Higher Skills, Better Jobs
Before incomes can increase along the Border, workers must improve their skills. The people of the Border face a dearth of job skills that serves as a barricade to better wages, more stable jobs, and, ultimately, higher incomes.
Many of these workers did not receive the full benefits of recent improvements in public education, and those who do not attend college will also miss out on improvements to higher education in the region.
As the Texas economy rocketed toward record gains in employment, wages, and household incomes during 1997, employment in Border counties remained depressingly low.
Year after year, Maverick, Presidio, and Zavala counties lead the nation in unemployment rates. The Border counties' unemployment rate of 8 percent in 1997 was twice the rate of non-Border counties in Texas. Nine of the Border counties have double-digit unemployment rates, four of those with rates above 20 percent.1 Only 18 metropolitan areas in the country have unemployment rates higher than Laredo or El Paso and only nine higher than Brownsville's 12 percent, according to the U.S. Bureau of Labor Statistics. McAllen's unemployment rate of 17.2 percent was the fifth highest of any city in the nation.2
If the Border were a state, it would have the highest unemployment rate in the nation. Nearly one in three of all unemployed workers in Texas live in the Border region, while one-sixth of the state's labor force is found along the Border.3
The South Texas/Border Initiative provided funds to South Texas universities to enhance programs for research and development, to pay off debt, and to pay for the construction of new facilities. The initiative, which authorized $348 million in new bonding capacity between 1992 and 1995, can be credited with enhancing higher education in the Border region.
These investments are expected to produce a better-educated, skilled workforce for the region in the future. However, there is a continual need for better worker training, particularly for people who are already out of school.
Nearly 80 percent of adults 25 or older in the 43-county Border region don't have a college or community college degree, compared with 75 percent statewide. While 21 percent of Border adults have at least an associate's degree, 37 percent have not graduated from high school.
The goal is to move people from low-wage jobs to high-wage jobs. Statewide, workers in jobs requiring only short-term, on-the-job training earn nearly 30 percent less than the average full-time worker. Short-term on-the-job training is gained from "occupations in which workers generally can develop the skills needed for average job performance after a short demonstration or up to one month of on-the-job experience and instruction..4
The gap in earnings between the workers who earn the most and those who earn the least has consistently increased nationwide since 1979.
While occupations requiring only moderate on-the-job training still pay below average, they pay 27 percent more than the short-term training occupations.
Education greatly determines who will have a job as well. According to an analysis of 1993-94 labor statistics conducted in 1997, the unemployment rate of workers with less than a high school diploma was 11.5 percent, compared to 2.9 percent for college graduates.5
These figures, drawn from national averages, apply to workers in the Border region. Workers with more education will earn more money and have a better chance of avoiding unemployment, according to an analysis of 1990 U.S. Census data (see Figure 5.1).
Employees can learn valuable skills from on-the-job training. Border residents may get shortchanged, however, in part because employers seem to provide older workers with a greater number of formal training hours. Nationwide, younger workers receive about half as much training as workers 25 to 54, according to a survey by the U.S. Bureau of Labor Statistics. Younger workers change jobs more frequently than older workers, and employers may be less willing to invest in formal training for younger workers, the study concludes. The Border region may be hard hit by this trend because of the predominance of younger workers; about 70 percent are younger than 45.
Only 60 percent of workers with a high school education or less received formal training, compared to 90 percent of those with a bachelor's degree or higher, according to the labor study.6 As discussed earlier, only about 21 percent of the Border's adult residents had any sort of college degree.
Large employers in the region report a diverse mix of training programs. Some companies provide no formal training, while others fund and conduct well-structured programs. For example, an El Paso construction company provides laborers an opportunity to develop skills to the point of becoming construction foremen. Another company in El Paso conducts monthly management seminars, while a wholesale grocer keeps a trainer on staff to train approximately 10 new employees every 90 days. One refining company in Corpus Christi trains employees in operations training, while another refining company offers computer seminars four times a year. A chemical company spends about $40,000 a year to train 200 employees with division-specific skills, while another business trains and tests most of its 3,000 employees as helpers or technicians. In Laredo, a gas pipeline company provides two-day training for approximately 700 new employees each year.7
In 1995, the Texas Legislature consolidated most state workforce programs into a single agency, the Texas Workforce Commission (TWC). One of the new agency's primary responsibilities is to oversee more than a dozen employment programs, including the Job Training Partnership Act, the Wagner-Peyser-funded Employment Services, Job Opportunities and Basic Skills, and Food Stamp Employment and Training programs, providing everything from the basics of job readiness, such as job search and interviewing techniques, punctuality, and appropriate appearance, to more sophisticated skills training such as how to serve customers.
