Filing Deadline Extended
Quick Start for:

Economic Development

Texas in Focus: Upper East Texas

Economic Development

The Upper East Texas region stretches from the serene expanses of the pine forests bordering Arkansas and Louisiana to the energetic eastern fringe of the Dallas-Fort Worth Metroplex. This varied landscape is echoed in the mosaic of industries that fuel the region’s growth.

Agriculture has traditionally anchored the Upper East Texas economy. Agricultural enterprises such as horticulture, timber and the dairy industry have remained robust, while value-added activities such as food processing and food distribution have evolved to support them.

Transportation also has played a pivotal role in the area’s economy. Industries including the manufacture of railroad rolling stock (locomotives, railcars, coaches and wagons), tires and motor vehicle bodies, as well as various services that support transportation, have relatively high concentrations of employment in Upper East Texas. Distribution, warehousing and storage services also have found a niche in this region.

Agricultural enterprises such as horticulture, timber and the dairy industry have remained robust.

East Texas timber near Mt. Pleasant PHOTO: Courtesy of JamesTaylorTimber.com

East Texas timber near Mt. Pleasant

PHOTO: Courtesy of JamesTaylorTimber.com

Economic Trends

Exhibit 2 displays the increase in employment expected for the Upper East Texas region, its urban and rural areas and the state of Texas as a whole from 2002 to 2012. These expected changes are presented in the form of growth indices, using 2002 as the base year with an index equal to 100.

The region as a whole and its rural counties are expected to undergo job growth at rates of 22.4 percent and 20.8 percent, respectively.

Exhibit 2

Upper East Texas Region Employment Indices, 2002-2012

Upper East Texas Region Employment Indices, 2002-2012

(Upper East Texas Region Employment Indices, in Table Format.)


Among the three metropolitan statistical areas (MSAs) that comprise Upper East Texas, the Longview MSA will experience the largest job growth rate through 2012, at 23.7 percent. The MSAs of Tyler and Texarkana will realize employment growth rates of 22.9 percent and 19.4 percent, respectively.

Delta County, the only county in the region that is part of the Dallas-Fort Worth-Arlington MSA, is expected to experience the region’s highest job growth. From 2002 to 2012, the county is expected to increase its number of jobs from 2,207 in 2002 to 2,878 in 2012, a 30.4 percent increase.

In all, however, employment growth in the region and its rural counties will parallel the state’s. Between 2002 and 2012, employment in Texas is expected to increase by 24.6 percent. The region as a whole and its rural counties are expected to undergo job growth at rates of 22.4 percent and 20.8 percent, respectively.

Exhibit 3 provides a more detailed picture of projected employment growth in Upper East Texas. It displays growth indices, again with 2002 as the base year, for various industries in the region. Employment numbers for these industries are presented at the 11-industry “supersector” level of the North American Industry Classification System (NAICS).1

Exhibit 3

Upper East Texas Region Employment by Industry Sector, 2002-2012

Upper East Texas Region Employment by Industry Sector, 2002-2012

(Upper East Texas Region Employment by Industry Sector, in Table Format.)

A supersector, as identified by a two-digit NAICS code, represents an aggregation of industries producing related goods and services. At this level, industries are classified into either goods-producing or service-producing supersectors. The goods-producing group comprises three supersectors pertaining to natural resources and mining, construction and manufacturing. The service-producing group comprises eight supersectors providing services ranging from trade, transportation and utilities to information, finance, education, health and government.

The financial activities sector, which includes the finance, insurance and real estate industries, should experience the most significant employment growth between 2002 and 2012, at 44.9 percent.

Professional and business services and the leisure and hospitality sectors will post significant employment growth rates as well, at 41.4 percent and 32.5 percent, respectively. Other regional industries anticipating positive job growth rates by 2012 include the construction sector (32.2 percent), the educational and health services sector (25.5 percent) and the “other services” sector (22.9 percent).2

Among the 11 supersectors covered in Exhibit 3, only manufacturing will exhibit less than double-digit employment growth rates between 2002 and 2012. The supersector is expected to grow by just 9.2 percent.

