Home-Grown Workers

Is Austin's Job Boom Trickling Down to the People?



Rip Rowan at Texas Workforce Center

photograph by John Anderson



Austin's reputation as a high-tech hot spot invokes glamorous images of hip, pioneering young engineers, groundbreaking research, and handsome salaries. That perception creates an alluring shimmer that draws aspiring professionals here and is undoubtedly priceless to city public relations officials. But for the majority of employees who work in the local high-tech sector -- those who don't design software or manage start-up companies -- the benefits of the new industry are the less sexy, wage-earning jobs created by the giant microelectronics companies that form the bedrock of Austin's high-tech economy. Manufacturing and support service jobs comprise the bulk of the positions that the city has imported by wooing companies such as Applied Materials, Motorola, and most recently Samsung, to the area. For 26-year-old John DeLeon, a beginning technician at Photronics who makes $8.80 per hour, the high-tech arena offered a way out of dead-end restaurant work. "It's great," says DeLeon, "I never thought I could be in a job like this, but it's not difficult if you're willing to apply yourself."

The city began attracting semiconductor manufacturers to the area with tax abatement incentives in the late Eighties, though those abatements quickly went out of fashion in the Nineties after the city began attaching stipulations for hiring under-employed and minority workers to the agreements. Nevertheless, the city continues to abate up to 80% of the improved property value that Motorola and Applied Materials accrue each year, and in 1995 the city agreed to abate 40% of the property value improvements at Samsung's new $1.3 billion plant for the next 10 years. What the local economy has received in exchange from the microelectronics boom is 150,000 new jobs and a $26 billion upsurge in the city/county tax base -- a 60% increase -- since 1990. The high-tech sector, which is growing twice as fast as other industries, now comprises about 40% of the regional economy, and microelectronic firms employ 23,000 people. Unemployment in the area hovers around 3%, below the state and national average.

It is virtually impossible to calculate whether, or to what extent, the benefits of jobs and capital investment created by the microelectronic companies outweigh the added strain on infrastructure, water treatment, and pollution controls. What is known is that the jobs created by the microelectronics industry offer workers without four-year college degrees wages and career opportunities that are well beyond those typically found in other manufacturing and service sectors. Entry-level wages are not outstanding, and have been the subject of controversy, but employees who take advantage of company-sponsored training programs through Austin Community College can earn $25,000- $30,000 a year, with full benefits, as early as two years after they are hired.

Some have noted, however, that the billions of dollars of corporate investment in the area has not appreciably helped people at the lowest-income levels. "If you look at the poverty rate," says Tom "Smitty" Smith of Public Citizen, "it's barely better than it was in '89, when we [the city] were flat busted. The purpose of economic growth is supposed to be to spread the wealth."

One can assume either that those who need jobs the worst are not finding their way through the doors of the microchip companies, or that the wages paid by those jobs are not sufficient to improve workers' lots.

Local and state government seem to assume the former, and have unleashed a stream of public money, in the form of state training grants and local workforce development initiatives, to recruit and equip welfare recipients and the underemployed for the living-wage jobs a high-tech economy promises. Austin Community College taps grants such as the Skills Development Fund to design technical training courses catering to employers' specific needs, and the city and county fund workforce development programs through the Capital Area Workforce Development Board. The looming cancelation of welfare benefits to hundreds of thousands of Texans under recent welfare reform adds urgency to the task.

But this outlay of public money to supply companies with workers looks like a form of corporate welfare to some. "We've seen instances where local workforce boards are no more than taxpayer-supported conduits to steer workers into jobs," says the state's AFL-CIO communications director Ed Sills. "It's part and parcel of the new welfare reform; instead of subsidizing education, we're subsidizing companies."




Enrique Gallardo, sheet metal worker
photograph by J ohn Anderson

Bait Meant Abatement

As part of Austin's tax abatement agreement with Samsung, the city provides further tax incentives if the company fills at least 20% of its workforce with people who previously earned less than 80% of the federal poverty level. The city also allocates a fifth of the tax revenue it assesses on Samsung (not tax it actually receives) to sponsor the Jobs Ahead program -- an eight-week training course that recruits from the hardest-to-employ segment of the population and teaches basic computer, math, and communications skills along with workplace orientation. After just over a year in existence, the program has managed to place few workers with high-tech companies, and only one with Samsung. Meanwhile, however, Samsung recruited 200 "manufacturing specialists" for its new plant through the workforce commissions' job screening service. Samsung spokesperson Bill Cryer estimates that of those employees, roughly 20% meet the city's low-income criteria, the number the company needs to qualify for the performance tax bonus. In other words, Samsung enjoys the services of a publicly funded recruiter which aids the company in locating its target workforce, but is under no obligation to hire employees the city pays to train.

Eastside activist Susana Almanza, director of People Organized in Defense of Earth and Its Resources (PODER), says that training programs don't go far enough to help the people who most need jobs. "If you just say we're going to abate taxes, and then use money for job training without a guarantee [that the companies will hire the enrollees], then it has no teeth in it," Almanza says. "What needed to be said is that each company is going to have 20 or 30 slots guaranteed, is going to commit to those slots and not just say we're going to put money there for training."

