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Chuck Bloom is a former publisher-owner-editor of several Texas community newspapers for more than 25 years before retiring, winner of dozens of journalism awards and former president of regional press groups. He published this piece today in his blog. The latest statistics show the unemployment rate in Collin County rose to 5.5% in December.
The state of things to come
I’d like to report to you on what will become an increasing sight here in Collin County, Texas, USA, one of the wealthier counties in Texas.
On Tuesday (Feb. 10), there was a relatively small job fair held at the Plano Centre, a small convention facility, sponsored by dice.com, a fairly new online job search site. In all, there were 11 companies represented, including the likes of Raytheon, Lennox, City of Dallas, Dallas Federal Reserve Bank, Region 10 Education Center (TEA), e-rewards, a few consulting firms and others.
This space was reserved prior to recent layoffs at Texas Instruments and other North Texas companies so organizers obviously did not know the size of the crowd to expect.
The event started at 11 a.m., but at 10:45 a.m., there was already a very long line waiting for the doors to open (several hundreds of unemployed job seekers). The room employed soon was filled to the gills with people waiting in line for more than two HOURS just to drop off a resume (accepting no applications, except on line but didn’t tell anyone) with one firm.
By 1 p.m., the procession to ENTER the Plano Centre wrapped around the building, not counting the crowd inside the lengthy hallway, trying to get into the room. Some estimates had more than 2,000 people looking for jobs at this event.
My wife was one of those involved and kept bumping into former Texas Instruments colleagues – all trying to do the same thing – find a new working life.
Such scenes will be repeated over and over and over as reality comes to Collin County – the weakening and worsening economy is striking at the heart of exurban America, as represented by cities like Plano, Frisco, Allen and McKinney. Since Texas admits the affects of the national recession are delayed before appearing in this state, we are only beginning to witness what the rest of the nation already knows.
Times are tough and about to get MUCH tougher before it gets better.
Fortunately, for this household, my diligent spouse has managed to obtain one of the rare nuggets that others tried so hard to mine – a job interview (with the city of Dallas - but not YET official; no one is returning phone calls and she is getting antsy about it). She was instantly the envy of others; merely wishing to have someone consider them for a new job, let alone hire them.
Such is life is the NEW America RIF (reduction in force … or … rising in fear).
Will we see an increase in unemployment? Of course! Companies are global and if they need to cut back because of a global and/or national slowdown, they will cut back and it will result in layoffs here at home. Texas Instruments is a great example.
But that's not nearly as bad as not having the companies here in the first place. We have a lot of them here in the DFW area for a reason.
But of the top 10 metropolitan areas for unemployment (a staggering 22.6% to 13%), California has EIGHT of them.
Why? Because of California's policies. You would have to be an idiot to start a business in California today.
5.5% unemployment is EXTREMELY LOW. I'm not trying to dismiss the harm unemployment causes the people who do get laid off. I'm not being insensitive. I just reject this idea promoted by some that Collin County is just like every other county in the nation and we're headed for 20% unemployment.
No, we are not, because of pro-business policies.
In the list of large metropolitan areas unemployment, Texas has 4 of the top 10 LOWEST UNEMPLOYMENT - Austin, San Antonio, Houston and Dallas are in the top 10 list of the lowest unemployment.
When I travel to California on business, I see a far greater number of startups and VC funding of emerging businesses there than I have ever seen in North Texas. Pick your modern industry - internetworking, medical devices, energy from renewable and non-extractive sources, and software to name a few and you'll find far more new business run by those Mr. Walters describes as "idiots" than anywhere in Texas, Austin included. This, I believe is due in large part to the substantial investment that California makes in higher education and scholarly research. There are 9 top tier-public universities in California, and two in Texas.
Likewise, we are foolish to believe that the jobs will come here when they leave California or Michigan, or that we're significantly better off than those states. Those jobs will go to Brazil, Russia, India or China (BRIC) where there are large numbers of highly educated people who are willing to work for third-world wages when compared with what it takes to live at the level we have come to expect in the U. S.
When HP is done integrating EDS, expect huge layoffs in Collin County as many of those jobs just evaporate or move offshore. The work done by major employers in telecom corridor has gone elsewhere, and not because of our non-existent regulatory policies, but because of the wages in BRIC. The work currently done at major employers such as Blue Cross and Experian can easily be done for less offshore. Likewise, many of the jobs at Pepsico/Frito can be moved offshore also. Pick your Collin County employer, and I can find 20% of it's jobs that can be moved offshore, resulting in 20% unemployment.
Our recession may be delayed like it was in the early 90's when most of the rest of the country was recovering when Collin County was tanking but the recession is surely on it's way and unlike states and regions focusing on the future, the chest-beating about our pro-business policies shrouds the fact that we are very poorly positioned to replace the jobs that will be lost.
I think you need to reread my post because I never said the recession would not come here. I specifically said that unemployment will increase here, and it has, but not to the levels seen in California and Michigan because of policy differences.
Collin County in 2009 is not Collin County in 1992 on every single level. It's a ridiculous comparison. Collin County's unemployment was always over 10% until around 1996 because of demographics and a transformation from rural to suburban.
The unemployment rate of Texas in 1992, however, peaked at 8.4%. California's peaked at 9.9%. So even then, California had higher unemployment rates.
Your comment about Collin County's unemployment lagging the nation in also inaccurate. California's unemployment peaked at 9.9%, as I said, and that was in January of 1993. It started going down from there. Texas' unemployment peak was 8.4% in June of 1992. Collin County's peaked in January of 1993 and went down from there, just like California.
