Border Business Briefs - Summer 2015 - Vol. 11, No. 2 by The University of Texas-Pan American

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DIRECTOR/Editor-in-Chief Salvador Contreras, Ph.D. EDITORIAL BOARD Pablo Camacho, Ph.D. Texas A&M International University Salvador Contreras, Ph.D. The University of Texas-Pan American Alberto Davila, Ph.D. The University of Texas-Pan American Tom Fullerton, Ph.D. The University of Texas at El Paso Gautam Hazarika, Ph.D. The University of Texas at Brownsville

Jim Lee, Ph.D. Texas A&M University-Corpus Christi ADVISORY BOARD Eduardo Caso Lone Star National Bank Raudel Garza Harlingen EDC Maria Mann SCIC-Womenâ&#x20AC;&#x2122;s Business Center Alex Meade Mission EDC Rebecca M. Olaguibel City of McAllen Cynthia M. Sakulenzki RGV Hispanic Chamber of Commerce Fred Sandoval City of Pharr Joey TreviĂąo Weslaco EDC

CENTER FOR

BORDER

ECONOMICS STUDIES

COLLEGE OF BUSINESS ADMINISTRATION The Center for Border Economic Studies (CBEST) is a public policy research unit of the College of Business Administration at The University of Texas-Pan American. CBEST is dedicated to the study of problems and issues unique to the U.S. and Mexico border economy. CBEST conducts interdisciplinary research that supports economic development, trade, entrepreneurship, innovation, social mobility, and access. Among its technical reports, the Center publishes the quarterly Border Business Briefs (BBB) and the annual Business Outlook Forecast. CBEST has strategic partnerships with private sectors, foundations, government agencies, research scholars, and nonprofits to fulfill its mission. CBEST focuses on research in the area of interdisciplinary policy, in support of sustainable economic development. We publish articles, monographs, books and reports that examine economic, social and political issues in the border region and make them available to policymakers, business leaders, government officials, academics, students, and the border community in order to foster informed decision-making. In addition, CBEST provides contract services in policy research, survey design, data collection, data research analysis, data interpretation, presentations and reports. These services are performed for a fee. Please contact CBEST for additional information on the contract services we provide. 1201 W. University Drive, Edinburg, TX 78539 | cbest@utpa.edu | utpa.edu/cbest

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B order B usiness B riefs | S ummer 2015

LETTER FROM THE EDITOR

Dear Reader, As many of you know, The University of Texas-Pan American (UTPA), The University of Texas at Brownsville (UTB), and the Regional Academic Health Center (RAHC) will combine resources and assets to create a new university, The University of Texas Rio Grande Valley (UTRGV). CBEST will be impacted by these changes. CBEST is part of the College of Business Administration (CoBA) at UTPA. We expect the Center to transition into the College of Business and Entrepreneurship (CoBE) at UTRGV. There are plans to change the structure of the Center and to expand its mission. There is also talk of changing the Center’s name to adequately represent an expanded mandate. At this point, we do not know how the restructuring will affect this publication. We are under the impression that the Center’s main outreach products (this publication and forecast report) will continue. CBEST continues to be a source of information on economic, social, and business developments in South Texas. On January 30, CBEST held its Annual Business and Economic Forecast luncheon. At the event, Dr. Teo Ozuna, dean of CoBA, presented CBEST’s economic outlook and forecasts for the U.S., Mexico, Texas, and South Texas. The event was made possible by the generosity of our Gold Sponsors Edinburg EDC, Harlingen EDC, IBC Bank, McAllen EDC, Mission EDC, RGV Partnership Chamber of Commerce, and Weslaco EDC; Silver Sponsor Texas Mutual; Bronze Sponsors RGV Hispanic Chamber and San Benito EDC. This publication as well as our reports and events are possible by the generosity of readers like you. Thank you for your continued support! This issue touches on entrepreneurship, tourism, South Texas’ economy, Mexico and elderly care. Jorge Gonzalez presents an article tying his ongoing research on diversity and inclusion and offers advice to local entrepreneurs. Oscar Ramos presents 10 tips to successfully use social media. We have two articles that focus on Mexico: Pablo Camacho provides an analysis of Mexico’s tax reform and its effect on prices. Nathaniel Karp summarizes the Mexico’s Energy Reforms and its possible impact on the Texas economy; Abdelhamid Riani and I look at economic activity of South Texas MSAs. In that spirit, Jim Lee evaluates the potential impact that falling oil prices will likely have on South Texas. We also have two articles that touch on the elderly. Penny Simpson summarizes existing research on the effects of poor treatment of the elderly on health outcomes. Jim Limon gives us an overview of laws, politics, and resources of long-term care access and facilities. Finally, this quarter we showcase Valley Talent Virgil Pierce. This publication and our other works are made possible by the generosity of volunteers and sponsors like you. We invite you to become a sponsor. If you are not already a sponsor please visit us online at utpa.edu/cbest and become a sponsor today. We hope you enjoy this issue. Feel free to send us your comments at cbest@utpa.edu.

Best regards,

Dr. Salvador Contreras Editor-in-Chief

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Creative and Design Studio Twelve01 Research and Special Projects Jose Clemente Abdelhamid Riani

Entrepreneurship South Texas Economic Gauge

Economy Inflation?

12 Entrepreneurship Diversity at Work 14 Energy Texasâ&#x20AC;&#x2122; Economy 18 Entrepreneurship Space X: TTTSocial Media Tips 22 Energy Oil Industry Exposed 26 Economy South Texas Keeps Pushing Ahead 30

Valley Talent Dr. Virgil Pierce

34 Health The Elderly & Ageism 36 Health Long-Term Care Issue 40 Economy Mexican Shoppers B order B usiness B riefs | S ummer 2015

ENTREPRENEURSHIP

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8.9

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rices

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South Texas Economic Gauge

(% ch

ange y/y)

0.7

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December Unemployment rate

4( 201

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201

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rices

B order B usiness B riefs | UTPA. edu / cbest

8.3

Sources: Unemployment rate and nonfarm employment are monthly and come from the U.S. Department of Labor. Nonfarm employment measures the percentage of change from one year ago. Gross sales are quarterly and reported by the Texas Comptroller of Public Accounts. The gross sales percentage change measure Q3 2014 over Q3 2013. The House Prices index is quarterly data that comes from the Federal Housing Finance Agency. The reported house price is the percentage change in the index from a year ago.

December Unemployment rate

nge y/y)

6.1

House P

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rices

201

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CORPUS CHR IS E

4.3

-2

December Unemployment rate

9.8

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3.5

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5.7

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year

014

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201

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9.6

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December Unemployment rate

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SAN ANT ON I Emplo y

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December Unemployment rate

House P

over y

3.4

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15 (% change uary 20 over n a J , yea af rm

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13.8

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201

(% ch

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December Unemployment rate

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LAR ED O Emplo y

B order B usiness B riefs | S ummer 2015

ECONOMY

Inflation?

Increase of value added tax (VAT) effects in Mexican border cities By Pablo Camacho

The fiscal reforms of Mexican President Enrique Peña Nieto’s Administration became effective January 2014. The reforms seek to increase government revenues and stimulate economic growth. Economic agents across Mexico have observed an increase in their fiscal burden. However, those located along international borders faced the increase in the value added tax (VAT), too. Prior to January 2014, two VAT rates were levied in Mexico: 11 percent nearby international limits, and 16 percent in the rest of the country. Now, the national VAT rate is 16 percent. Economic agents at Mexico’s borders, thus, saw an increase of 5 percentage points in the VAT rate. Public perception is that business will pass the higher fiscal burden to consumers through price increases. In addition, the VAT rate increase may impact the general price level in the border region and lead to higher than anticipated inflation. This note addresses such public concerns. 8

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6 Jan 14

Jan 13

Jan 9-13 Avg

Percentage Rate (%)

5 4 3 2 1 0

National

Cd. Acuña

Cd. Juárez

Matamoros

Mexicali

Tijuana

Figure 1: January Inter-annual Inflation Rates: National and Selected Border Cities

The focus here is to evaluate whether the increase in the VAT rate provoked inflationary pressures in Mexican border cities. This is a descriptive analysis. One would conclude that the VAT rate increased prices along Mexico’s international limits if: (i) Mexican border towns January 2014 inter-annual inflation rate is larger than past January inter-annual inflation rates and (ii) the January 2014 inter-annual inflation rate for Mexican border towns exceeds the country’s January 2014 inter-annual inflation rate. In Mexico, it is common for businesses to adjust prices in January. Since the reform’s impact took effect January 2014, one can expect that the higher prices observed in January 2014 included the effect of the increased fiscal burden. In case (i), one may conclude that higher prices are a direct result of the reforms, whereas case (ii) would sort out the price increase due to raising the VAT rate from the other fiscal burden inflates. Figure 1 reports the consumer price index (CPI) for selected cities in Mexico. These include Mexico-U.S. border cities: Cd. Acuña (Coahuila), Cd. Juárez (Chihuahua); Matamoros (Tamaulipas), Mexicali, (Baja California), Tijuana (Baja California). Monthly CPI data is from Banco de México. An atypical increase in the average price level is observed in Mexican border towns at the time the VAT rate raises. Figure 1 reports inter-annual

inflation rates for each location for the periods of January 2014, January 2013, and January 20092013 average. For the selected cities along Mexico’s international limit, the inter-annual inflation rate in January 2014 is noticeably higher than the inter-annual inflation rate in January 2013: ranging from 1.40 percentage points difference in the case of Tijuana, to a 2.42 percentage points difference in Cd. Acuña. The same pattern is observed when the comparison is made against the five-year average January inter-annual inflation rate from 2009 to 2013, except for Matamoros. However, the same patterns are observed across Mexico. For instance, the country’s inter-annual inflation rate in January 2014 is 1.23 percentage points higher than in January 2013. Therefore, the price increases in Mexico’s border cities on January 2014 are not solely explained by the raise in the VAT rate. In addition, the observed increase in local average price levels are well below the 5 percentage points increase in the VAT rate. Regarding the public perception that the increase in the VAT rate is inflationary, figure 2 shows Mexican border towns actually experienced disinflation during 2014. What’s more, in 2014, Mexico’s annual inflation rate (4.08 percent) was higher than the annual inflation rate seen in the border cities analyzed here, except Cd. Acuña B order B usiness B riefs | S ummer 2015

6 Country

Cd. Acuña

Cd. Juárez Matamoros

Mexicali

Dec 14

Nov 14

Oct 14

Sep 14

Aug 14

Jul 14

Jun 14

May 14

Apr 14

Mar 14

Feb 14

Tijuana

Jan 14

Percentage Rate (%)

Figure 2: Inter-annual Inflation Rates throughout 2014: National and Selected Border Cities Source: Analysis made with Banco de México data.

6 2014

2013

2009-13 Avg

Percentage Rate (%)

5 4 3 2 1 0

National

Cd. Acuña

Cd. Juárez

Matamoros

Mexicali

Tijuana

Figure 3: Annual Inflation Rate: National and Selected Border Cities Source: Analysis made with Banco de México data.

