Community Overview

March, 2004

The effects of the downturn in the economy on Austin and Travis County

Local economic indicators over the past two months appear to be holding steady. Incremental economic growth is accompanied by a continued overall downward trend in unemployment. The unemployment rate for Travis County went up slightly in January, following normal yearly trends, yet remained below the rate for January of last year. Demand for most social services, including basic needs and medical assistance continues to rise. Legislative cuts to Medicaid and CHIP funding are causing increases in demand for local services and programs.

EMPLOYMENT:

• Following usual yearly patterns, the unemployment rate rose to 5.4% in January from 4.9% in December. However, the unemployment rate in January of this year is significantly lower than the 6.2% rate in January of 2003 (Texas Workforce Commission).
• Nationally, the unemployment rate dropped to 5.6% in February down from 5.7% in January. This is the lowest national unemployment rate in 2 years (Austin American-Statesman).
• Also on the national level, wages and benefits for workers grew by 0.7% during the last quarter of 2003 reflecting the smallest quarterly increase in a year (Austin American-Statesman).
• Local businesses report mixed employment trends:
  • J.C. Penney Co. Inc. will close its North Austin call center resulting in a loss of 475 jobs.
  • Starwood Hotels & Resorts will cut 165 full and part-time jobs from its Austin customer service center.
  • EDS laid off 242 Austin employees during mid-January 2004.
  • Zimmer Holdings, Inc., an orthopedics company, announced that it will close its Austin manufacturing facility by the end of 2005 resulting in the lay off of approximately 550 employees.
  • Many small to medium sized companies, which provide 30% of the jobs in the region, have been adding workers during the past year, and the trend is predicted to continue (Austin American-Statesman).
• From April to June, 28% of companies in the Austin area interviewed in a survey reported that they plan to hire more employees, while 7% intend to reduce their workforce, and 65% expect to maintain their current staff levels. This outlook is healthier than the first quarter forecast when 23% of the companies interviewed predicted an increase in hiring activity. However, projections are more reserved than last year at this time when 40% of companies surveyed thought employment increases (Manpower, Inc.).
• The semiconductor industry, which accounts for one in five high tech jobs in the region, eliminated 32% of jobs between 2000 and 2003 as older factories closed. The industry trend will be increasingly focused on product design and development, while the majority of chip manufacturing will be outsourced overseas, primarily to Asia (Austin American-Statesman).
• The President’s Economic Report predicts that the economy will create 2.6 million new jobs by the end of 2004. Last year’s report predicted 1.7 million new jobs in 2003 when in fact the nation had a net job loss of 53,000. Local economist Angelos Angelou predicts that the local job growth rate will be 2.2%, translating to 14,300 new jobs created in the Austin area during 2004 (Austin American-Statesman).

There were 692 layoffs reported to WorkSource for the Austin area in February of this year, which is more than three times the 306 lay-offs reported for February of 2003. However, this number is still down 22% from January’s 882 layoffs (WorkSource). Texas has lost 86,000 jobs since the beginning of the 2001 recession, and unemployment remains high. The rate at which Texas workers have exhausted their unemployment benefits is almost twice the national average (67% vs. 37%). In January, 25,000 Texas workers lost their national unemployment benefits (CPPP).

• While other employment sectors are struggling in Central Texas, the health care industry is growing- but there aren’t enough workers to fill available positions. Several hospitals in the area are expanding and the new Austin Children’s Hospital is expected to produce 1,000 jobs. Local education systems such as ACC are moving to train more health care workers and are creating additional classes to meet demand (Austin American-Statesman).

