Workforce Development in El Paso: A view from the Dallas Fed

The views expressed in this presentation are strictly those of the author and do not necessarily reflect the positions of the Federal Reserve Bank of Dallas or of the Federal Reserve System. Any secondary distribution of this

material is strictly prohibited. May be quoted with appropriate attribution to the author.

Roberto Coronado AVP in Charge and Sr. Economist

Outline

1. 60x30 TX 2. A perspective on El Paso 3. Role of Dallas Fed

Outline

1. 60x30 TX 2. A perspective on El Paso 3. Role of Dallas Fed

60x30TX

Source: Texas Higher Education Coordination Board Members

60x30TX

Source: Texas Higher Education Coordination Board Members

Outline

1. 60x30 TX 2. A perspective on El Paso 3. Role of Dallas Fed

El Paso’s economy boomed in 2015…

SOURCE: Federal Reserve Bank of Dallas

95

100

105

110

115

120

125

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

Index, Jan 2005 = 100

…as employment grew above average

2.4

3.8

2.2

3.8

0.2

2.0

2.6

1.3

2.0 1.6

-2.4

2.6

-1.2

1.0

2.0 1.9

3.5

-0.2

-1.0

1.7

0.6

2.1 1.7

0.9

3.0

-3

-2

-1

0

1

2

3

4

5

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Average 1.5

Source: Federal Reserve Bank of Dallas.

Percent, Dec/Dec, S.A.

Main economic drivers

• U.S. economy

• Mexico’s economy

• Ciudad Juarez and the maquiladora industry

• Cross-border retail activity

• Government sector

El Paso follows the maquiladora industry

90

95

100

105

110

115

150

170

190

210

230

250

270

'08 '09 '10 '11 '12 '13 '14 '15

Index January 2008=100 Thousands, SA

El Paso Business Cycle Index

Juarez Maquiladora Employment

250,250 Dec ‘15

109.4 Dec '15

NOTE: El Paso Business Cycle is a composite index that includes employment, unemployment rate, retail sales and wages. SOURCE: INEGI and Dallas Fed

El Paso retail sales slow

8

10

12

14

16

18

80

90

100

110

120

130

140

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

2000: Q1 = 100 Peso/Dollar

El Paso Retail Sales

Nominal Exchange Rate

Source: Texas Comptroller of Public Accounts, Federal Reserve Bank of Dallas

0

0.4

0.8

1.2

1.6

2

-2.5 -2 -1.5 -1 -0.5 0 0.5 1 1.5 2 2.5 3

Loca

tion

quot

ient

in 2

014

Percentage-point change in employment share, 2006–14

Government

Transportation

Advanced materials

Retail

Construction

Health

Education

Mature Star

Transitioning Emerging

Recreation & food services

Business & financial services

Primary metal manufacturing

El Paso’s economy dependent on government, but health is a rising industry

Note: Bubble size represents cluster share of metropolitan statistical area employment. Source: “At the Heart of Texas: Cities’ Industry Clusters Drive Growth” Federal Reserve Bank of Dallas, February 2016;

Only 43 percent of El Paso workforce has an Associate’s degree or higher…

31.0

23.7

27.3

18.0

31.0

24.6

28.2

16.2

31.1

26.2 27.7

15.0

0

5

10

15

20

25

30

35

Less than high school High school or equivalent Some college orAssociate's degree

Bachelor's degree or advanceddegree

1995

2000

2005

2010

2015

Note: Note: Excludes “Educational Attainment not Available (workers aged 24 or younger)” Source: U.S. Census Bureau, Center for Economic Studies, LEHD; Q3 data for El Paso Metropolitan

% of workforce

…Yet, they have the highest earnings

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Less than high school High school or equivalent Some college orAssociate's degree

Bachelor's degree oradvanced degree

Note: Dollar amount above bars is average monthly premium compared to one level of education higher Note: Excludes “Educational Attainment not Available (workers aged 24 or younger)” Source: U.S. Census Bureau, Center for Economic Studies, LEHD; 2015 Q3 data for El Paso Metropolitan

Average Monthly Income, Dollars

$553

$554

$1,564

$2,378

$2,931

$3,485

$5,049

Where a 2-year degree pays the most

Associate’s Degree Wage Premium*

Industry Monthly Premium

1 Office of Physicians $1843 2 Health and Personal Care Stores $881 3 Computer Systems Design and Related Services $860 4 Automobile Dealers $761

5 Agencies, Brokerages, and Other Insurance Related Activities $757

6 Architectural, Engineering and Related Services $748 7 Scheduled Air Transportation $676 8 General Medical and Surgical Hospitals $653 9 Depository Credit Intermediation $637

10 Wired Telecommunications Carrier $625 *Some college or Associate’s degree Note: Excludes “Educational Attainment not Available (workers aged 24 or younger)” Source: U.S. Census Bureau, Center for Economic Studies, LEHD; Q2 data for El Paso MSA

Outline

1. 60x30 TX 2. A perspective on El Paso 3. Role of Dallas Fed

Financial Literacy

• Financial literacy is strongly correlated with an ability to make wiser choices and realize better outcomes

• National surveys suggest Texans have a relatively low level of financial literacy that can adversely affect decision-making. – 60+ percent of Texas survey

respondents haven’t planned for retirement.

– Texans also fare poorly when it comes to having a bank account.

Source: Anthony Murphy, Policy Advisor and Senior Economist, Dallas Fed, “High School Financial Literacy Mandate Could Boost Texans’ Economic Well-Being, Southwest Economy, 1Q:2016,

Regional Partnerships and Initiatives

– Borderplex Workforce Solutions – Texas Higher Education Coordinating Board – Region 19 – Borderplex Economic Alliance – Local School Districts – Local Chambers of Commerce – Business and Community Leaders

Other District Resources

Workforce Development in El Paso: A view from the Dallas Fed

The views expressed in this presentation are strictly those of the author and do not necessarily reflect the positions of the Federal Reserve Bank of Dallas or of the Federal Reserve System. Any secondary distribution of this

material is strictly prohibited. May be quoted with appropriate attribution to the author.

For more information visit www.dallasfed.org