(4.11 percent)—Figure 3. Further, Matamoros and Mexicali observed an annual inflation rate in 2014 lower than in 2013 and lower than the previous fiveyear average annual inflation rate. Based on the brief descriptive analysis presented here, there is no evidence that the 5 percentage points raise in the VAT rate caused (1) an increase of the same magnitude in the average price level along Mexico’s border regions on January 2014, nor (2) an increase in the inflation rate in those locations. 10

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Dr. Pablo Camacho is Associate Professor of Economics at Texas A&M International University Endnotes: Mexico shares a common border with Belize, Guatemala, and the United States of America. However, because of availability of data, the scope of this note is limited to the Mexico-U.S. border. January (Y) inter-annual inflation rate is the inflation rate over the period January (Y-1) to January (Y); e.g., (Y) = 2014, then (Y-1) = 2013. Reforma Hacenaria ¿Qué es? Retrieved from http://reformas.gob.mx/ reforma-hacendaria/que-es on February 27, 2015.

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ENTREPRENEURSHIP

Diversity at Work

DOES IT MATTER IN THE VALLEY? By Jorge Gonzalez

Workplace diversity is an important social justice and business issue. The inclusion of social minority groups, such as Hispanics and African Americans, is an important issue for firms around the nation. But is this different in the Rio Grande Valley, where Hispanics make up the vast majority of employees and customers? Research in diversity and inclusion contends that, compared with homogeneous (similar) firms, diverse firms are better prepared to understand, serve, and meet the demands of a diverse marketplace. Inclusive organizations are also better able to lead and motivate diverse employees. The research evidence, however, is inconclusive. Studies show that diversity has advantages in some instances and disadvantages in others. In short, the ongoing research on diversity impact on a firmâ&#x20AC;&#x2122;s performance depends on contextual factors. This is a reason why many management scholars and consultants now address not only diversity, but also inclusion. An inclusive workplace is one where people from all social groups are valued and treated with fairness, equality, dignity, and respect. My 2009 12

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study shows that firm diversity is associated with better firm performance when such firms also possess an inclusive diversity climate. In other words, workplace inclusion helps diversity meet the promise of greater performance attributed to a greater variety of perspectives and more elaboration in decision-making and problem solving. Employee attitudes and behavior may be a reason why this occurs. This study also shows that Hispanic employees tend to want to quit their jobs when most of their colleagues are from a different ethnicity. However, most Hispanics desire to stay in their current job if they perceive that the organizationâ&#x20AC;&#x2122;s diversity climate is fair and inclusive. The impact of diversity also depends on community characteristics. For instance, the

proportion of African American employees is related to higher performance among firms that serve communities with a similar customer base (see my 2013 study). Other studies have also found this result for Asian Americans. However, this “matchmaking” effect has not been shown to exist for Hispanics. My research also shows that, aside from a proportional representativeness of race/ethnicity, firm diversity is related to profits for firms located in diverse communities.

Table 1: Non-Hispanic Population of the Rio Grande Valley

The research evidence also shows that the diversity climate of a community matters. Aside from community demographics, a community’s diversity climate is related to its residents’ moving intentions (see my 2012 study). People want to move from communities that have poor diversity climates. This happens for both whites and people of color, although the effect is stronger for people of color. This is important, as moving from a community often implies leaving a job. Firms should consider the diversity climate of the communities where they are located if they want to retain their diverse talent, and attract new talent from other communities.

Source: U.S. Census

But what does this mean for the Valley? Diversity issues are important to Hispanics. Hispanics are now the largest racial/ethnic minority group; they constitute 17% of the population. However, Hispanics are under-represented in the workplace, particularly in professional and managerial ranks. The Valley, however, is not ethnically diverse. By the numbers it appears rather homogeneous (similar). Hispanics constitute about 89.7% of the total population (91% of Hidalgo County, 88.5% of Cameron County, and 96% of Starr County; U.S. Census). There are, however, at least three reasons why organizational and community diversity are important here. First, diversity in the Valley is not only about racial/ethnic composition, but also about disparity in status, power, and resources. Consider that despite the fact that Hispanics are the vast majority in the region, they own a disproportionate lower number of local businesses – 69% in Hidalgo County and 62% in Cameron County (U.S. Census). Second, consider the demographics from a different perspective. The non-Hispanic population in the Valley is substantial; there are about 12,500 Asian American and 10,000 African American residents (see Table 1). The area’s diversity climate matters to this population. In our community

Percentage

Approx. total

Whites

78%

104,000

Asian Americans

9.4%

12,500

African Americans

7.8%

10,000

Native Americans

5.1%

6,700

diversity climate study, we surveyed more than 2,000 professionals nationwide. Although only a handful of these respondents were from and rated the Valley, all of them gave their communities diversity climate scores that were lower than the national average. This arguably means that RGV communities and organizations have room for growth in diversity climate, and that there is need for greater inclusion directed toward all racial and ethnic groups. Lastly, diversity in the Valley is subtle. Consider the cultural and linguistic differences between recent Mexican immigrants from Hispanics who are descendants of people who have lived in the region for generations. Also, the Valley’s cultural mosaic is comprised not only by racial and ethnic differences, but also those in gender, age, as well as psychological attributes such as values, goals, and personalities. In conclusion, diversity can and often leads to higher performance. Managers who want to attract and retain diverse talent should be concerned not only with having an inclusive climate in their organizations, but also influencing the climate of the communities where such organizations are located. Lastly, the social justice and business implications of diversity and inclusion are also present in the Valley. Dr. Jorge Gonzalez is Assistant Professor of Management at The University of Texas-Pan American Endnotes: Gonzalez, J. A., & DeNisi A. S. (2009). Cross-Level effects of demography and diversity climate on organizational attachment and firm effectiveness. Journal of Organizational Behavior. 30: 21-40. Gonzalez, J. A. (2013) Matchmaking: Community and Business Unit Racial/Ethnic Diversity and Business Unit Performance. International Journal of Human Resource Management. 24: 4063-4081 Ragins, B. R., Gonzalez, J. A. Ehrhardt, K., & Singh, R. (2012). Crossing the threshold: The spillover of community racial diversity and diversity climate to the workplace. Personnel Psychology. 65: 755-787

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ENERGY

Texas’ Economy And the impact on it by Mexico’s Energy Reform By Nathaniel Karp

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In December 2013, Mexico’s Congress passed groundbreaking legislation that modified the Constitution to effectively open the energy sector to foreign and domestic private investors. The reform seeks to modernize the energy sector, reverse declining production, and lower energy costs, which in turn would increase economic growth.