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ECONOMY:

LOCAL

• Many local businesses are showing signs of economic recovery:
  • AMD had a net income of $43.2 million for the quarter ending December 2003, their first quarterly profit in more than 2 years.
  • For the first time since its inception, 8-year-old Vignette Corp. made a profit in the fourth quarter of 2003.
  • Motorola returned to profitability with net income of $489 million for the last quarter of 2003. This compares favorably to a net income of $291 million for the last quarter of 2003.
  • National Instruments reached record sales of nearly $122 million in the fourth quarter of 2003 and profit for the year overall grew 6%.
  • Dell’s profit grew 24% to $749 million in the fourth fiscal quarter ending Jan. 31, 2004.
  • Silicon Labs posted record profits ($20.9 million) and sales ($109.6 million) for their fourth quarter.
  • During the fourth quarter, Texas Instruments had its highest sales in 3 years with a profit of $512 million (Austin American-Statesman).
• Austin’s sales tax collections rose 7.7% to $8.9 million in November 2003, bringing the sales tax income to approximately $441,000 more than projected (Austin American-Statesman).

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STATE

State sales tax net collections deposited to general revenue totaled $1,316.1 million in January 2004. Compared with the $1,242.9 million collected in January 2003, this represents an increase of 5.9% (Texas Comptroller of Public Accounts). Statewide sales tax revenue grew 8.7% in November of 2003 compared with figures for November 2002. This is the greatest increase in monthly comparisons in almost 3 years. Monthly sales tax revenue has continued to increase for four months (Austin American-Statesman).

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NATIONAL

• 2003 was the best year for homebuilders since 1978 with 1.85 million houses built compared to 1.7 million in 2002. The housing sector’s strength contributed to the 8.2% growth rate in the economy during the third quarter of 2003 (Austin American-Statesman).
• When compared to 2003 figures, U.S. retail sales for January 2004 rose 5.8%. Among other factors, this increase is attributed to an underlying improvement in the economy (Austin American-Statesman).
• A report from the Federal Reserve District (Dallas) for the end of 2003 indicates modest economic growth in areas of manufacturing (food, metals, lumber, paper, and high tech). However, employers report hiring more contract and temporary workers because of rising costs for healthcare and other employee benefits (Austin American-Statesman).
• Inventories in US factories hit a record low of a 1.17-month supply in December 2003, a condition that may result in increased demand and hiring (Austin American-Statesman).
• The new Federal Poverty Income Guidelines for 2004 raised the poverty level slightly from last year. In 2003 a single person earning $8,980 was considered to be at 100% of poverty and in 2004 that figure rose to $9,310. For a family of four, the poverty guideline changed from $18,400 to $18,850. Many local, state, and federal programs use the Federal Poverty Income Guidelines to determine eligibility for social services assistance (U.S. Department of Health and Human Services).

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DEMAND INDICATORS:

Basic Needs:

• According to the Texas Department of Human Services, only 1.9 million or 34% of the 5.5 million Texans eligible for food stamps actually received them during FY 2003. The untapped food stamp benefits for the year amount to nearly $4.5 billion statewide (Austin American-Statesman).
• A national survey indicated that hunger and homelessness continued to rise last year in 25 American cities. Requests for emergency food assistance increased 17% from 2002 to 2003 and requests for emergency shelter increased by an average of 13% in the cities surveyed. Unemployment and employment related problems were cited most often as the cause of hunger and lack of affordable housing was the leading cause of homelessness (Texas Association of Community Action Agencies, Inc.).

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Housing:

• Travis and Williamson Counties had 579 foreclosures for March. This is up from 538 postings in the February auction, but is lower than the record level 609 foreclosure postings in January. Figures for the first three months of 2004 show a 19% increase in Travis County and a 30% increase in Williamson County when compared to figures for the first quarter of 2003. Foreclosure postings are often the last indicator to show improvement as the economy begins to recover (Austin American-Statesman).
• 2003 was a record year for home sales in the Austin area as single-family home sales reached 17,981, a 7% increase from the 16,782 single-family homes sold during 2002 (Austin American-Statesman).
• According to Austin Investor Interests, rents in Austin dropped to a five-year low during the last quarter of 2003. However, signs indicate that the apartment market in Austin is starting to stabilize as occupancy rates rose from less than 88% to 89% during 2003 and the construction of new complexes has slowed (Austin American-Statesman).

