Trade-Linked Service Jobs Help Lead El Paso Income Gains

September 4, 2012

Bill Gilmer Robert "Bill" Gilmer is an economist who co-wrote the recently published income study at the El Paso branch of the Federal Reserve of Dallas. (Vanessa M. Feldman / El Paso Times)

By Vic Kolenc \ El Paso Times

El Paso's income levels are on the rise after years of declines largely due to growth of service jobs tied to cross-border trade, a new study concludes.

"El Paso is still a poor city, no question. At least El Paso is making progress, and moving in the right direction again after 31 years of moving in the wrong direction," said Robert "Bill" Gilmer, an economist who co-wrote the recently published income study at the El Paso branch of the Federal Reserve Bank of Dallas.

El Paso's per-capita income of $28,698 in 2010, the latest year such data are available for metro areas, was only 72 percent of the U.S. per capita income of $39,937.

But the big news, Gilmer said, is El Paso has reversed a decades-old trend of declining per-capita income and made up most of the ground lost between 1969 and 2000 when El Paso's garment industry was disappearing. In 2001, El Paso and other border cities began increasing income at a faster pace than the national rate, Gilmer said.

In 2000, El Paso per-capita income was $18,812, according to U.S. Bureau of Economic Analysis. Nationally that year, the average was $29,451.

El Paso's per-capita income -- total personal income of El Pasoans divided by the El Paso population -- grew 4 percent per year from 2001 through 2010 while national per-capita income grew 2.8 percent, the study found.

Fort Bliss expansion, which Gilmer said, was "truly a savior for El Paso" during the recession, and the addition of the Texas

Tech University medical school played important roles in El Paso's income growth in the past decade. But the study's data show a big part of the income growth was due to growing, well-paid jobs in finance, real estate and management tied to cross-border trade and manufacturing growth in Mexico, Gilmer reported.

"This was ground zero for NAFTA's (North American Free Trade Agreement) bad effects" when the El Paso garment industry disintegrated, Gilmer said. "Now, it's turned around and El Paso is getting benefits from NAFTA."

The trend is also seen in other border cities, Browns ville, Laredo and McAllen, where per-capita income also has grown at just under 4 percent per year in the past decade, the study found.

Tom Fullerton, an economics professor at the University of Texas at El Paso, said several organizations have noted that per-capita income has improved in El Paso and other parts of the U.S.-Mexico border.

"The interesting result that is highlighted by the Dallas Fed study is the role played by international commerce" in the income growth, Fullerton said. "To the extent that international trade continues to expand, there will be additional opportunities for more income improvement in future years."

Gilmer said getting El Paso's per-capita income on par with the national level will be a slow process.

It would take almost 20 years if the growth rate continued at the level seen in the last decade, he said.

Bob Nachtmann, dean of the UTEP College of Business Administration, in a written statement, said the growing income trend is the brightest economic news for El Paso in years.

The study shows recent job growth is in knowledge-based jobs, which means higher wages, he noted.

The Dallas Fed study is a counterbalance to another study released last week by the Brookings Institution in Washington, D.C., which found El Paso had the third-worst education gap among the nation's 100 largest metro areas. The education gap is the amount of education workers have versus how much education is required for new jobs.

"If the implication in the Brookings study is you can't grow skills-based businesses in El Paso, then it's wrong," Gilmer said.

Apparently, the jobs created by cross-border trade are being filled because the jobs are growing, he said.

Gilmer, 66, retired as head of the El Paso branch of the Dallas Fed last week. He's become director of a regional forecasting institute at the University of Houston.

 

 
OECD-IMHE