Mexico’s reforms in the energy sector have been prompted by stagnant oil production and steep reduction in proved oil reserves. In figure 1, the bars show that Mexico’s total oil production over the 1990 to 2013 period remained flat and decreased consistently after reaching a peak in 2004 of 3,848 thousand of barrels per day. In addition, proved reserves have plunged from an estimated 56 billion barrels in 1990 to a little less than 10 billion barrels in 2015. By renovating existing agencies and creating new ones, the reform improves the regulatory framework, curtails discretionary practices and enhances transparency and accountability. This should lead to a more competitive environment for the energy sector. Nine new secondary laws and changes to 12 others lay a foundation of private sector participation. These laws govern licenses, production-sharing and profit-sharing contracts, and pure service contracts. This will allow private investors to engage in exploration and production, and participate in the refining, transportation, storage and distribution of oil, natural gas, and other petroleum-based products. The reform will also allow the government to contract with private firms to expand the generation, transmission and distribution of electricity. The 21 laws also address matters of eminent domain, the taxation and royalty system, operations and financial reporting by energy sector entities, the functioning and interaction of regulatory entities, and domestic content requirements. State-owned companies Pemex (Petróleos Mexicanos) and the Federal Electricity Commission (Comisión Federal de Electricidad-CFE) will be transformed into so-called state-owned productive enterprises. They will be granted autonomy and their corporate governance will be strengthened. B order B usiness B riefs | S ummer 2015

4000

3500 3000

2500

2000 1500

1000

500 0

Proved reserves (billion barrels)

0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Total oil production (thousand barrels per day)

4500

proved reserves billion barrels

total oil production thousand barrels per day

Figure 1: Mexico’s total oil production and proved reserves.

This will increase revenues, create economic value and boost their competitiveness against their peers. Although the Mexican state retains ownership of all subsoil hydrocarbons, state-owned productive enterprises and private firms will be allowed to report reserves for accounting and financial purposes.

bid packages and execute the new contracts of Round One. As a result, Mexico’s energy sector could soon see increased capital spending and a boost in new technologies.

In addition, the reform creates the Mexican Oil Fund, entrusted with receiving, administering and distributing income from all hydrocarbon exploration and extraction activities, excluding any tax revenues.

Texas stands to be the major beneficiary from the reform due to deep economic ties, geographic proximity and expertise in energy exploration, production and distribution. Texas is home to hundreds of energy companies, 28 of them in the Fortune 500. Considering that 54% of prospective oil and gas resources in Mexico are unconventional, involving horizontal drilling and fracking, the country will need Texas’ firms to provide physical resources, cutting-edge technologies, human capital and expertise. Likewise, Mexico will require vast amounts of capital and engineering capacity to drill in deep-water, which accounts for 52% of their total conventional reserves.

Lastly, the reform encourages the use of renewable technologies, sets ambitious goals for clean and renewable sources, and expands industrial safety and environmental protection. So far, the government finalized what’s known as Round Zero, assigning exploratory blocks and producing fields to Pemex while previewing the blocks that will comprise Round One. In addition, Pemex is migrating 22 contracts to the new legal scheme and seek out partners for 10 projects assigned in Round Zero. Regulators have set up a “data room” for a transparent and open bidding process. They will publish the pre-bidding packages, carry out social-impact studies, sell the 16

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Opportunities for Texas

There is also considerable potential for expanding shale gas exploration and production in Mexico. Mexico’s total gas resources are one-fourth of the U.S. Of the five promising basins in that country, the two largest are on or near the Texas

border. According to EIA, the Burgos Basin in northeast Mexico — an extension of the Eagle Ford Shale — is estimated to hold two-thirds of Mexico’s 545 trillion cubic feet (Tcf) of technically recoverable shale gas resources. This would have significant appeal for companies that operate on the Texas side of the Eagle Ford play. However, this is dependent on how fast Mexico develops the required infrastructure to exploit these resources. Currently, 80% of Mexican gas imports come from the U.S., and 60% of those come directly from pipelines in Texas. Before the reform, the Mexican Energy Minister (Secretaría de Energía) expected natural gas imports from the U.S. to more than double — from 1.8 billion cubic feet per day (Bcfd) in 2013 to 3.8 Bcfd in 2018. In the shorter term, these estimates are unlikely to change significantly given that new shale gas production in Mexico will take time to develop. Over a longer horizon, despite higher gas production in Mexico, Texas gas will continue flowing to Mexico as stronger economic growth in the country will lead to higher demand for electricity, which is increasingly generated by natural gas. In addition, Mexico offers opportunities for LNG exports to Asia. The reform’s advantages also extend to companies in the construction sector as the reform will drive a need for new infrastructure. Over the next 10 years, Mexico needs to increase electricity capacity by 60% to keep up with increasing demand. Moreover, using data from EIA, Mexico has less than 1 mile of pipeline per each 1,000 square miles of land, oneninth the U.S. ratio. A large share of the foreign direct investment (FDI) to Mexico will be used to purchase goods and services from Texas. This will benefit a wide range of manufacturing industries including, but not limited to, manufacturing of electrical equipment, motor vehicle parts, mining machinery, chemicals, oil products, engines, turbines, and power transmission equipment, medical equipment, electric lighting equipment, and computer and peripheral equipment. In addition, we expect a significant boost in activity for professional, scientific, and technical services, insurance carriers and depository institutions. Gains in Texas energy-related companies will boost incomes and spill-over into other industries such as housing, durable goods manufacturing, retail trade,