Sources: City of Tyler, Texas and Tyler Rose Museum.

Economic Structure

All job growth depends upon the region’s underlying economic structure. That structure includes multiple factors, including natural resources, labor force characteristics and the composition and concentration of the region’s industries. This latter characteristic, which is also called clustering, is particularly important since industry clusters give firms within them access to more suppliers and skilled laborers and valuable knowledge and information.3 The benefits that result from high industry concentrations give a region its competitive edge.4

One tool that can be used to identify industry concentration is the “location quotient.” The location quotient identifies industry concentration by comparing the share of a region’s economy attributable to a specific industry to the share that same industry accounts for in the nation’s economy.

In essence, the share an industry accounts for in the national economy is seen as the “norm” for that industry, so comparing that norm with its share of a regional economy indicates whether that region tends to have “a lot” or “a little” of a particular industry. Typically, a region will contain “a lot” of industries for which it has some natural or developed competitive advantage, based for instance on a local abundance of a particular resource, climate, an advantageous natural feature (such as proximity to a port), labor skills or some other factor.

A location quotient greater than one signifies that the region has a high concentration of employment in the industry compared to the same industry at the national level. This means that the region is “specialized” in that particular industry. A location quotient of less than one indicates that the region’s concentration in the industry is under or less than that of the same industry at the national level. In essence, the region is less specialized in that given industry.

Exhibit 4 lists industries in the Upper East Texas region with location quotients that exceed one, which signifies that they are specialized, based on 2007 employment. These industries are grouped according to their respective NAICS supersectors and are ranked from the highest to lowest location quotient for each supersector.6

Exhibit 4

Upper East Texas Largest Industry Location Quotients, 2007

Manufacturing

Description NAICS Code 2007 Jobs 2007 LQ
Railroad rolling stock manufacturing33651 2,190 23.02
Petrochemical manufacturing32511 1,601 17.30
HVAC and commercial refrigeration equipment33341 3,480 6.63
Other converted paper product manufacturing32229 1,064 6.55
Iron and steel mills and ferroalloy mfg.33111 1,854 5.73
Motor vehicle body and trailer manufacturing33621 2,941 5.18
Construction machinery manufacturing33312 1,320 5.02
Wood container and pallet manufacturing32192 1,082 4.96
Metal tank, heavy gauge, manufacturing33242 494 4.81
Pottery, ceramics, and plumbing fixture mfg.32711 382 4.77
Ferrous metal foundries33151 1,406 4.65
Tire manufacturing32621 837 4.26
Abrasive product manufacturing32791 159 4.19
Animal slaughtering and processing31161 6,919 4.17
Accessories and other apparel manufacturing31599 289 3.90
Agricultural implement manufacturing33311 947 3.65
Clay building material and refractories mfg.32712 459 3.57
Fruit and vegetable canning and drying31142 935 3.12
All other fabricated metal product mfg.33299 1,838 2.80
Mining and oil and gas field machinery mfg.33313 633 2.75
Asphalt paving and roofing materials mfg.32412 213 2.22
Plate work and fabricated structural products33231 1,377 2.19
Sawmills and wood preservation32111 885 2.15
Sign manufacturing33995 410 1.28

Educational and Health Services

Description NAICS Code 2007 Jobs 2007 LQ
Home health care services62161 12,260 3.22

Professional and Business Services

Description NAICS Code 2007 Jobs 2007 LQ
Geophysical surveying and mapping services54136 173 2.23

Agriculture, Natural Resources and Mining

Description NAICS Code 2007 Jobs 2007 National LQ
Support activities for mining 21311 9,676 9.76
Timber tract operations 11311 189 7.74
Oil and gas extraction 21111 9,512 7.62
Coal mining 21211 1,173 4.44
Crop and animal production 11A00 32,576 3.42
Logging 11331 1,171 2.69

Construction

Description NAICS Code 2007 Jobs 2007 LQ
Oil and gas pipeline construction 23712 1,614 5.10
Industrial building construction 23621 1,359 2.01

