By 2016, almost one-third of the Texas workforce may face a reversal in fortune. According to projections by the state Workforce Commission, workers with technical skills, who were once thought to have a firm hold on the middle class, are now vulnerable to the twin perils of technological obsolescence and jobs that move offshore.
The problem these workers face can be traced to a shift away from manufacturing, an unfortunate change exacerbated by misguided public policy, according to commission Chairman Tom Pauken. The result is that some 29 percent of the workforce in Texas is neither highly skilled, highly paid knowledge workers, nor lower-skilled, lower-paid service workers.
A Dallas lawyer, former state GOP chairman and Ronald Reagan appointee, Pauken is fighting to protect these workers by using the limited number of levers available at the state level and calling on Washington to use the tax code to protect and promote American jobs.
Pauken says the Texas model, characterized by an “attractive climate for business” that includes low taxes, limited regulation and a good workforce, has allowed the state to “poach jobs” from other states. Texans trained at state community colleges can fill these jobs. As the state’s traditional oil and agricultural economy has diversified, it has put a premium on skills training.
Pauken believes the Texas college system has the capacity to meet the demands of employers even as state finances are battered by the fastest growing population in the country, a near doubling of unemployment to 8.3 percent since 2008 and a $15 billion budget shortfall. Against that backdrop, he suggests a change in emphasis on secondary schools from university preparation for all to more vocational training for those who don’t plan to attend college, adding that what cannot be done in school can be augmented by expanding existing apprenticeship programs.
But is an emphasis on vocational training the right direction for Texas? Scott McCown, executive director of the progressive, nonpartisan Center for Public Policy Priorities in Austin, says that “community colleges are a bright spot” on an otherwise bleak educational landscape in Texas, where keeping business taxes low takes priority over an educational pathway toward advanced science, math and engineering.
Low taxes and limited regulation have become articles of faith among state policymakers who fail to distinguish between “what God did for us and what public policy did,” McCown adds. He is discouraged by the state’s unwillingness to invest in research and education at levels needed to reverse what he sees as a state “caught in a downward spiral.”
But Pauken doesn’t see it that way. “I don’t view what we’ve done in Texas -- poaching jobs from other states -- as a race to the bottom. What I worry about, though, is that it is a zero-sum game.”
To change the game, Pauken wants to eliminate the 35 percent federal corporate tax and the employer portion of the payroll tax in favor of a revenue-neutral consumption or value-added tax of 8 percent. It would be applied to all imports, and businesses would receive an 8 percent credit for all exports that would count against their total consumption. Such a policy would tip the economy in favor of domestic manufacturing, bringing many jobs back home.
In the meantime, state actions in Texas and elsewhere that maintain a skilled, manual workforce are a healthy corrective for the middle class. The risk is in playing the skilled manual trades against service and knowledge work as if we can get by without any one of them.