiting Automation

Creative Tasks ●

36

Originality ● Fine Arts

Perception Manipulation Tasks

Social Tasks

Finger Dexterity Manual Dexterity ● Cramped Workspace

Social Perceptiveness ● Negotiation ● Persuasion ● Care-giving

● ●

●

Oxford University Predictive Model • Oxford University researchers Frey and Osborne publish 2013 study “The Future of Employment: How Susceptible Are Jobs to Computerisation?”

• Study was NOT a prediction of future job losses but how exposed existing jobs are to AI and automation • News outlets misrepresented findings by stating “47% of jobs in the U.S. will be displaced by automation”

37

Oxford University Predictive Model • The speed and extent of adoption of AI-based technologies will vary significantly by industry, occupation, specific employer, location, regulations, costs, labor shortages, etc.

• The research assumes that an occupation is homogenous; occupational variation e.g. truck drivers of consumer goods vs. hazardous chemicals will likely be affected by AI in different ways with different timelines for adoption • Oxford model cannot account for new competitors’ disruption of traditional business models e.g. Amazon vis-à-vis retail, Uber vis-à-vis taxis

38

Gulf Coast Employment Chance of Automation

16% 37%

46%

Low (< 30%) 39

Moderate (30% to 70%)

High (> 70%)

Gulf Coast Employment Chance of Automation

by Occupational Typical Education Required Master's

97%

1% 1%

Doctoral or professional

97%

2% 1%

Bachelor's

72%

Associate's

42%

Postsecondary nondegree

38%

Total, All Occupations

37%

HS diploma

29%

No formal credential

13%

-20% Low (< 30%) 40

23%

23%

36%

28%

34% 16%

46% 52%

19%

0%

84%

3% 20%

5%

40%

Moderate (30% to 70%)

60%

80%

100%

High (> 70%)

120%

90% 80%

Gulf Coast Employment Chance of Automation

by Digital Skills Required Low Automation Risk (< 30% chance)

78%

Moderate Automation Risk (30% to 70% chance)

70%

High Automation Risk (> 70% chance)

60%

49%

50% 40%

37%

30% 20% 10% 0%

High Digital Skills 41

Source Methodologies: Metropolitan Policy Program at Brookings, Mark Muro “Digitalization and the American workforce” Oxford University, Carl Frey & Michael Osborne “The Future of Employment: How susceptible are jobs to computerisation?”

Medium Digital Skills

Low Digital Skills

Gulf Coast Employment Chance of Automation

by Social Interaction Required Occupation Family

Relatively High Degree of Social Interaction Required

Relatively Low Degree of Social Interaction Required

Management Healthcare Practitioners & Technical Education, Training, & Library Arts, Design, Entertainment, Sports, & Media Community & Social Service Healthcare Support Personal Care & Service Legal Architecture & Engineering Computer & Mathematical Life, Physical, & Social Science Business & Financial Operations Installation, Maintenance, & Repair Construction & Extraction Protective Service Sales & Related Production Office & Administrative Support Transportation & Material Moving Building & Grounds Cleaning & Maintenance Farming, Fishing, & Forestry Food Preparation & Serving Related

Median Wages Avg. Chance of Automation $110,000 $78,000 $52,000 $50,000 $50,000 $28,000 $23,000 $118,000 $99,000 $89,000 $78,000 $75,000 $46,000 $44,000 $42,000 $38,000 $41,000 $37,000 $36,000 $23,000 $23,000 $22,000

14%

Low Chance of Automation (< 30%)

49%

Moderate Chance of Automation (30% to 70%)

81%

High Chance of Automation (> 70%)

Case Study: Human Role in AI & Automation

Role of Human Judgement in AI and Automation Input Data

Algorithm

Output/ Predictions

Decide appropriate inputs based on domain knowledge

Choose appropriate algorithm Determine reward function

Evaluate for consistency with original goals Assess cost of false positives

Role of Human Judgement 44 Source: adapted from Ahmed Elgammal AI Art Creative Process Schematic – www.artsy.net “What the Art World Is Failing to Grasp about Christie’s AI Portrait Coup” Source: Ajay Agrawal, Joshua Gans, Avi Goldfarb – www.hbr.org “How AI Will Change the Way We Make Decisions”

Gulf Coast Workforce Board

45

46

47

48

What went wrong?

What Went Wrong?

Input 1

50 Source: malletsdarker / imgur

Input 2

Input 3

4 Likely Explanations • Too few examples for algorithm to learn from • Fundamental shift in distance of focal point from 1st and 2nd photos to 3rd

• Introduction of new elements (i.e. people) in 3rd photo not present in other 2 • Algorithm interpreted dark ski suit as tree shadows (note the omission of the person on the left)

51 Gulf Coast Workforce Board

Recommendations

52

2019 Report Card Recommendations 1) Make robust changes in public education to build a future-ready workforce emphasizing both digital and social skills (Page 34)

2) Encourage continued industrial diversification that builds on the regionâ&#x20AC;&#x2122;s existing business strengths (Page 36)

3) Encourage employer-driven talent development as a strategy to equip both businesses and workers to adapt to a rapidly changing workplace (Page 38) 53