Trade, Transportation and Utilities

Description NAICS Code 2007 Jobs 2007 LQ
Support activities for rail transportation48821 582 6.88
Livestock merchant wholesalers42452 366 4.94
Water supply and irrigation systems22131 532 4.22
Meat markets44521 663 3.75
Manufactured, mobile, home dealers45393 332 3.53
Pipeline transportation of crude oil48611 74 2.93
Petroleum bulk stations and terminals42471 307 2.77
Nursery and florist merchant wholesalers42493 470 2.22
Warehouse clubs and supercenters45291 7,911 2.22
Dairy product merchant wholesalers42443 289 2.06

Financial Activities

Description NAICS Code 2007 Jobs 2007 LQ
Trusts, estates, and agency accounts52592 832 7.53
Other insurance funds52519 903 4.56
Open-end investment funds52591 691 3.30

Leisure and Hospitality

Description NAICS Code 2007 Jobs 2007 LQ
Mobile food services72233 47 1.15

Source: Economic Modeling Specialists Inc.

The most competitive industry in Upper East Texas is the “all other specialty trade contractor” industry, which includes businesses that construct outdoor swimming pools, fences, parking lots, pavements and driveways.

The location quotients for these industries ranged in value from 1.15 for mobile food services to 23.02 for the railroad rolling stock manufacturing industry. In the case of mobile food services, the level of employment in this Upper East Texas industry is 15 percent higher than its national counterpart. The railroad rolling stock manufacturing industry, by contrast, has 23 times more workers than the same industry at the national level.

Most Competitive Industries

While location quotients provide important information on regional industry concentrations, the portrait they paint is only a snapshot, a static measure for a particular point in time. To assess the competitive resilience of a regional industry, a more dynamic measure is needed. One such measure is “shift-share analysis.”

In this analysis, the change in an industry’s presence in a region is divided into three components: the portion attributable to the overall growth or decline in the nation’s economy (the national growth effect); that attributable to the industry’s national level growth or decline above or below the national growth trend (the industry mix effect); and that attributable to the region’s competitiveness as a site for the industry (the regional competitiveness effect).

Exhibit 5 lists the most competitive industries in the Upper East Texas region, based on shift-share analysis.8 The industries are ranked based on their employment change in the regional competitiveness effect component (and thus the industry’s comparative advantage in the region) between 2002 and 2007, and grouped based on their respective NAICS supersectors.

Based on the information presented in Exhibit 5, the most competitive industry in Upper East Texas is the “all other specialty trade contractor” industry, which includes businesses that construct outdoor swimming pools, fences, parking lots, pavements and driveways. A total of 1,502 positions of the 2,258-employee increase in this industry are attributable to the region’s competitiveness in this industry.

The regional competitiveness effect also played a significant role in employment growth in transportation-related industries such as the general and the refrigerated warehousing and storage industries. These industries are ranked second and fourth, respectively, in terms of competitive effect employment growth. In fact, this effect accounted for more than 90 percent of the change in industry employment from 2002 to 2007.

According to the exhibit, support activities for mining ranked third, with the regional competitiveness effect accounting for 1,465 of a 4,522-position change in employment.9 The majority of this change in employment, however, is not attributable to the competitiveness effect. Instead, about 58 percent (2,634 jobs) of this change in employment is due to the industry mix effect. This means that employment growth in this regional industry is largely due to the fact that the industry grew nationally at a faster rate than the overall economy from 2002 to 2007.

Good Jobs for the Future

Shift-share analysis can identify the region’s most competitive industries – those that possess the best chances for increased employment opportunities. What types of occupations can Upper East Texans expect to find within these industries? Exhibit 6 presents a list of “good jobs” for the region’s future, grouping them based on their educational requirements.

171 occupations in Upper East Texas pay more than the state’s 2007 per capita personal income level of $37,187.

Occupations requiring doctoral and professional degrees command the highest median annual earnings, with a weighted average of $97,966 for the region. Occupations requiring both a college degree and work experience provide the second-highest median annual earnings, with a weighted average of $71,903. Occupations requiring a master’s degree provide the third-highest median annual earnings, with a weighted average median wage of $60,680 annually.