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Physical and Mental Health:

According to the Texas KIDSCOUNT project, Austin ranked in the top 10 states in the nation for birth outcomes. Specifically Austin is taking the right steps to lower: Percentage of births to mothers who smoked during pregnancy (7th of 50 largest cities) Percentage of low birth-weight births (8th of 50 largest cities) Percentage of pre-term births (9th of 50 largest cities) However, Austin ranked 43rd in percentage of births to teen moms with one or more children (CPPP). Medicaid enrollment has declined to 62,997 people in January of this year from 69,187 people in November of 2003. CHIP enrollment has also steadily declined from 12,130 children in October of 2003 to 10,038 children in January 2004.

• In the last 2 months, 10 confirmed cases of heroin overdoses have occurred in Austin, the highest number in 10 years (KEYE News).
• According to Texas Department of Health statistics, poor physical fitness costs Texas an estimated $10 billion per year in lost productivity and increased health care system usage (TACAA Food Journal).
• Austin ranked 19th on the 2004 Men’s Fitness list of fittest cities in the U.S. based on data collected in 14 evaluation categories. This rating reflects a decrease in citywide fitness status since last year, when Austin was determined to be the 13th fittest city in the country (Austin American-Statesman).
• The Hogg Foundation for Mental Health and the Texas Department of Mental Health and Mental Retardation have come together to create The Center for Excellence in Mental Health, a research and education center that will study the effectiveness and impact of mental health services in Texas (Austin American-Statesman).
• The U.S. infant mortality rate increased 3% from 6.8 deaths per 1000 live births in 2001 to 7 in 2002. Although the U.S. consistently has one of the highest infant mortality rates among developed countries, this is the first increase since 1958. Infant mortality rate is considered to be an indicator of the health and well being of a society (Austin American-Statesman).
• An annual report published by the federal Centers for Medicare and Medicaid indicted that 2002 health care spending reached $1.6 trillion or $5,440 for every American, reflecting a 9.3% increase from 2001 spending levels. According to the report, 2002 was the fourth consecutive year in which health care spending outpaced growth in the rest of the economy, with prescription drug costs and hospital spending being two major cost drivers. When compared with other industrialized nations, in 2001 the U.S. spent 47% more per capita on health care than Switzerland, the second biggest spender (Austin American-Statesman).
• A national survey of large employers with 1,000 or more employees found that responsibility for health insurance is shifting to retirees as employers cut back on health insurance benefits. According to the report from the Kaiser Family Foundation and Hewitt Associates, 71% of companies surveyed have increased retiree’s contributions to premiums and 1 in 10 will no longer provide coverage for current worker’s retirement as part of a benefit package (Austin American-Statesman).

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Transportation

• A study released by the American Highway Users Alliance ranked the stretch of IH-35 near MLK as the 39th most congested bottleneck in the nation. According to the report, 217,372 vehicles travel this stretch of the highway daily, and drivers passing through this bottleneck experience a collective 4.4 million hours of delay each year (Austin American-Statesman).
• A national study conducted by Advocates for Highway and Auto safety found that Texas has enacted 9 of 16 recommended laws meant to decrease the number of traffic deaths (Austin American-Statesman).

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Education and Workforce Development

WorkSource Career Centers had an average of 882 visits per day in January of this year. This is a 15% increase from the 747 average daily visits in December of 2003 (WorkSource). Austin public schools ranked #7 on Forbes magazine’s “Best Education in Biggest Cities” list. Evaluation criteria included high school graduation rates, housing affordability, and access to resources such as libraries, colleges, and museums (KEYE News).