and recreation. This in turn will create more jobs and boost tax revenues for the state. In addition, stronger economic growth in Mexico will raise living standards and real incomes, which will further boost trade with Texas, creating new opportunities for individuals and companies on both sides of the border. For South Texas, developing the shale basins south of the border together with the high level of economic integration with Mexico’s northeast will boost economic activity. Faster economic growth at the border will narrow the socio-economic disparities between Texas’ border cities and big metro areas. If these border towns effectively seize the opportunity, the Texas-Mexico border could see one of the most dramatic transformations in its history. Nonetheless, success of the reform is not guaranteed. The sharp decline in oil prices reduces the incentives to invest in capital-intensive projects, particularly in deep-water. Low natural gas prices, lack of infrastructure in Mexico and abundant natural gas production in the U.S. imply that Mexico will continue importing gas from Texas. In addition, Mexico needs to reduce the cost of doing business by investing in human capital, strengthening the rule of law, fostering competition, modernizing infrastructure and improving security, as well as reducing economic informality, inequality and poverty. Moreover, to assure an effective implementation of the reform, Mexican policymakers need to create efficient regulatory entities, attractive contracts and a competitive tax structure. Conclusion In conclusion, Mexico’s groundbreaking energy reform is a potential win for Texans. Higher economic growth, greater foreign trade, more state revenues and job creation will bring prosperity to our communities and help solidify Texas’ leadership position of growth and innovation in the 21st century.

Dr. Nathaniel Karp is Chief Economist at BBVA Compass Endnotes: The views expressed here are from the author alone and do not reflect the views of BBVA Compass or BBVA Group. A previous version was presented as Testimony before the Texas Senate Natural Resources Committee. Figure 1 is constructed with data from the U.S. Energy Information Administration (retrieved from http://www.eia.gov/countries/country-data.cfm?fips=MX#pet on 2/23/2015).

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ENTREPRENEURSHIP

By Oscar Ramos

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Social media can serve as a communication platform between a business and its target audience. On social media, individuals reveal their preferences by identifying needs, feedback, opinions, and more. This is the kind of data that a business seeks in order to better understand its target population. In this piece, we seek to answer the question, Is there a one-size-fits-all solution to social media? The answer is a resounding no.

Millions of people worldwide use social media for a variety reasons. These users are scattered throughout the planet and are of diverse backgrounds. Social media networks generate huge amounts of information as diverse as its users. Entrepreneurs, marketers, and research analysts desire these kinds of data because they offer the potential to transform, package, and organize information in a way that can help a business grow and understand its targeted audience.

Social media is a free medium that helps us explore and express everything we have in mind. This facilitates a connection to people who express interests in a specific topic, content, or view. Many startups and freelancers create social media accounts on different platforms to raise awareness of their products or brands. However, since it is easy to start and get excited about using social media application, it is also easy to stray and forget about the different platforms. Without a sound and clear objective and goals, your social media strategy can fail – not because of a low number of followers, but due audience distrust. Fortunately, there are strategies and tips that facilitate the usage of social networks. You need to be aware that even though this is an electronic conversation, it is still a conversation with people who may not share your interests and may not be willing to read your posts. The hardest task is to identify the reason why your target audience may want to see your information. Leading social marketers, through observation and experimentation, have come to key insights on social media engagement. Below I present 10 tips to help you best navigate and use social media platforms. I also present personal as well as excerpts from 50 Expert Tips for Getting Started on Social Media found at slideshare.net. “Every business has a story. What’s yours? Share it in a way that attracts people and encourage prospects to take action.” – According to Rebekah Radice (Social Media Strategist).

At the College of Business Administration (CoBA) at UTPA, we believe in daring students to lead in their classes, projects, and lives. We work hard to inspire future leaders of the world. That’s our story, and we share it in a way that our students can absorb and practice the message.

Do not, and I repeat, do not just create an account on every single social medium you see. B order B usiness B riefs | S ummer 2015

52%

is the most popular social media site.

13%

use pinterest

of online adults now use two or more social media sites.

56%

53% of internet-using young adults ages 18-29 use Instagram.

of all online adults 65 and older use Facebook.

50%

of internet users with college educations are using LinkedIn.

That will not guarantee that you will be listened to! Be strategic. Which are the best media to reach my targeted audience? Select one or two and learn how to master them.

5. Identify your goals and then make a plan! Think of the objectives you want to accomplish on social media. Then you will be able to choose which ones fit better for that specific need.

Based on research, I have found that Facebook, Instagram, and Snapchat are the top three social media platforms that UTPA students use at the College of Business. With this in mind, it is clear where to start an account.

6. “After creating your accounts, follow like-minded businesses, then watch and observe to get the tone of the platform; then engage.”– This according to Pam Wood (Owner Ballroom Made Simple).

“In social media, content leads to conversations, conversations build relationships, and relationships result in Return on Investment.” – According to Robert Caruso (Founder & CEO, Bundle Post).

At CoBA, we follow other schools of business, influencers, and colleagues. All of them have great content from which we learn in order to improve our management.

Our Return on Investment is the satisfaction that students are informed about college activities. This attitude builds trust and creates strong relationships within the school. 4. Use visuals wisely; images and pictures have a better result on platforms that are created specifically for them. For example, Pinterest, Instagram, or Snapchat are particularly suited for sharing pictures. Test the waters and try the ones you like, then identify which is better focused, and learn more about them.

42%

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Watch your spelling! Even the best copywriters have to proofread their work. Proper grammar will influence those reading your posts to have more confidence and take your information seriously. I have learned not once, but many times about correct spelling. Since it’s very easy to respond to someone’s content, people tend to respond more often when grammar is not correct. Make sure you double-check every post.