In the Upper East Texas region, occupations requiring postsecondary vocational training provide median annual earnings of $42,239. Occupations requiring relevant work experience or an associate’s or bachelor’s degree yield median annual earnings of between $49,000 and $51,000.

For the purpose of this analysis, a “good job” is one for which the weighted average of median annual earnings, as reported by the Texas Workforce Commission for the work force development areas comprising the Upper East Texas region, exceeds the state’s 2007 per capita personal income level of $37,187.10 In the Upper East Texas region, 171 occupations pay more than this amount.

It should be noted that many occupations that meet the “good jobs” definition do not require a college degree. A number of occupations requiring related work experience, on-the-job-training or postsecondary vocational training also provide good wages.

Comptroller Assistance

One of the many functions of the Comptroller’s office is to provide economic development information to local governments and other groups, and to analyze demographics, the labor force and other economic factors needed to generate local economic growth. Through its Texas EDGE (Economic Data for Growth and Expansion) program, the agency can identify occupational and industry trends and their effects on local and regional economies.

The Comptroller’s office also can provide local demographic data, identify business clusters and provide maps of regional infrastructure including highways, railroads and other public facilities. For assistance, please visit www.window.state.tx.us/texasedge or e-mail texas.edge@cpa.state.tx.us.

Since August 2008, the Comptroller’s office has responded to 301 Texas EDGE requests from city and county government officials, economic development corporations, private businesses and members of the media.11 These requests have covered many topics, including demographics, economic development, economic modeling and taxes.

The agency also provides local governments with information about tax-related programs and helps them identify opportunities to raise funds for economic development efforts through property, sales and franchise tax revenues, exemptions and credits. It also provides information on special assessments and other opportunities related to disaster relief.

Exhibit 7 lists 25 occupations expected to have the highest number of job openings between 2007 and 2012. The occupation most in demand, retail sales, is expected to create 4,653 openings between 2007 and 2012, with median annual earnings of approximately $18,288.12

Exhibit 7

Occupations in Upper East with the Most Projected Openings by 2012

Rank Description 2007 Jobs 2012 Jobs Total Job Openings Growth Replacement Annual Earnings
1 Retail salespersons 18,128 20,438 4,653 2,310 2,343 $18,288
2 Cashiers, except gaming 12,580 12,977 3,567 397 3,170 $14,940
3 Combined food preparation and serving workers, including fast food 11,213 13,224 3,071 2,011 1,060 $14,102
4 Maids and housekeeping cleaners 10,496 12,872 2,650 2,376 274 $14,614
5 Truck drivers, heavy and tractor-trailer 9,960 11,275 2,054 1,315 739 $32,177
6 First-line supervisors/managers of retail sales workers 9,685 10,430 1,187 745 442 $30,176
7 Office clerks, general 9,617 10,732 1,923 1,115 808 $19,654
8 Registered nurses 9,275 10,761 2,240 1,486 754 $51,766
9 Secretaries, except legal, medical, and executive 9,102 9,610 1,142 508 634 $22,307
10 Laborers and freight, stock and material movers, hand 8,420 9,064 1,933 644 1,289 $20,612
11 Managers, all other 7,811 9,081 1,292 1,270 22 $60,340
12 Bookkeeping, accounting and auditing clerks 7,612 8,403 1,251 791 460 $27,032
13 General and operations managers 7,136 7,643 1,256 507 749 $71,483
14 Personal and home care aides 6,362 8,126 2,160 1,764 396 $13,658
15 Waiters and waitresses 6,198 7,389 2,848 1,191 1,657 $13,827
16 Elementary school teachers, except special education 6,187 7,011 1,477 824 653 $39,576
17 Janitors and cleaners, except maids and housekeeping cleaners 5,952 6,696 1,240 744 496 $16,790
18 Customer service representatives 5,814 6,809 1,759 995 764 $22,760
19 Licensed practical and licensed vocational nurses 5,544 6,237 1,442 693 749 $34,916
20 Child care workers 5,440 6,379 1,104 939 165 $14,003
21 Home health aides 4,865 6,072 1,409 1,207 202 $15,840
22 Secondary school teachers, except special and vocational education 4,725 5,188 1,167 463 704 $42,501
23 Real estate sales agents 4,353 5,494 1,161 1,141 20 $35,531
24 Correctional officers and jailers 4,254 4,876 1,108 622 486 $28,006
25 Real estate brokers 4,143 5,263 1,125 1,120 5 $78,186

Sources: Economic Modeling Specialists Inc. and the Texas Workforce Commission.