But Jobs Ahead manager Rip Rowan says it isn't realistic to expect people with virtually no skills or familiarity with the workplace to leave an eight-week course prepared for jobs in high-tech. What Jobs Ahead can do successfully, Rowan says, is land people jobs that lead to better opportunities in the future. "We don't want to put anybody in a dead-end job that doesn't go somewhere else," Rowan says. "What we need to work on with the employers is the internal processes, so we get somebody in at an administrative level, or maybe a loading dock position, and then build that stairway up to the technical position, to a more livable situation."

"People should never see education as a one-shot deal," agrees Dr. Barbara Bolin, associate vice president for workforce education at ACC, who oversees the training curricula the collge supplies to Jobs Ahead. "I keep saying to [Jobs Ahead participants], you don't just expect that this will fix you for life; that isn't the way the world is anymore. You've got to keep learning, and keep moving."

Stephanie Taylor, 23, who through Jobs Ahead moved herself out of fast-food work into a $7-an-hour administrative assistant position in a pediatrics clinic, says, "at least it's work experience I can put on my resumé." Taylor says that she was told when hired that the job offered no room for advancement, but that the job supports her and her one-year-old daughter while she considers her next move.

Likewise, Enrique Gallardo, 41, managed to land a low-paying job after he completed the Construction Gateway program, a publicly funded workforce development program specifically designed to move workers into industrial trades. Although the job is not really enough to support Gallardo and his wife and children, because of his prison record and lack of certification he was glad to have secured a position with a metal contractor hired by Motorola, in hopes that it will lead somewhere else. Gallardo, who just finished a shift of 27 consecutive 12-hour days, says he looks forward to entering a union apprenticeship program and becoming a highly paid journeyman. "I just needed a foot in the door," he says.


High Demand for High Skills

When spokespersons for the microelectronic corporations are asked what commitments their companies have made to hiring low-skilled workers, they invariably point to their company's cooperation with ACC in designing specialized technical training curricula, or their participation with Inroads, a program which helps prepare minority high school students for work in the microchip industry. In fact, the design of customized education has become a veritable growth industry for ACC, which routinely fields contracts from microelectronic companies to upgrade the training of their employees. As ACC's Bolin puts it, the industry is currently caught short of skilled labor, and knows it has to "manufacture" workers as well as product.

"Austin used to be a real sleepy hollow, you know, and nobody really cared much about those folks in East Austin who were just kind of left over there in poverty -- they were out of sight, out of mind," she says. "Well, now people are saying we've got to have workers and it costs a great deal of money to recruit and import labor for these big companies, so the logical thing is to grow your own if you can."

Samsung vice president John Bercen says his company is always willing to interview participants from job training programs, and that Samsung wants to be a good neighbor by opening jobs to people with little or no education. But the company says that any commitment to hire those participants would not be compatible with a work environment that demands high skills, because the work is not for everybody. Public information director Bill Cryer says that preliminary orientation for potential new workers always produces a high number of dropouts who don't feel comfortable in the clean rooms. "The obligation of any company is to make a profit and stay in business," says Cryer. "If it can't do that, then no one has a job."

"I think we are blind as to where people come from," adds Motorola's Nan McRaven, "We're looking for a qualified workforce wherever we can find people."

Bolin insists that public investment will be crucial to leading those people to the companies. "Samsung will not pick up anybody who is unemployed or under-employed to the extent these people [public job training participants] are," she says. "They will just let them fall by the wayside."


Corporate Giver or Receiver?

Right now, the sheer mass of jobs that the microelectronic companies open up -- both directly and indirectly -- provides a natural target for public job training programs and gives the companies the appearance of saviors as the clock ticks down on the welfare state. But it seems fair to ask if corporations aren't using well-intentioned government initiatives as free human resources providers. The prevailing, corporate laissez-faire attitude which assumes that anything that helps business helps us all has long been considered a dubious argument. In the Austin region, economic data indicate that the electronics boom is already beginning to flatten. Microchip prices are being squeezed downward, and Austin's low unemployment rate is pushing labor costs up. One high-tech company, New Tek, Inc., recently passed up Austin as a potential site for a new plant, opting instead for lower labor costs in San Antonio. The area may be reaching the saturation point for new industry. Furthermore, as the Chamber of Commerce's Economic Review and Forecast points out, a concentration of industry in a given geographic area tends to create an unstable, volatile economy, which reacts much more drastically to unfavorable changes in market forces.

Still, for now, tech companies provide previously unrealizable career paths for many workers, and as long as corporate heads can show that thousands of jobs are opening up in their industry annually, it's tough to force mandatory hiring practices as a matter of public policy. And as welfare benefits expire for hundreds of thousands across the state in the near future, people will have more incentive than ever to land themselves in the available jobs.

Sills says that from a union perspective, microelectronic companies can't be criticized for wages or benefits, but more for the "working conditions" and "life paths" they subject people to.

"The high-tech industry tends to take young people in, get every hour they can from them, and then, when people realize they want other things out of life, the companies lose interest in them," says Sills.

But John DeLeon says that, after working six months at Photronics, he's already decided he wants to retire there. DeLeon landed his job with help from Austin Interfaith -- an affiliation of statewide church congregations that soon plans to ask local governments and corporations to sponsor its own job placement/training service. "Those of us referred by Austin Interfaith haven't let Photronics down," he says, "and Photronics sees that, and I think that they're going to take whomever they can from Austin Interfaith."

It may be many years before Austin learns whether the high-tech industry will prove not to let the city down and be faithful partners in the effort to preserve prosperity.

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