“Be authentic. Be yourself. Don’t try to copy someone else’s game plan. Every organization is different and your unique

Social media users among all adults ages 18+

PERCENTAGE OF DAILY ACTIVITY 70% of users

58%

23%

22%

21%

19%

Source: Pew Research Center’s Internet Project September Combined OmnibusSurvey, September 11-14 & September 18-21, 2014. N=2,003 adults in the U.S. ages 18+

2012 67

2013

36% of users

2014

71 71

28 20 22

Facebook

49% of users

21 15

Pinterest Instagram

16 18

Source: Pew Research Center’s Internet Project Surveys, 2012-2014. 2014 data collected September 11-14 & September 18-21, 2014. N=1,597 internet users ages 18+

17% of users 13% of users

Twitter Source: Pew Research Center’s Social Media Update 2014

content must come from the heart and soul of your organization. Be you.” – This according to Leslie Fishlock Founder and CEO, Geek Girl Camp. . We work hard to bring the right and desired content that our audience likes. Do research, qualitative and quantitative. For CoBA I conducted the first social media research for the Dean’s office in the fall of 2014, in which I understood the behavior that business students have on social media. That way it’s easier for me to know what, when, why, and how to post because I now know what my audience wants. Listen and create a dialogue with your followers. Utilize the performance reports available on some of the platforms, analyze them and use the information for future planning.

10 Look for tools that can facilitate your work in

this position. There are online tools that can perform tasks such as automatic posts, scheduling, research, and data analysis; some of them have a mobile application to operate on the go. My recommendations are: Google Analytics and Trends, Buffer, Hootsuite, Survey Monkey and Virtually. There are many more that you can explore! Remember, it is better to take a break after a long day watching

the screen or using your mobile device. These tools can help you be more effective and updated with the upcoming trends. Having an understanding of these 10 recommendations does not suffice. You need to be consistent with the content and be creative in how you make new strategies. Also, spend time brainstorming ideas and constantly think of how you can improve your message. One reason to keep abreast of your content is because there is a misconception that the amount of money spent on a site is the only measure of effective social marketing. This means, the more you boost your advertisement, the higher the probability to get a greater reach. This is not to say that boosting your posts is wrong, but be mindful that not every post you make has to be boosted. Do not be afraid to post. Learning from mistakes makes for better future posts. However, the more you post strategically and at the right time, the better your message is understood by your audience. Oscar Ramos is a Marketing student and Social Media Specialist at The University of Texas-Pan American Endnotes: 50 Expert Tips for Getting Started on Social Media. (2014, April 24). Retrieved from http://www.slideshare.net/ConstantContact/50-expert-tips-for-getting-started-onsocial-media-33900540?related=1 on .2/27/2014.

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ENERGY

Oil Industry Exposed

The story for Texas—the nation’s top oil producer By Jim Lee 22

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Crude oil prices have fallen by more than half since their peaks in mid-2014. Lower prices for gasoline and other petroleum products are expected to be a boon for the U.S. economy as a result of cost savings for consumers and businesses. The story for Texas—the nation’s top oil producer—is different, however.

Déjà Vu All Over Again In response to the plunging oil prices to below $50 per barrel, a large number of energy companies and their suppliers across the United States have been scaling back production and capital investment. Halliburton has announced its plan to lay off 6,400 employees, while Chevron has slashed its planned capital spending by 13 percent this year. Drilling activity in Texas has slowed down considerably. Recent developments in global oil markets were reminiscences of the oil bust in the mid-1980s, which sent the Texas economy into a severe recession. According to the Federal Reserve Bank of Dallas, if crude oil prices continue to stay below $50 a barrel, Texas’s employment would reduce by 125,000, other things being equal. Compared to the 1980s, the state’s economy today is conceivably more diversified and less dependent on its energy resources. For this reason, the Dallas Fed expects Texas employment to grow at nearly 3 percent in 2015, still higher than the national average of 2 percent. Historical Experiences How does South Texas stack up? To address this question, let’s first look at the historical records of the regional economies in the wake of the oil market crash in the mid-1980s. Figure 1 shows the employment trends of the five metro areas in South Texas during the 10-year period following 1985. The data are scaled to 100 for 1985, which is the base year. The employment patterns reveal varying local economic impacts of a decline in regional oil production.

Corpus Christi experienced the most severe downturn, shredding more than 7 percent of its jobs in 1986 and 1987. That metro area’s employment did not return to the 1985 level until eight years later in 1993. Yet the oil debacle apparently did not affect San Antonio. Its employment continued to grow after 1985. For Laredo and McAllen, the economic impact was short-lived. Laredo’s employment reduced by 2 percent in 1986, but since grew at an annual rate of as much as 10 percent through 1992. McAllen also gained back most of its 1986 job losses by the following year. If history does repeat itself, then current low oil prices will inflict the most economic pain on Corpus Christi. Laredo, on the contrary, will gain the most in the long run. The impact of falling oil prices on South Texas local economies will be affected on the area’s dependence on the oil and gas industry. Employment in oil and gas drilling, extraction and support industries is directly affected by developments in the energy markets. Figure 2 shows the trends of total employment in the oil and gas industries for the five metro areas since 1985. As for Figure 1, the data are scaled to 100 for 1985. For Corpus Christi, it appears that losses in the oil- and gas-related employment were responsible for much of the setback in its local labor market following the oil price collapse

Dr. Jim Lee is Professor of Economics and Director of the South Texas Economic Development Center at Texas A&M UniversityCorpus Christi

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in the mid-1980s. Beginning in 1986, oil and gas related employment in Corpus Christi continued on a downward trend through the 1990s. By 2001, employment in those industries had shrunk by about 70 percent as compared to its previous peak in 1982. As a result of the booming activity in the Eagle Ford Shale region, that metro areaâ&#x20AC;&#x2122;s oil and gas related employment expanded at a rapid pace of over 10 percent in 2011 and 2012. By 2013, this sector had completed a full cycle with the amount of jobs returning to the 1985 levels. Figure 2 shows that the Corpus Christi experience was unique in South Texas. Oil- and gas- related employment in other South Texas metro areas either did not suffer similar setbacks, like the case of San Antonio, or in fact it grew over time, like the case of Laredo. Regardless, employment in oil- and gas-related industries soared among the five metro areas during the recent shale oil boom that began to develop in 2008.