What We Heard

Community Feedback • A need for ongoing career awareness among both students and their parents to better leverage local job opportunities • Employers who echoed their need for workers with fundamental workplace skills in addition to technical competencies • How the effects of a tight labor market are amplified in rural areas, where employers are even more challenged to find and keep qualified candidates, which in turn can limit the ability to attract further development • The tight labor market created an opportunity for employers to consider non-traditional candidates and work-based training • Early education can contribute to a tech-ready future workforce, but that enrichment requires even greater resources • District level CTE leaders consider themselves well-equipped to adapt to the changes driven by technology and automation but desire a more streamlined access to major employers to understand the market needs at scale 55

Discussion

Thank You! Thomas M. Brown Planner Gulf Coast Workforce Board/Workforce Solutions 713-993-4579 Thomas.Brown@wrksolutions.com wrksolutions.com/reportcard

Industry Example #1: Beverage Manufacturing NAICS

Industry

Industry Avg. Chance of Automation

Share of Regional Employment

Targeted Industry

3121

BeverageManufacturing Manufacturing Beverage

67%

0.1%

No

Occupation

Occupation % Chance of Automation

Retail Salespersons Sales Rep., Wholesale & Manufacturing, Ex. Tech. & Scientific Products 1st-Line Spvrs. of Production & Opr. Workers General & Operations Mgrs.

Industrial Production Mgrs.

27 28 7 7 2

4 4 2 2 0.9

36 34 67 47 65

4 3 3 2 0.8

85 87 89 86 95

11 7 4 3 3

Automation Chance

Low < 30%

Demonstrators & Product Promoters Merchandise Displayers & Window Trimmers Moderate Industrial Machinery Mechanics 30% to 70% Bartenders Accountants & Auditors

High > 70%

58

Packaging & Filling Machine Oprs. & Tenders Sep., Filtering, Clarifying, Precipitating Still Mach. Set., Opr. & Tend.

Industrial Truck & Tractor Oprs.

Driver/Sales Workers Waiters & Waitresses

% Share of HSHG Industry Occupation Employment

Real Wage Growth 2009-2019

Employment Growth 2009-2019

Projected Emp Growth 2019-2029

5%

34%

14%

319%

67

32%

19%

18%

23%

-

Growth No. of Firms in Industry 2009-2019

Gulf Coast Region: Share of Beverage Manufacturing Employment by Chance of Automation

22%

62%

â&#x2013;˛

16%

â&#x2013;˛

Low

Moderate

High

Industry Example #2: Book Stores and News Dealers NAICS 4512

Automation Chance

Low < 30%

Industry Book Storesand and News News Dealers Book Stores Dealers

Occupation Retail Salespersons 1st-Line Spvrs. of Retail Sales Workers General & Operations Mgrs.

Wholesale & Retail Buyers, Ex. Farm Products Sales Mgrs.

Demonstrators & Product Promoters Accountants & Auditors Moderate Business Operations Specialists, All Other 30% to 70% Market Research Analysts & Marketing Specialists Production, Planning, & Expediting Clerks

High > 70%

59

Cashiers Counter Attendants, Cafeteria, Food Concession, & Coffee Shop Stock Clerks & Order Fillers Shipping, Receiving, & Traffic Clerks Customer Service Representatives

Industry Avg. Chance of Automation

Share of Regional Employment

Targeted Industry

41%

0.0%

No

Occupation % Chance of Automation

% Share of HSHG Industry Occupation Employment

27 6 7 8 3

57 8 3 1 1

36 65 36 54 68

0.5 0.1 0.1 0.1 0.1

95 86 95 94 76

10 7 3 2 1

Real Wage Growth 2009-2019

Employment Growth 2009-2019

Projected Emp Growth 2019-2029

-36%

-36%

-14%

32%

19%

18%

Growth No. of Firms in Industry 2009-2019

-54% -68 23%

Gulf Coast Region: Share of Book Stores and News Dealers Employment by Chance of Automation

26% 1%

▲

73% ▲

Low

Moderate

High

-

Industry Example #3: Accounting, Tax Prep, Bookkeeping, Payroll NAICS

Industry

Industry Avg. Chance of Automation

Share of Regional Employment

Targeted Industry

5412

Accounting, TaxPreparation, Preparation, Bookkeeping, and Payroll Services Serv Accounting, Tax Bookkeeping, and Payroll

67%

0.8%

Y

Occupation

Occupation % Chance of Automation

Automation Chance

Low < 30%

Financial Mgrs.

1st-Line Spvrs. of Office & Admin. Support Workers General & Operations Mgrs.

Executive Secretaries & Exec.Admin. Assistants Human Resources Specialists

Accountants & Auditors Sales Representatives, Services, All Other Moderate Bill & Account Collectors 30% to 70% Receptionists & Information Clerks Business Operations Specialists, All Other

High > 70%

60

Bookkeeping, Accounting, & Auditing Clerks Tax Preparers Office Clerks, General Secretaries & Admin. Assistants, Ex. Legal, Medical, & Executive Billing & Posting Clerks

% Share of HSHG Industry Occupation Employment

11 6 7 30 22

3 2 2 1 0.8

65 62 44 66 36

40 2 1 1 0.5

96 89 91 89 94

8 7 5 4 4

Real Wage Growth 2009-2019

Employment Growth 2009-2019

Projected Emp Growth 2019-2029

Growth No. of Firms in Industry 2009-2019

50%

29%

18%

21% 429

32%

19%

18%

23%

Gulf Coast Region: Share of Accounting, Tax Preparation, Bookkeeping, and Payroll Services Employment by Chance of Automation

13% 40%

â&#x2013;˛

47%

Low

Moderate

High

-