The reform, which was designed to enlist direct involvement from local community leaders, resulted in 28 workforce regions headed by local workforce development boards.
County judges and mayors of the major cities in each region can appoint a single workforce development board, charged with coordinating and procuring workforce services, to draw upon state and federal funds. Formation of a local workforce development board is not required. However, if a region fails to do so, it forfeits local control of the programs administered by TWC.
The key reason to form a local board is to get input from area employers. Job training programs must have direct involvement from employers to succeed. TWC's difficulties in implementing these massive reforms, such as a reluctance of local boards to shift their focus to regional concerns, can impede some boards from forming.
In focusing job skills programs through regional workforce development boards, the 1995 Legislature placed management of training and job placement services in the hands of local leaders. Local boards could meet local needs with innovative approaches.
Each region reflects distinctive labor needs and aspirations. Ideally, in turn, each local workforce board strives to ensure a balance between the local supply and demand for labor skills. Nine workforce regions encompass the 43-county Border area. Two of these regions established workforce development boards and opened career development centers--places for residents to seek workforce services, including assessments of client needs, job referrals, and other assistance, including basic job search and interviewing skills.
Setting up career development centers is a difficult task requiring county and city officials to agree on how much money to spend on workforce needs. Another three boards along the border became operational in 1998; three more have plans under review by TWC. Community leaders in the region including Hidalgo and Willacy counties chose not to form a board; TWC's local office will continue to purchase or to directly provide state and federally funded services.
Once in business, each local workforce board hires a training provider for job training services and coordinates job training and placement services. Before a board can coordinate, plan, and procure services, appointees and plans must gain approval from TWC, the Texas Council on Workforce and Economic Competitiveness, and the Governor. Then funding arrangements are made with TWC.
Unemployment is highest in Hidalgo County, yet officials have chosen not to form a local workforce development board. Border counties without operational local boards risk federal involvement if workforce legislation passes. Both U.S. Senate and House versions of workforce reform legislation require the formation of local boards and consolidate funding streams into a smaller number of block grants.8
Overall, 17 percent of TWC's funding flows to the Border.9 This nearly matches the 18 percent of Texas' labor force in the Border. However, the Border's high unemployment rate means that 32 percent of all the state's unemployed workers can be found in the region. While not all of TWC's funds are allocated on the basis of unemployment, there should be concern that only 17 percent of these funds are allocated to an area with 32 percent of the state's unemployed.
Moreover, since the Border contains about 22 percent of the state's population, TWC's expenditures, when calculated per capita, are lower in the Border than in non-Border counties.
Another program for workforce training is "school-to-work," designed to smooth the transition from classroom to workplace through connecting activities that integrate classroom and on-the-job instruction, link high school and college curricula, match students with employers, and train job-site mentors. This federally funded program began in 1994 as a seven-year initiative; grants were given to 37 states, including Texas.
In 1996, Texas was awarded a five-year school-to-work grant for $61 million, administered by TWC.10 The 27 school-to-work partnerships in Texas work closely with the state's Tech-Prep program, which implements the strategies developed by school-to-work.11
Literacy is an important issue for Border workers looking to improve their job skills and wages. The U.S. Department of Education developed a tool for determining three dimensions of literacy.12
The mean literacy score for all Texans is slightly higher than those in the Border region. Of even greater concern is that 33 percent of the Border's labor force has the lowest level of literacy skills. This means 800,000 people 16 and older can barely perform basic literacy tasks. In comparison, nearly one-fourth of Texans read at the lowest level, about the same as the national average.