South Texas Employment Trends, 1985-1992 1985=100 Brownsville Corpus Christi Laredo McAllen San Antonio

160

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Figure 1: Selected MSAs employment trends South Texas Oil & Gas Employment Trends, 1985-2013 1985=100 Brownsville Corpus Christi Laredo McAllen San Antonio

200

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100

Exposure to Oil and Gas So how dependent is South Texas on oil and gas activities? Figure 3 shows the share of workers employed in oil and gas drilling, extraction and support industries for the five metro areas since 1970. The relative size of employment in those industries is a reasonable measure of the first-order effect of any change in oil and gas activities. In Corpus Christi, even though the oil and gas sector has recovered most of its jobs destroyed during the oil debacle of the 1980s, direct oil and gas employment now accounts for just over 5 percent of total area employment, or about half of that during its peak three decades ago. The relative size of the oil and gas sector in Laredo appears to follow a similar ebb and flow pattern over time as that in Corpus Christi. Laredoâ&#x20AC;&#x2122;s 24

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0 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Figure 2: Oil & Gas Employment trends for selected South Texas MSAs

Oil & Gas Jobs as Percentage of Total Employment, 1970-2013 Brownsville Corpus Christi Laredo McAllen San Antonio

9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 1970

1974

1978

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1986

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2010

Figure 3: Oil & Gas employment as a share of total employment for selected MSAs

Oil & Gas Shares of County Employment, 2013 San Antonio MSA

Rural Communities

Corpus Christi MSA Laredo MSA

McAllen MSA Brownsville MSA

<5%

15% to 20%

5% to 10%

>20%

10% to 15% Figure 4: Oil & Gas employment as a share of total employment for South Texas Counties

current oil and gas employment share is about half of its peak around 7 percent in the mid-1980s. For the other three metro areas, the oil and gas sector has been relatively small, accounting for no more than 2 percent of the local workforce during the past two decades. Despite substantial gains in employment directly related to oil and gas production since 2008, as shown in Figure 2, South Texas workforce has expanded at a more rapid pace since the 1980s as has the significance of oil and gas extraction has diminished for most metro areas, except perhaps Corpus Christi. The relative diversity of those metro areas’ employment bases should keep the region as a whole reasonably well insulated from imminent cutbacks in the state’s oil production.

Even though the observations in Figure 3 suggest that most metro areas in South Texas have diversified away from oil and gas production, this is not true for other communities in the region. The five metros together account for more than 80 percent of total employment in the 42-county region of South Texas, but they only account for about 50 percent of the region’s oil- and gas-related employment. The majority of oil and gas drilling activity in South Texas occurs in rural communities and not the metro areas. Figure 4 shows a map of the employment shares in the oil and gas sector for individual counties in South Texas. Consistent with Figure 3, the share of employment directly related to oil and gas activities in 2013 was less than 5 percent for the counties that belong to one of the five metro areas, except San Patricio in Corpus Christi MSA. By contrast, counties atop the Eagle Ford Shale, such as Dimmit, La Salle, Live Oak, McMullen and Jim Wells, had more than one in five of their workers engaged directly in oil and gas industry. In the first two months of 2015, the number of operating oil rigs in the Eagle Ford Shale fell by nearly 40, or 25 percent, according to Baker Hughes. Should oil prices continue to remain at current depressed levels, those rural communities would bear the brunt of the possible economic downturn in South Texas. Cutbacks in oil drilling activity will affect not only employees in oil and gas industry, but also employees in other industries, through the so-called spillover or multiplier effects. B order B usiness B riefs | S ummer 2015

ECONOMY

South Texas keeps pushing ahead By Abdelhamid Riani and Salvador Contreras

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Half a century ago, the Rio Grande Valley of South Texas was mainly a rural and agriculture-based economy characterized by slow growth. Today, the area has become an important international hub. Its strategic geographic location has allowed the Valley to become a place of impressive economic and social development. For instance, total nonfarm employment in the McAllen-Edinburg-Mission (MSA) area has grown from 68,900 in 1980 to 242,800 in December 2014, a 250% increase in 35 years (based on data from the U.S. Bureau of Labor Statistics). The region has transformed into a commercial as well as an agricultural economic force. Over the past five years, real gross domestic product (RGDP) in the area MSAs of Laredo, Corpus Christi, Harlingen and Brownsville experienced a moderate growth. The financial crisis of 2008 had a negative effect on the economy of this region. Since, GDP in all major South Texas MSAs have recovered. The region has remained dynamic due to its proximity and trading relations with Mexico. Recent estimates from the Center for Border Economic Studies suggests that economic activity in 2014 grew by 4.3% in the McAllen-Edinburg-Mission MSA, mainly due to the increase in retail sales, increased spending in lodging from either business or tourism/ leisure endeavors, higher enplanements, increased volume of new building permits, stable housing market, and job creation in the region. El Paso experienced moderate annualized growth rates from 2010 to 2014. The MSA rebounded from a sluggish 0.5% growth rate in 2013 to an estimated 3.8% growth rate in 2014. The economic output of El Paso is expected to grow at 2.3% in 2015; this is slower than last yearâ&#x20AC;&#x2122;s 3.8% growth rate. The slower pace of growth may be attributable to federal cuts in defense expected to affect troop levels at Fort Bliss. This may impact retail sales and transportation traffic in the area. In addition, Ciudad Juarezâ&#x20AC;&#x2122;s economic activity still spurs growth in this region. The University of Texas at El Paso recently forecasted that housing construction, a key economic indicator in El Paso, had struggled. Abdelhamid Riani is a Ph.D. student in Finance at The University of Texas Pan-American Dr. Salvador Contreras is Assistant Professor of Economics and Director of CBEST at The University of Texas Pan American