• Texas ranked among the 20 most segregated states for black and Latino students in 2001 according to a Harvard study. Statewide, 37% of black students and 48% of Latino students attend primarily minority schools. Across the country, schools are more segregated than they have been since 1969, although variation exists between states and regions. (Austin American-Statesman).
• Texas returned $11 million dollars in unused federal funds for public education to the U.S. treasury in 2003, ranking it first in the nation for unspent federal education dollars (Dallas Morning News).
• The 35% tuition boost approved by the UT Board of Regents has translated into a $360 tuition increase for a full-time UT undergraduate student during the Spring 2004 semester. The tuition will increase by an additional $360 for Fall 2004 (Austin American-Statesman).
• Austin Families, Inc. and Connections Resource Center have merged under the name Family Connections. The new organization will continue to support parents and childcare providers and offer programs that promote accessible, quality childcare and early education in the Austin community. Nationally, Texas ranks 48th in childcare quality standards including adult/child ratio and staff training. The quality of early education and care has a major impact on brain development, preparedness for school, and success later in life (Family Connections).

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Public Safety:

• A pilot program to place homeless offenders leaving the local state jail in transitional housing has been considered an early success. The program provides ex-offenders with access to job training and counseling, mental health services and other supports. Only 19% (10 of the 53 program participants) have been rearrested. This compares with an 83% re-arrest rate (5 out of 6) for those who did not participate (Austin American-Statesman).
• Statewide data released by the Texas Department of Public Safety indicates that 1,032 cell phone-related crashes were reported in 2001. In the two-year period between 2000-2001, 15 people were killed in cell phone related accidents. The 2001 data is the first set of full-year statistics available since Texas started tracking cell phone use as a contributing factor that officers can report in a traffic accident. Under the new reporting form officers are also able to report road rage, which accounted for 219 wrecks in 2001 (Austin American-Statesman).
• The number of new felony cases in Travis County dropped from 8,061 in 2002 to 7,710 in 2003. The number of new misdemeanor cases also dropped, from 25,230 in 2002 to 24,369 in 2003. In addition, the number of felony referrals in Juvenile probation dropped from 758 in 2002 to 727 in 2003. The number of juvenile misdemeanor referrals dropped from 4,221 to 3,439 (Travis County Criminal Justice Planning).

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Demographic Changes:

• Between 1990 and 2000, Texas grew by almost 4 million persons- 80% of whom were non-Anglo. Currently Austin is the only major metropolitan area in Texas that does not have a majority non-Anglo population. Over the next 40 years Texas will continue to become more diverse. Education and economic attainment among the non-Anglo population lags behind Anglo populations. If education and workforce investments are not adequately strengthened, current projections indicate that Texas will have a declining median income of $6,000 per year less than current (average income in 2000 was $54,441) by 2040 (State Demographer/CPPP).
• By 2030, one in five Texans will be 65 or older (State Demographer).
• According to a report released by the Brookings Institution, the Austin-San Marcos area has become one of the top destinations in the U.S. for immigrants in recent years. The foreign-born population living in the area increased by 580% between 1980 and 2000, and currently comprises approximately 12% of the population (Austin American-Statesman).

RESOURCES:

• The Austin/Travis County Health and Human Services Department has received $491,792 in federal funds to renovate its multipurpose community center located at 2508 Durwood Road (Austin American-Statesman).
• People’s Community Clinic has been selected as the 2004 recipient of at least $155,000 to be raised during the 27th annual Capitol 10,000 race (Austin American-Statesman).
• The Mary Lee Foundation will receive $1,598,300 from the U.S. Department of Housing and Urban Developemnt to build 22 housing units for the elderly (Texas Nonprofit Newsletter).
• The Austin Asset Building Coalition, a group of 20 public and private agencies, has been working in the community to promote awareness of the Earned Income Tax Credit (EITC), a federal tax credit for low-income workers. Nineteen free tax sites are operating to help low-income workers file for the credit with an average refund of about $1,600. Increasing utilization of the EITC can bring $13 to $24 million in previously unclaimed refunds into the local economy (Austin American-Statesman).
• A new 38,000 square foot WorkSource Center will open in May 2004 at 6500 Airport Boulevard. In addition to increasing capacity to meet need for employment services, the center will offer new features including space for entrepreneurial classes, a computer training lab, a youth career center, a children’s waiting area, and conference suites for employer interviews (WorkSource News).
• The Austin Entrepreneurs Foundation distributed $134,000 to 10 Austin charities. Since the Foundation’s inception in 1999, local start-up companies have donated low-priced stock options to the foundation as a method of philanthropy. If the company does well, the Foundation cashes in the stock options and distributes the money to the chosen charities (Austin American-Statesman).
• Family Eldercare reports needing more volunteers and additional funding to keep up with demand for services. Over 40 volunteers are needed for the Guardianship program that provides services to incapacitated older adults and clients with disabilities. The agency also needs added financial support for its Home Care and Respite Program in order to provide sufficient homemaker and personal assistance services to clients (Family Eldercare).
• The 2004 federal spending bill has allocated almost $20 million for Central Texas Projects including:
  • $2.15 million to replace aging sewer pipes
  • $1 million for roadwork on East Seventh street
  • $400,000 to renovate the Austin Convention Center
  • $200,000 for the SMART program to encourage affordable housing
  • $400,000 to the Medical Institute for Sexual Health, an organization that promotes sexual abstinence
    The 2004 budget plan includes cut-backs or elimation of 128 federal government programs in areas including education, health, housing and law enforcement (Austin American-Statesman).
• Fifty-seven Austin-area companies have contributed $4.7 million for an economic development fund for the Greater Austin Chamber of Commerce. The money is a part of an $11 million fund raising goal and will be used to attract new companies to Central Texas (Austin American-Statesman).
• A study of more than 1,000 foundations found that colleges, medical centers, and symphonies receive more philanthropic financial support than do social services agencies. In 2001 more than 25% of donations from foundations went to colleges, with elite universities being 16 of the 20 top grant recipients during the past decade (Austin American-Statesman).
• The Chronicle of Philanthropy ranked Austin among the top 10 ‘stingiest cities’ based on charitable contributions from households with incomes above $50,000 per year. Dallas, Ft. Worth, San Antonio and Houston ranked in the top ten most generous (Texas Non-Profits).
• A team of health care providers from Austin Children’s Hospital will study early diagnosis and treatment of fetal alcohol spectrum disorder. The Austin team is one of five Texas teams awarded a portion of a $97,000 federal grant. Approximately 2,500 Texas children are born with the disorder each year (Austin American-Statesman).

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WHAT CAN YOU DO TO HELP?

• Choose a local social services agency to support financially.
• Copy and distribute this document in order to increase public awareness.
• Support the local economy by shopping at local businesses.
• Give to the United Way Capital Area’s Community Fund or the Austin Community Foundation’s Urgent Issues Fund.
• Contact the United Way Capital Area’s Volunteer Center at 512-323-1898 or search for volunteer opportunities on United Way Capital Area’s website at www.uway-austin.org.
• Also see the CAN Urgent Issues Action Plan at www.caction.org for additional information about community-wide approaches to addressing these issues in our community.
  

ACKNOWLEDGEMENTS

The Community Overview was researched and written by the Research & Planning Division of Travis County Health and Human Services & Veterans Services, with assistance from numerous individuals in the community. We attempted to include all those who had a part in this undertaking, but if we have inadvertently omitted anyone, we apologize and ask that you inform us so that we may recognize you appropriately as the process continues.

TRAVIS COUNTY HHS & VS RESEARCH AND PLANNING DIVISION:

Blanca Leahy, Director

Korey Darling, Lead Writer
Charlotte Brooks, Lawrence Lyman, Meg Poag, Ellen Richards, Joy Stollings, & Brook Son

CONTRIBUTORS:

Fred Butler, Sam Woollard,– Community Action Network
Joyce Haight- Family Eldercare
Susan Kresch Terese – Insure-A-Kid
Leanne James – WorkSource
Lisa Tagliapietra – Manpower, Inc.

COMMUNITY ACTION NETWORK PARTNERS:

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