The issue is the contrast between business environments between Texas and California in 2009. These differences have grown a great deal over the last 17 years, which is why the difference between the two unemployment rates is much bigger. And in 1992, you didn't have the mass exodus of California like you do today.
Companies are moving out of California at a rapid rate because the cost of doing business is so much greater than other states and they have been doing that for many years now.
The Cost-of-Doing Business Index in 2007 ranked California at #6 with a 127.5 index. Texas was 24th with an index of 95.9. The tax burden index has California at 78.4 and Texas at 45.4. Again, this is data from 2007. It doesn't include the new tax increases California just passed.
People are leaving that state too at record numbers because of the high cost of living, high taxation, high crime, horrible public schools. They have had 4 straight years of people leaving.
California's public schools are now rated 48th in the country.
Texas has 58 Fortune 500 companies, more than any other state.
Texas is the largest exporter of goods in the country.
In 2007, the Texas GDP grew by 4.1%. California's grew by 1.5%.
In 2008, Texas gained 154,600 jobs. California lost 257,400 jobs.
There are many, many examples of companies moving offices out of California and into less expensive states. Here are a couple:
Toyota and AAA close offices in California and move them to Arizona, Oklahoma and Mississippi:
Biomed leaving California:
"The tilt of corporate investment out of California is accelerating"
This is from 2007:
"The state rate of GDP growth over the past decade has been strong, ranking fourth in the nation, but California has been losing ground in the new millennium. In 2004-05, it fell to 17th, behind not only fast-growing Arizona and Nevada but also Oregon, Washington and rival "nation-state" Texas. "
"More disturbing, as California's population has grown -- largely from immigration -- per-capita income growth has weakened. From the 1930s to as late as the 1980s, Californians generally got richer faster than other Americans. In 1946, Gunther reported, Californians enjoyed the highest living standards and the third-highest per-capita income in the country. Today, California ranks 12th in per-capita income. And it's losing ground: Between 1999 and 2004, California's per-capita income growth ranked a miserable 40th among the states. "
But California has been losing jobs for a while now, well before this recession the country is in. I lived in California when Davis was recalled in 2003. It was a huge issue back then.
"It costs an average of 30 percent more to operate in California than in other Western states, largely due to higher wages and benefits.
-- California business regulations are more costly, complex and uncertain than those in any other state, by a wide margin.
-- As a result, 40 percent of California companies interviewed said they have an explicit policy to move jobs to other states. Just under 20 percent said their policy is to avoid adding jobs in the state."
I have no idea what you are referring to in regards to VC and startups nor how that refutes the job losses in California. The entire country has been experiencing a huge IPO slowdown over the last year. Maybe you are still living in 1999? Ever since 2002's SOX law (in the wake of Enron), London has been the financial capital of the world in regards to IPO.
Texas is gaining rapidly on California with tech jobs. Texas is #2 in the country.
You mentioned HP. Last October, they announced they were going to layoff 24,600 employees, half of them in the U.S., half outside of the U.S. Those layoffs are happening in California, Idaho, Washington – everywhere HP operates offices, which is why I said a global company that has layoffs will affect Collin County if they have an office here.
And HP believes it is automation, not offshoring, that will create the biggest cost savings.
Other countries are stealing companies from the U.S. just like states are stealing California companies, and for the same reason. The U.S. has the 2nd highest corporate tax rate in the world, behind Japan who has had a 13-year recession.
Ireland has scored some great companies from the U.S. recently. Their corporate tax rate is 12.5% compared with the United States corporate tax rate of 30.5%.
So, again, it is the anti-business policies that will make businesses flee. There are huge differences in this area between states and even countries. Pretending that these differences don't impact employment is very ignorant.
But let's strengthen the labor unions and raise taxes in the USA. I'm sure that will turn out great.
Having lived in Collin County for most of the last 20 years, I don't think my comparison was at all ridiculous. I'm seeing the exact same trends here now that I saw here in 1992.
I have neither the time nor inclination to crunch the numbers on every state in the union about what happened in 1992. From personal experience, I can tell you that North Texas was still going down and I moved to the Denver area because it was going up and I could find work there. I rented my house here for less than my mortgage payment because I could not sell it even though I had bought it cheap out of foreclosure.
I find your comments on taxes a little simplistic. While the published tax rate may be high, it's common knowledge that no major business actually pays that rate. They either hide their profits offshore somewhere or negotiate their rate down to nearly nothing on the lure of bringing jobs into an area. Instead of the 30+% you quote, the effective US average is closer to 25%. But, thanks to the shenanigans known as "income shifting" across borders, the taxable profits of most companies are far, far below the profit reported on their annual reports so regardless of the tax percentages they do not pay a significant portion of their profits as taxes. If Collin County collected it's full share of taxes from all the major employers in here we would have a budget surplus even after providing all the public services a liberal could hope for. But, they don't pay, and the county provides very little.
I'm not advocating raising taxes. In fact, I'd like to see them lowered across the board but all the loopholes must be closed so that the published rate is what companies actually pay. This is the only way to stem the flow of jobs and corporations to offshore locations.
Comment deleted by Bill
Your constant personal attacks on me and other posters (most which I have refused to publish) have forced me to deny you access to the Collin County Observer for 30 days.
During this cooling off period, I will not accept nor post any comments from you. I suggest that since you feel so strongly on so many issues that you create your own online forum, where you may say what you please, in whatever manner you wish.
You may not do so here.
Comments are closed for this post.