Labor 101: Smart Growth Is Great – If You Can Afford It

The Working Stiff Journal
Vol. 2 #7, September 1999
by Jackie Dana

Austin grows at a shocking pace as more and more high-tech companies move to town, attracting flocks of highly skilled (and highly paid) employees. Yuppies multiply faster than rabbits. The inhabitants of mansions perched over the greenbelts and Mount Bonnell stare, uncomprehending, at exhausted workers who are too tired to be polite when making that double decaf skim cappuccino at their second job.

In the next twenty years Austin’s population is predicted to increase by 66%, ranking it third in areas of greatest growth in the country (after Sacramento and Dallas/Fort Worth). The Austin area added nearly 118,000 residents between 1990 and 1994, an increase of 13.9%. Williamson County saw its population grow by 23.7%. In order for the city to continue experiencing meteoric growth and remain a great place to live, there must be workers. Someone has to serve food in restaurants, haul away garbage, pave streets, teach children, drive buses, sell pet food. Without us, the microchip plants close down, the electricity gets turned off, and no new houses get built. All that prosperity goes down the drain without people to do the work.

And work we do. As of June there were 707,918 employable workers in the Austin-San Marcos area. Fewer than 19,000 were unemployed, giving Austin a mere 2.6% unemployment rate, half the statewide unemployment rate of 5.4%. Contributing to that rate is a hefty increase in jobs – nearly 25,000 jobs created in the past year. In the Austin Business Journal, Ryan Robinson, chief demographer for the City of Austin, called the job growth rate of 6.5% in the past few years “stratospheric.”

Why is this significant? Take note of the types of jobs that are being created. In the past year, the goods-producing sector saw an increase of just 4,400 jobs while the service-producing sector expanded by 20,300. Almost 9,000 jobs were created in areas like computer and data processing, management, and business services. In fact, in 1997 the top ten local employers included Motorola, Dell Computer, IBM, and Advanced Micro Devices. Austin’s 1,700 technology firms make up approximately 12% of the area’s total work force.

The high-tech industry: A boon to our city, but does it help Austin’s workers? No one can doubt that the high-tech industry creates jobs. The problem is that lots of people beyond our state borders are ready to take them. The Real Estate Center at Texas A&M noted that from 1990 to 1996 Travis County’s population increased 18.7%, more than half of the new population originating elsewhere in the United States, particularly California and the East Coast. Further complicating matters, these new Austinites are bringing money with them, forcing up the cost of rent and new homes. “Immigrants have dramatically scaled up the cost of real estate, since even now Austin still looks cheap by New York, Silicon Valley, or D.C. standards,” Brian Kushner, CEO of Recompute, said in the Austin Business Journal.

Could it be that “Smart Growth” is just another term for a relocation package for wealthy high-tech workers? Between October 1998 and June of this year, the median home price in the Austin area rose 8.6% to $130,160. Only one-fifth of all homes built in the past year were priced below $110,000. In January the maximum mortgage limit for FHA loans in the area rose from $116,800 to $133,855. The Austin Chamber of Commerce notes that the average new house sells for just over $153,000, while an existing single-family home averages just over $112,000 when resold. Such prices are out of the reach of the average worker. Apartment rent, however, isn’t much better. Between 95% and 97% of the area’s 87,574 apartment units are occupied, keeping rents high. According to the Austin American-Statesman, “rents have jumped 21 percent over the past five years alone to their highest level – making the Austin area the most expensive in Texas and the third-most expensive in the South” after Washington, D.C., and South Florida. According to the Chamber of Commerce, rents average about 85 cents/square foot. Believe it or not, it’s actually cheaper to buy a house in Austin than to rent an apartment.

But don’t accuse high-tech workers of raising the cost of living. It’s the industries, not the workers, who deserve the blame for the skyrocketing costs. New companies move to town, increase demands on our infrastructure, and employ out-of-state workers in high-level positions. Local folks, on the other hand, get the crumbs, working in poor conditions, often as “contract labor” for little more than minimum wage.

The “prosperity” high-tech companies bring to town doesn’t help average workers at all. In “The State of Working America 1998-99” we are cautioned not to believe that prosperity automatically brings a higher standard of living. Instead, “living standards of most working families still have not recovered from the recession of the early 1990s, nor have their wages kept pace with the growth in productivity. The income growth that has been generated among middle-income families has been driven largely by an increase in working hours . . . to make up for the long-term deterioration of wages.”

So the cost of living in Austin has mushroomed while our wages remain stagnant. Despite our hometown prosperity, business owners insist that they cannot afford to pay workers living wages. The federal minimum wage is $5.15, but with our cost of living, Austin workers need to earn at least $9.09 per hour just to afford a one-bedroom apartment. The lowest-paid workers need two full-time minimum-wage jobs just to survive.

We need to change this pattern. Smart Growth is fine as long as the workers don’t suffer as a result. After all, Austin needs its workers – it cannot function without us. Workers need to support each other, to help win better pay and benefits for all of us, and to achieve living wage standards in both public and private sector employment. We must stand together – for united we stand, divided we fall.

The Working Stiff Journal was a free community newspaper produced in Austin, Texas and distributed across town. All of the articles were available online on the UT Watch site for many years, but they are no longer available, so I am republishing my own work here (in 2014). You can still read back issues thanks to the Internet Archive’s Wayback Machine.

Leave a Reply

%d bloggers like this: