MCALLEN, RGV – A senior vice president at the Federal Reserve Bank of Dallas has praised South Texas College and McAllen Economic Development Corporation for addressing the disruption new technology is causing the economy.

San Antonio-based Blake Hastings oversees human resources functions at all Dallas Fed offices, including talent management, benefits and compensation, and diversity and inclusion. He also has oversight for the San Antonio Branch and is responsible for all Dallas Fed activities within Central and South Texas.

Blake Hastings

Hastings was a keynote speaker at STC’s 5th Annual INNO’ Conference held at the college’s technology campus in south McAllen on Friday. In his remarks, Hastings talked about the two core elements that fuel an economy’s growth, an increased labor force and the productivity of that workforce. “We are concerned about both right now,” Hastings said.

Hastings was the second visiting VIP inside a week to praise MEDC and STC for their collaboration on workforce training. At the same venue a week ago, Julian Alvarez, commissioner for the Texas Workforce Commission, gave a shout out to STC, MEDC and PSJA ISD for their collaboration on skills training.

Technology-enabled disruption


When it comes to productivity, Hastings said the public is seeing a lot of technology-enabled disruption going on in their everyday lives. By way of example, he cited Amazon and Uber.

“That disruption is making the companies and firms and their capital more productive but not necessarily translating into greater productivity for the workforce,” said Hastings. “As workers get displaced by technology, as their jobs go away, as we can automate them, often times what we see is those workers are not going to lateral jobs, where their productivity remains the same. They are often down-skilling to jobs that are less productive.”

Thus, while firms are becoming more productive and some industries are becoming more productive, Hastings said, on balance the workforce, as these shifts go on, is not necessarily becoming more productive.

“So, we are seeing a real headwind on productivity growth. There is still growth in productivity, but it is anemic compared to what we have enjoyed these last 30 or 40 years. We believe one culprit for that is this technology-enabled disruption.”

Hastings asked how this might be dealt with. He answered his own question by saying the Dallas Fed is taking it seriously and talking to workforce training boards about it. “We have been engaging local workforce efforts all across our state. We would argue the need for skills training is going to become a lifelong endeavor.”

Talking about those attending STC, Hastings predicted that the skills students have when they leave to find work are not going to be enough to serve them their entire careers.

“They are going to have some form of disruption occur that they are going to have to respond to. They are going to have to gain the skills to respond to those challenges,” Hastings said. “And so, we are really interested as a central bank, as maximum employment is one of our mandates, to work at a local level. This is not an issue that can be solved on a national scale by Washington.”

Hastings said workforce development and skills training has to be a local thing.

“When it is done well, it is a partnership between the private and the public sector. I would argue, Madam President, that what you are doing at South Texas College, and Keith, the partnership that you bring from the private sector is really a look-to example for the rest of the nation,” Hastings said.

Hastings was referring to Dr. Shirley A. Reed, STC’s president, who was in the audience, and Keith Patridge, CEO of McAllen EDC.

“I am not saying that because I am here, to brown-nose you. It is true. The partnerships you have been doing over the last five or six years that are now real, that are part of your curriculum, this is what the rest of the nation needs to start doing,” Hastings said, praising Reed and Patridge.

“Recognition that a lot of these jobs that historically we looked at as vocational, as though that was a bad word, is shifting, and these are (now being viewed as) really good paying jobs.”

By way of an example, Hastings cited what is happening at auto dealerships.

“Auto dealerships have been disrupted. The way they sell cars to us is no longer through the traditional model. The most important person in the auto-dealership is no longer the sales person. As a result, there are fewer of them and they are not being paid the same as they were before. If anything, their wages in real terms have gone down. But, the No. 1 most important person in the auto dealership is the mechanic, the auto technician. They are making in excess of six figures a year because they are computer engineers for all intent and purposes. These are computers we are driving around these days. The skills they (mechanics) have to have is much different than it was 20 years ago.”

Computer coding and advanced manufacturing are vital skills in the new economy, Hastings argue.

“We have to respond to that and supply that labor. We have never seen a point in time in the history of our country when we have had more jobs unfilled. There is a deficit of available workforce particularly in the skilled professions. We hear that all over the country. So, this is a point of emphasis for us (at the Dallas Fed). It is something we are going to engage in.’

Hastings said the Dallas Fed wants to help engage at the local level.

“We don’t want to drive what you do locally, we just want to inform it with data analysis and our view of the economy. It is a really important topic and we believe it is one of the reasons our economy is not growing like we have seen historically,” Hastings said.

“The productivity is not there because the skills are not there to fill the jobs that we need. We would see a huge jump in economic activity if we had the ability to supply the skilled jobs the private sector is looking for right now.”

Immigration


Hastings touched briefly on immigration at INNO’ 2017.

“I am not going to touch the third rail of politics, which is called immigration and immigration reform except to say over the last 30 years, 50 percent of all labor force growth in the United States has been immigration into the United States, foreign born workers coming here,” Hastings said.

“We believe looking out into the future, with all these demographic challenges, nearly all of the future labor force growth will come from foreign born workers. How that looks policy-wise, what changes get made that affect that, I have no idea. Suffice it to say, we are not going to grow a native-born workforce over the next 20 to 30 years. It is not unique to the U.S. It is Canada, it is western Europe and other countries.”

NAFTA


Hastings said he was going to be careful about talking about the North American Free Trade Agreement currently being renegotiated between the U.S., Canada, and Mexico, because the Dallas Fed is neither for or against it.

“We do believe that revisiting a 20-plus-years-old trade agreement is a good thing. Modernizing it could be a good thing. It is hard to imagine that everything that exists today in our trading relationship is reflected in NAFTA, sectors like energy. We believe that modernizing NAFTA, there is logic to that,” Hutton said.

“But, what we are careful to say is that the trading relationship with Mexico and Canada is particularly important to our state and to our country as a whole.”

Hastings said that having helped business communities in Texas in the past through lobbying, he was struggling with the notion that trade is a zero-sum game.

“That a job existing in Mexico that produces a good sold in the United States comes at the expense of a worker in the United States – this idea that it is a win-lose zero sum game is just a fallacy,” Hastings said. “In fact, we would argue that the trading relationship with Mexico and Canada is about competitiveness. That the ability to have a shared manufacturing environment makes the North American region more competitive as a manufacturing center.”

If the United States were to eliminate or reduce its ability to share manufacturing and have a coordinated supply chain with Canada and Mexico, it would “definitely impact” U.S. competitiveness.

“Many of the manufacturing jobs that exist in the United States today exist because of shared manufacturing with supply coming from Mexico. If that didn’t exist, if we interrupted that relationship it is likely that entire production chain would move to Asia,” Hastings argued.

“This is the Dallas Fed’s view. Again, we are not taking a side on NAFTA or any specific elements of the NAFTA debate but what we are saying is we have to mindful of the fact that this relationship is critically important to the U.S.”

Another “fallacy,” Hastings said, is the claim that jobs, and particularly middle-class jobs, are being eliminated in the modern economy as a result of globalization and trade.

“In fact, it is the issue I led with, it is disruption, it is technology, it is not trade. We have the numbers and statistics to bear that out,” Hastings said.

“It is just not factually correct to say trade is costing middle class jobs in the United States today. If anything, the trade relationship in North America is protecting those jobs because it is keeping them competitive vis-á-vis Asia and Europe and other parts of the world.”