Austin: Economy

Major Industries and Commercial Activity

Austin's role as a center for high technology made it particularly vulnerable to the recession that struck the nation's economy in the early 2000s. For three consecutive years, Austin suffered layoffs and job reductions; even the city government slashed 1,000 jobs. In an effort to reverse the tide, the city launched Opportunity Austin in September 2003. This plan aimed to bolster existing industries, such as computer software, digital media, wireless technology, semiconductors, and tourism, as well as attract new companies from diverse segments, like automotive, medical products, transportation and logistics, and national and regional headquarters. The 5-year goal of Opportunity Austin is to add 72,000 new jobs and a $2.9 billion increase in payroll.

An off-shoot of Austin's leadership in the semiconductor and software industries is the wireless segment. With a developed infrastructure of telecommunication, transportation, electric, and water capacities, Austin is a leading site for wireless technologies. Named one of the hottest wireless cities by Newsweek magazine in June 2004, Austin offers more free wireless spots—including its city parks—per capita than any other city in the nation. Moreover, the University of Texas at Austin is the nation's most unwired university in the country. Qualcomm Corp. constructed a computer chip design center in Austin in 2004, the same year that Verizon Wireless selected Austin as the first city for the launch of its BroadbandAccess 3G Network, a high-speed wireless Internet access service. Other wireless companies with a presence in Austin include AT&T Wireless Corp., Dell Inc., Intel Corp., and T-Mobile.

Drawing on the same expertise in high technology and innovation, the city is venturing into the biomedical and pharmaceuticals industry. The University of Texas at Austin is a primary asset in this arena. It has world-class programs in bioengineering, nanotechnology, bioinformatics, and pharmaceutical research, and is a leader in the number of science and engineering doctoral degrees it awards. Austin ranks high in patent activity—a measure of innovation. The 2,789 patents that were granted to Austin inventors in 2003 translates to 200 patents per 100,000 residents, more than 5 times the national rate of 36 patents per 100,000 residents. The city is home to approximately 85 biotech/pharmaceutical companies, including Apogent Technologies Inc., Luminex Corp., and TOPAZ Technologies Inc.

Austin has a history of success in striving to attract regional office and national headquarters. Dell Inc. is not only based in Austin, it is one of the area's largest employers. A diverse array of companies also elected to make Austin their headquarters: Hoover's Inc. (business/market intelligence), National Instruments Corp. (industrial automation), Schlotzsky's Inc. (sandwich chain), and Whole Foods Market Inc. (natural foods chain). In 2004 alone, a number of companies established or expanded their Austin headquarters, including 360Commerce Inc. (software), Britestream Networks Inc. (semiconductors), HealthTronics Inc. (surgical services/medical devices), Opus Healthcare Solutions (medical software), SigmaTel Inc. (semiconductors), Silicon Laboratories Inc. (integrated circuits), TriCoast Funding (mortgages), and the wireless industry association Wi-Fi Alliance. The city also serves as divisional or regional headquarters for such companies as 3M Co. (conglomerate well-known for adhesives), Progressive Corp. (insurance), and Waste Management Inc. (garbage collection).

Items and goods produced: computers, computer peripherals, software, electronic instruments, semiconductors, biotechnology, pharmaceuticals, business equipment, video games

Incentive Programs—New and Existing Companies

Local programs

The city of Austin offers tax abatements, enterprise zone exemptions, public utility incentives, and financing programs for qualified new and existing companies. The Economic Development staff of the Greater Austin Chamber of Commerce can provide ongoing assistance to relocating companies, from initial inquiry to full employment. Chamber staff can act as area-wide resources for community presentations, initial interface with company employees, spousal employment assistance, residential real estate brokers/tours, special mortgage and banking programs, child care/elder care, and cultural acclimation.

State programs

The state of Texas offers a number of incentive programs to attract new and expanding businesses to the state. The Texas Economic Development Act of 2001 encourages large-scale manufacturing, research and development, and renewable energy by offering an eight-year reduction in property taxes. Other property tax incentives are offered to companies owning certain abated property and those that are located in specified areas known as reinvestment zones. The Texas Enterprise Zone Program offers sales and use tax refunds to companies that create jobs in certain economically distresses areas of the state. Other sales and use tax refunds are extended toward manufacturing machinery and equipment, with agricultural products and semiconductor components targeted in particular. Research and development expenditures may be qualified for franchise tax credits, as can businesses creating jobs or injecting capital into "strategic investment areas."

Job training programs

The Texas Workforce Commission (TWC) provides workforce development assistance to employers and jobseekers across the state through a network of 28 workforce boards. Programs for employers include recruitment, retention, training and retraining, and outplacement services for employees. TWC also administers the Skills Development Fund, a program that assists public community and technical colleges create customized job training for local businesses. In the 2000-2001 school year alone, the Center for Career and Business Development, operated by Austin Community College, trained more than 5,800 employees of local high technology companies. This college also developed the Robotics and Automated Manufacturing program to produce skilled technicians for such highly automated industries as automotive manufacturing, an industry targeted by the city for growth. The Greater Austin Chamber of Commerce and the city of Austin founded the Capital Area Training Foundation (CATF) as an industry-led, non-profit organization dedicated to establishing long-term education and workforce development solutions. CATF courses provide college credit, internships, industry tours, and guest speakers who help students make the connection between high school and the world of work.

Development Projects

Defined by the Opportunity Austin initiative, the city's focus for the mid-2000s was to strengthen its core high technology industry while attracting new diverse businesses and national, regional, or divisional headquarters. The first company recruited under this program was TASUS Corp., which announced plans in January 2004 to relocate from Indiana to Austin in a move that will create 100 new jobs in the area. Harris Publishing Co. announced a 150-job expansion the following month. In a large coup for the city, The Home Depot Inc. started construction in July 2004 on a new technology center that will create 500 new jobs and have an economic impact of $30 million each year. U.S. Aquaculture broke ground in February 2005 on a $5 million, 60,000 square foot facility that will produce organically raised fish.

In the culture and recreation arena, Austin continued to develop projects that would improve the quality of life for residents and visitors. Construction began in 2005 on the Lozano Long Center for the Performing Arts as well as the Lance Armstrong Crosstown Bikeway, named for the seven-time winner of the Tour de France, which will provide a six-mile bike route through downtown Austin. The Jack S. Blanton Museum of Art is scheduled to open at the University of Texas at Austin in February 2006. In the planning stage are the Austin Museum of Art and the Mexican-American Cultural Center, a 126,000 square foot facility that will be dedicated to Mexican-American cultural arts and heritage.

Economic Development Information: Greater Austin Chamber of Commerce, 210 Barton Springs Rd., Ste. 400, Austin, TX 78704; telephone (512)478-9383; fax (512)478-6389

Commercial Shipping

Expansion Management magazine ranked the Austin-San Marcos area one of the top metropolitan areas for logistics, taking into account its transportation/distribution climate, road infrastructure and traffic, railroads, water ports, and air service. Austin-Bergstrom International Airport has a 338,000-square-foot cargo port, and handled more than 254 million pounds of freight in 2004. Of this figure, international cargo totaled more than 12 million pounds, a 45 percent increase over the previous year. The airport's freight carriers are Federal Express, Airborne Express, and Menlo Worldwide Forwarding. Austin's busy Port of Entry is served by three brokers: LE Coppersmith Inc., Robert F. Barnes, and UPS Supply Chain Solutions Inc. Freight also travels to and from the city via Burlington Northern, Santa Fe Railway, Union Pacific Railroad, Georgetown Railroad, and Austin Area Terminal Railroad.

Labor Force and Employment Outlook

Austin boasts a high quality labor force, based in large part on its highly trained, youthful population. In 2003 the percentage of college graduates in the Austin metropolitan area was 36.7 percent, compared to 26.5 percent nationally. The region's seven colleges and universities, particularly the University of Texas at Austin, produce highly skilled, innovate graduates seeking entry into the workforce. At the same time, 47 percent of the area's population was between the ages of 18 and 44 years, while the national average was 39 percent. As a result of these and other factors, Business 2.0 magazine ranked Austin number four on its ranking of "Boom Towns" in March 2004.

The following is a summary of data regarding the Austin metropolitan area labor force, 2003 annual averages.

Size of nonagricultural labor force: 652,300

Number of workers employed in . . .

natural resources and mining: 1,500

construction: 35,700

manufacturing: 57,700

trade, transportation and utilities: 112,000

information: 20,900

financial activities: 39,400

professional and business services: 85,500

educational and health services: 65,700

leisure and hospitality: 63,500

other services: 24,500

government: 145,800

Average hourly wage of production workers employed in manufacturing: $13.94 (2003 statewide annual average)

Unemployment rate: 4.0% (December 2004)

Austin: Economy

Largest employers Number of employees
Austin Independent School District (each employs 5,000 people or more)
City of Austin
Dell Inc.
Federal Government
Freescale Semiconductor Inc.
IBM Corp.
St. David's Healthcare Partnership
Seton Healthcare Network
State of Texas
Texas State University-San Marcos
University of Texas at Austin

Cost of Living

Austin was ranked one of the nation's top 40 real estate markets by Expansion Management magazine in 2003. With a rate of 114.2 percent, the area also ranked first in fastest growing household income between 1990 and 2003, according to Cities Ranked & Rated, published by Wiley Publishing in 2004.

The following is a summary of data regarding several key cost of living factors for the Austin area.

2004 (3rd Quarter) ACCRA Average House Price: $216,000

2004 (3rd Quarter) ACCRA Cost of Living Index: 94.1 (U.S. average = 100.0)

State income tax rate: none

State sales tax rate: 6.25% (food and prescription drugs are exempt)

Local income tax rate: none

Local sales tax rate: 2.0% (of which, 1.0% goes to Metropolitan Transit Authority)

Property tax rate: 2.6431%

Economic Information: Greater Austin Chamber of Commerce, 210 Barton Springs Rd., Ste. 400, Austin, TX 78704; telephone (512)478-9383; fax (512)478-6389. Texas Work-force Commission, 101 E. 15th St., Rm. 651, Austin, TX 78778-0001; telephone (512)463-2236; email