Manufacturing is a backbone for the Texas economy. In 2016 alone, it generated $218 billion dollars for Texas – nearly 15% of the state’s GDP – and directly supported 845,000 jobs. Economic output from manufacturing in Texas has nearly doubled in size since 1997, growing by 98.7% and rapidly outpacing Texas’ GDP overall.
However, this rosy picture hides challenges facing manufacturing labor. Since 1997, employment in Texas manufacturing has declined 19%. This can largely be attributed to advances in technology and automation. By assigning routine tasks to increasingly affordable machines, companies can easily increase productivity while reducing operating costs.
New technologies have changed the skills required of manufacturing workers to include programming proficiency, data analysis, and management. This has created an industry-wide “skills gap”: employers cannot find workers with appropriate skills, and workers do not have the skills to obtain open jobs. Across the U.S., this could cause 2.4 million manufacturing positions to remain unfilled by 2028. Texas is especially vulnerable to this labor disruption, with one-quarter of jobs in Houston at risk of displacement. The size of this problem requires bold action.
Worker retraining provides the most straightforward solution to address the skills gap. Currently, Texas supports retraining through the Skills Development Program. Administered by the Texas Workforce Commission, the program provides grants to businesses that want to retrain their workers.
While the program has seen some success – about 16,000 workers benefitted in 2016 – it does not present a viable solution for the scale of this technological revolution. It requires community colleges to conduct retraining, even though this is often inaccessible to many workers. Retraining programs are narrowly tailored, focusing on specific skills rather than a worker’s long-term growth. Finally, it puts workers’ economic prospects in the hands of one business. For Texas to deal with this skills gap, its retraining must demonstrate greater flexibility.
Fortunately, the program only requires a small adjustment. Texas should supply Skills Development Grants to non-profits dedicated to retraining workers. Non-profits are focused the needs of workers, not a single business, and are thus more motivated to facilitate retraining programs with long-term benefits. Non-profits could host their own skills development classes at times and mediums more comfortable for workers.
Project Quest in San Antonio serves as a model for such a third-party organization. The organization provides skills training for workers, supplemented by professional and personal support. While the program is not cheap – spending approximately $11,000 per trainee – it has been lauded for its success. With support from the Skills Development Program, organizations like Project Quest could expand across the state.
Technology promises to revolutionize manufacturing. This will not eliminate the need for manufacturing labor; rather, it will change the skills required of workers. Relying on businesses to submit grants places worker’s training prospects entirely in the hands of their employer. Redirecting Skills Development Program grant funds to third-party organizations will allow for more flexible, sustainable training. The Texas Workforce Commission should make this change immediately to prepare for the upcoming labor displacement.