One in three Border residents can barely perform the basic tasks of reading a work schedule, adding up their hours, and filling out a time sheet, or gleaning the critical points from a memo on company safety policies.13
To help improve this situation, the Texas Education Agency (TEA) operates the Adult Education Program to provide training in literacy, English language, basic academic skills, life-coping skills, and high school-level competencies for 212,000 out-of-school youth and adults. The agency awarded about $29 million in grants to adult education cooperatives across the state in 1997.14 Per capita, that only amounts to about $135 annually to bring each person's reading, writing, and math skills up to a functional level. It also means that the state is funding literacy training for only 7 percent of the adults stuck in the lowest literacy level.15
The Texas Smart Jobs Fund, created by the Texas Legislature in 1993, provides grants to businesses to train new or existing employees. From fiscal 1994 through fiscal 1997, 61 Border businesses received more than $8 million in Smart Jobs grants to train or retrain 5,907 workers for jobs ranging from order entry clerks to community health workers. Sixteen Bexar County businesses received $1.9 million in Smart Jobs grants to create or maintain 1,637 jobs. Seventeen companies in El Paso County received Smart Jobs grants totaling $1.8 million to train 1,842 workers. Companies in Cameron, Webb, Nueces, and Hidalgo counties trained 1,892 workers with $3.7 million in grant awards. Pride Petroleum Services in Duval, Jim Wells and Starr counties trained 44 workers with a combined grant of $61,000. Companies in Kerr, Medina, Pecos, Presidio, Reeves, and Willacy also received grants ranging from $1,100 to $249,000.16
Smart Jobs has proven effective at helping companies to retain and retrain workers and even to create new jobs. However, companies in counties with the highest unemployment rates in the state, such as Hidalgo, Cameron, Maverick, and Starr, have difficulty competing with companies in Dallas and Houston. Grants are delivered on a first-come, first-served basis. While the unemployment rate is on average twice as high in Border counties as in non-Border counties, the region received 12 percent of grants awarded in fiscal 1994-97. In contrast, Dallas-Fort Worth, with an unemployment rate of only 3.2 percent, received 44 percent of Smart Jobs funds.17
The Skills Development Fund, created in 1995, provides grants to community colleges for customized training requested by area businesses.
The fund was created to remove administrative barriers that were impeding the timely response of public community and technical colleges to industry and workforce training needs. It was not intended to pay for training costs of an employer who moves the work site from one place in Texas to another.18 Between June 1996 and August 1997, the Skills Development Fund provided six of the eight community and technical colleges in the Border with $5.4 million, out of the total $25 million statewide, to work with more than four dozen companies to train 6,100 workers.19
Community and Technical Colleges
Community colleges grant certificates of completion for a variety of occupations, some in conjunction with public schools. The Border is home to eight of the state's 51 community and three technical colleges: Alamo Community College District (with four colleges), El Paso County Community College District, South Texas Community College, Texas Southmost College, Laredo Community College, Southwest Texas Junior College, Del Mar College, and Texas State Technical College-Harlingen. These colleges enroll 22 percent of the state's community and technical college students but award only 16 percent of the state's certificates of completion and 17 percent of the state's associate degrees.20
The state provides financial support for instruction and administration in 51 community college districts, and the community colleges use local tax dollars to augment state funds. For the most part, however, any customized training that colleges offer must be funded by local tax dollars or fees charged to employers or trainees.21
Approximately 39 percent of the total contact hours funded by the state are vocational/technical courses; the remainder are academic, including remedial and compensatory adult education. No state funding is provided for physical plant operations or maintenance. Local taxing districts are expected to provide support for physical plant operations. Local communities must provide facilities, and community colleges are not eligible for funds available to most senior institutions.
Tuition and fee revenue is not appropriated by the state. Tuition rates vary among schools. In 1996, tuition rates plus fees ranged from $298 to about $1,200 per semester. Border community colleges tend to have higher tuition and fees than the rest of the state. The state's public community college average tuition and fees total $753 per semester; only one of the Border's seven community colleges falls below the state average. For the 1998-99 biennium, the general revenue per contact hour in community colleges is approximately $3.57.22
The cost of customized training, construction, and maintenance of facilities, plus upgrading of equipment, puts a heavy burden on a local tax base already stretched to provide adequate primary and secondary education and basic infrastructure. However, if skills training is to be the engine that will drive incomes above their current rates, community colleges must have adequate computers and facilities. The need to improve skills and to provide the highest-quality training possible warrants state support of facilities and equipment for community colleges in the Border.