Eleven of the 25 occupations with the most openings, accounting for about 57 percent of the total, require short-term, on-the-job training. Of the remaining 14 occupations, eight require educational training beyond high school or work experience in a relevant field. These eight occupations provide a minimum median annual salary of at least $30,000.

The Comptroller’s Local Government Assistance and Economic Development Division provides free risk assessments to local governments. These give local officials reasonable assurance that risks to local objectives have been identified and identify the controls and mitigating factors associated with each.

Finally, the Comptroller’s State Energy Conservation Office (SECO) can help local governments slash their energy costs and adopt cost-effective clean energy technologies. SECO offers local governments a free preliminary energy audit of their facilities. These audits provide recommendations for reducing electricity consumption by improving the efficiency of heating and air conditioning systems and lighting.


Gross Sales and Sales Tax, Upper East Texas Region, 2006 and 2007

County Gross Sales 2006 Gross Sales 2007 Amount Subject to Tax 2006 Amount Subject to Tax 2007 Sales Tax 2006 Sales Tax 2007
Gregg $8,495,399 $11,818,894 $2,152,539 $2,322,116 $134,534 $145,132
Smith $6,646,663 $6,516,042 $2,353,913 $2,439,097 $147,120 $152,444
Titus $3,247,579 $3,858,156 $270,948 $504,985 $16,934 $31,562
Anderson $3,960,450 $3,630,380 $466,573 $488,035 $29,161 $30,502
All Other Counties $16,471,287 $17,578,547 $4,213,394 $4,409,137 $263,337 $275,571
Total $38,821,379 $43,402,020 $9,457,367 $10,163,370 $591,085 $635,211

Source: Texas Comptroller of Public Accounts.

Retail Employees and Wages, Upper East Texas Region, 2006 and 2007

County Employees
2006
Total Wages
2006
Employees
2007
Total Wages
2007
Smith 12,925 $329,383,599 13,431 $342,563,022
Gregg 9,135 $262,471,272 9,356 $273,809,933
Bowie 5,499 $124,544,730 5,734 $133,994,602
Harrison 2,667 $64,647,776 2,564 $59,156,238
All Other Counties 21,342 $465,967,109 21,268 $478,713,249
Total 51,568 $1,247,014,486 52,353 $1,288,237,044

Source: Texas Comptroller of Public Accounts.

Industry Profiles


Endnotes

  • 1 U.S. Department of Labor, NAICS Supersectors for CES Program,” http://www.bls.gov/sae/saesuper.htm. (Last visited September 23, 2008.)
  • 2 The “Other Services” sector represents all industries covered under the two-digit NAICS code 82. These industries are primarily engaged in the provision of repair and maintenance services for automotive, electronic, commercial and industrial machines and equipment. The sector also includes personal services such as laundry, dry cleaning, hair, nail, and skin care, funeral parlors and organizations that have religious, social advocacy, civic, political and business purposes.
  • 3 National Governors Association, A Governor’s Guide to Cluster-Based Economic Development (Washington, D.C., 2002), p. 9, http://www.eda.gov/ImageCache/EDAPublic/documents/pdfdocs/nga_5fclusters_2epdf/v1/nga_5fclusters.pdf. (Last visited September 23, 2008.)
  • 4 Laila Assanie and Mine Yücel, “Industry Clusters Shape Texas Economy,” Southwest Economy (September/October 2007), pp. 1-2, 5, 8, http://dallasfed.org/research/swe/2007/swe0705b.cfm. (Last visited September 23, 2008.)
  • 5 Texas Workforce Commission, Standardized Occupational Components for Data Services of Trends in Employment System (SOCRATES), “Employer Search,” http://socrates.cdr.state.tx.us/. (Last visited September 23, 2008.) Custom query for LWDA Region 07 (North East Texas) and LWDA Region 08 (East Texas) employer contacts.
  • 6 U.S. Department of Labor, “NAICS Supersectors for CES Program.”
  • 7 Texas Comptroller of Public Accounts. “Bouncing Back From BRAC.” Fiscal Notes. (July/August 2006), http://www.window.state.tx.us/comptrol/fnotes/fn0607_08/brac.html. (Last visited September 23, 2008).
  • 8 For the purpose of this analysis, “most competitive” industries are those that posted the largest job growth (positive job changes) in the competitive effect component of the shift-share analysis between 2002 and 2007.
  • 9 This industry represents businesses that provide drilling core sampling, and geological observation services to the mining industry.
  • 10 U.S. Department of Commerce, Bureau of Economic Analysis, “State Personal Income 2007,” News Release, (March 26, 2008), http://www.bea.gov/newsreleases/regional/spi/2008/pdf/spi0308.pdf. (Last visited September 23, 2008.) See “Table 1A. Per Capita Personal Income, Person Income, and Population, by State and Region, 2006-2007.”
  • 11 Based on e-mail correspondence with Mr. Andy Liebler, Senior Policy Analyst of the Regional Fiscal Analysis Section of the Texas Comptroller’s Office, August 21, 2008. These requests fall under categories such as economic development, sales tax, demographics, etc.
  • 12 Median annual earnings were estimated by multiplying the median hourly earning for the industry by 2,080 work hours, which is the average number of work hours in a week (40) multiplied by the number of weeks in a year (52). The exceptions to this estimate are professions related to elementary, middle school and secondary education, which generally involve about nine months of work. These annual wages were obtained from the Texas Workforce Commission.
  • 13 Simon Property Group, “Broadway Square, Tyler, Texas,” p. 1, http://www.simon.com/Mall/LeasingSheet/0344_BroadwaySquare_PropFactSheet.pdf; Simon Property Group, “Longview Mall, Longview, Texas,” p. 1, http://www.simon.com/Mall/LeasingSheet/2356_LongviewMall_PropFactSheet.pdf; and “Central Mall, Texarkana, Texas,” pp.1-2, http://www.centralmalltexarkana.com/mimages/factsheets.pdf. (Last visited September 23, 2008.)
  • 14 Texas Workforce Commission, “Quarterly Employment and Wages (QCEW),” http://www.tracer2.com/cgi/dataanalysis/AreaSelection.asp?tableName=Industry. (Last visited September 23, 2008). Custom query for Upper East Texas’ fruit and vegetable, dairy, meat, and bakery production industry data.
  • 15 Texas Workforce Commission, Standardized Occupational Components for Data Services of Trends in Employment System (SOCRATES), “Employer Search.”
  • 16 Pilgrim’s Pride, “The Pilgrim’s Story,” p. 1, http://www.pilgrimspride.com/aboutus/pilgrimsstory.aspx. (Last visited September 23, 2008.)
  • 17 Pilgrim’s Pride, “About Us,” p. 1, http://www.pilgrimspride.com/aboutus/. (Last visited September 23, 2008.)
  • 18 Dan Garcia, “Pilgrim’s Pride Cuts 600 Jobs at Arkansas Plant,” (July 15, 2008), pp. 1-2, http://www.kauz.com/news/25467844.html. (Last visited September 23, 2008.)
  • 19 Texas Workforce Commission, “Quarterly Employment and Wages (QCEW). Custom query for Upper East Texas’ forestry industry with Comptroller’s office calculations.
  • 20 Texas Office of the Governor, “Texas Industry Profile–Forestry and Logging NAICS 113 (private industry only),” p. 1, http://www.texasindustryprofiles.com/pdf/empsnapshot/113.pdf. (Last visited September 23, 2008); Texas Office of the Governor, “Texas’ Industry Profile–Paper Manufacturing NAICS 322 (private industry only),” p. 1, http://www.texasindustryprofiles.com/pdf/empsnapshot/322.pdf. (Last visited September 23, 2008.)