While Texas State Technical College is often grouped with other community colleges, its funding differs in one important aspect. The TSTC system is funded with state general revenue appropriations, tuition, and fees. Therefore, TSTC-Harlingen provides important technical training for Border students without drawing on local funds.
TSTC provides vocational/technical education, where "primary consideration shall be placed on industrial and technological manpower needs of the state." TSTC is required to emphasize advanced or emerging technical programs not commonly offered by public junior colleges.23
In El Paso, the number of job categories for which there were too few skilled workers numbered 251, with a "training gap" of 5,701 positions, according to a December 1997 report by the El Paso Chamber of Commerce. TSTC does not have a campus in El Paso, but it does have programs throughout Texas in 49 of the fields listed. Those fields account for more than 1,000 of the "training gap" positions. El Paso Community College's list of programs includes few of those 49 fields.24 El Paso's businesses and workers could benefit from a TSTC campus that would provide more technical training options without creating an increased draw on local tax dollars.
In the private sector, for-profit or proprietary schools offer courses in everything from fashion modeling to underwater welding. TWC regulates 284 proprietary schools statewide, 57 of which are in the Border. To operate in Texas, a proprietary school must receive a certificate of approval from TWC, which states, among other things, that the school is capable of meeting its objectives for offering the courses or curriculum advertised, maintains adequate student follow-up data, issues certificates of training, and is financially sound. The school must renew its certificate of approval annually.25
TWC regulated proprietary schools in the Border enrolled more than 21,000 students in 1995-96, with a total of 6,000 students completing the training.
Adjusting to NAFTA
In 1974, Congress provided for trade adjustment assistance to support and retrain workers displaced by economic shifts resulting from free trade. In 1993, the same year the North American Free Trade Agreement (NAFTA) was ratified, Congress created the NAFTA Trade Adjustment Assistance (NAFTA-TAA) program to help workers especially hard hit by the new trade agreement. NAFTA-TAA is federally funded and provides occupational, remedial, literacy, English-as-a-Second-Language, and entrepreneurial training, along with income support for up to 52 weeks, payments for job search commutes, and a relocation allowance to employees who have lost their jobs because of NAFTA.26
NAFTA-TAA certified nearly 7,500 workers laid off in El Paso from 1994 through 1997, representing one-half of all NAFTA-TAA certified workers in Texas. Following that, El Paso was successful in obtaining a large grant from the U.S. Department of Labor for job training and placement for workers most adversely affected by NAFTA.
In early May, the U.S. Labor Department granted El Paso $45 million over three years to help retrain 3,500 workers displaced by NAFTA. The grant announcement described El Paso as "the city most affected by the trilateral trade pact. "27
The majority of the dislocated workers certified to receive benefits from the NAFTA-TAA program were Hispanic women with limited education and even more limited English skills who had worked in the garment factories in El Paso. These workers are atypical of workers who normally benefit from trade adjustment assistance in that they do not already possess substantial skills that can be translated to another set of skills over a year's training. Despite their unique characteristics, the El Paso workers were placed in literacy and English classes to help them find new jobs in the El Paso economy. A year, or even 18 months, was not enough time for these workers to develop the English skills necessary to be trained in other job skills. As a result, they have used up their individual training subsidies and have yet to develop marketable skills.
The problems in El Paso point directly to flaws in NAFTA-TAA that must be corrected to make it more beneficial to displaced workers along the border. The requirement that workers must be in some sort of training, no matter how ill-suited, to remain eligible for the trade adjustment assistance subsidy must be corrected. While the $45 million will make a tremendous difference, it could have been even more beneficial if the original NAFTA-TAA for displaced workers had provided an employable skill in demand in the region. The time frame for finding a training slot should be modified to provide workers with greater flexibility and more opportunity to find the training best suited to their needs. A program administrator should perform periodic follow-up, possibly quarterly, to help prevent workers from running out of time on their assistance before they get the training they need to find another job.
<--Higher Education Transportation-->