Other factors include weaker investments in the housing market and rising mortgage interest rates. Real GDP forecasts for South Texas MSAs areas are presented in Figure 1. Forecasts for 2015 suggest that McAllen-Edinburg-Mission MSA will experience the highest growth as compared to the area MSAs with 3.6%; this exceeds national projections of 2% according to the Center for Border Economic Studies (Figure 2). El Paso and Laredo come in second at 2.3% followed by

Real GDP Forecast

2015

2014

McAllen-EdinburgMission MSA

3.6 4.3 2.3

Laredo MSA

3.2

2.3

El Paso MSA

Corpus Christi MSA

BrownsvilleHarlingen MSA

3.8 0.8 3.1 1.7 3.1

Figure 1: 2014 and 2015 CBEST RGDP forecast for South Texas MSAs. Endnotes: Contreras, S., Clemente, J., and Riani, A. (2015). January 2015 Annotated Forecast Report. Edinburg, TX: Center for Border Economic Studies. The University of Texas System. (2011). Impact on the Rio Grande Valley. (Retrieved from http://www.utsystem.edu/sites/utsfiles/news/ ImpactSheetValley0511.pdf on 2/25/2015)

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RGDP GROWTH RATE

-2.0 0.0 2.0 4.0 6.0

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5.0 1.9

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2008q4

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Figure 2: U.S. Real GDP Growth Rate Source: Bureau of Economic Analysis and CBEST

Mexico Annualized Real GDP Growth Rate Quaterly , Forecast

REAL GROWTH RATE (%) -10.0 -2.0 6.0

In conclusion, several external factors are expected to contribute to the continuous growth of the Rio Grande Valley. In a study done by the University of Texas System on the impact of the new university on the region’s economy, the report shows that the University of Texas at Brownsville (UTB) and the University of Texas-Pan American (UTPA) contributed over $640 million to the region’s economy and almost 5,500 jobs in 2010. This contribution is expected to be even higher with UTRGV and the expected increase in the new university’s budget.

Quaterly (SA), Forecast

8.4

7.8 3.3

-15.5

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-11.6

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-15.0 0.0 15.0

According to the Border Economic Studies (Figure 3), Real GDP in Mexico is expected to start the year slowly. CBEST estimates a 1.5% growth for full year 2015. The relatively weak Mexican economy, in addition to a weakening peso, is expected to dampen retail revenue growth in the Laredo and McAllen-EdinburgMission MSAs.

U.S. Real GDP Growth Rate

RGDP GROWTH RATE

Brownsville-Harlingen and Corpus Christi MSA. These projections are in part due to an increase planned investments. For example, the McAllen-EdinburgMission MSA should benefit from ongoing infrastructure investment related to The University of Texas Rio Grande Valley and its new planned medical school, Hidalgo County Loop project, and other ongoing business investments.

2000q1

2001q4

2003q3

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2008q4

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Figure3: Mexico Annualized Real GDP Growth Rate Source: Banco de Mexico and CBEST

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VALLEY TALENT

Dr. Virgil Pierce

Creating new formulas for success in math education

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This quarter we give tribute to Valley talent Dr. Virgil Pierce. The University of Texas-Pan American recently featured Dr. Pierce after receiving The University of Texas Board of Regents Outstanding Teaching Award. The information below is based on that featured article. B order B usiness B riefs | S ummer 2015

When asked about his approach to mathematics teaching, Dr. Virgil Pierce, an associate professor of mathematics at The University of Texas – Pan American, says “I feel like so many teachers are trying to convince students to be interested in things that they are interested in whereas my approach is that I get a lot more mileage out of finding out what students are interested in and figuring out how the mathematics is hiding there.” Pierce’s passion for the field and in improving math literacy and success by university undergraduate and graduate students has led him to become the director of the university’s efforts in developmental mathematics and a leading advocate for innovative teaching approaches to the subject, including the use of state-of-the-art technology. “I am for techniques which improve student mastery and recall of learning outcome goals and connect these topics with other aspects of the education or with their real world experiences,” Pierce said. “The experience of mathematics which students receive in my courses is always tempered by examples, examples as varied as possible.” The University of Texas Board of Regents recognized his expertise as an educator with one of seven 2014 Regents’ Outstanding Teaching Awards presented to UTPA faculty members. The recognition includes a monetary reward of $25,000, which is among the largest incentives in the nation for exceptional faculty performance. Pierce, who earned a B.A. in mathematics from Boston University and his Ph.D. in mathematics from the University of Arizona, came to UTPA in 2008. He has found that being a math educator and researcher was his life’s calling. “I am so happy I found teaching. Not a day goes by that I don’t enjoy it,” he said. “I am lucky with the subject - it is something that connects to almost everything that students are interested in. The only teachers that have an easier job are art teachers. I kind of feel that math and art are these two fundamental human endeavors that can connect to almost anything.” At the University, he has taught nearly 20 different courses ranging from remedial math to advanced and graduate courses - courses with titles like Contemporary Math for arts and humanities 32

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“I am for techniques which improve student mastery and recall of learning outcome goals and connect these topics with other aspects of the education or with their real world experiences.” majors, the History of Math especially directed to students who want to become math teachers, and Mathematics for Electrical Engineering and Computer Engineering for students going into those careers. “In every single class that Dr. Pierce has taught, he introduced new technology and/or innovative, non-traditional teaching techniques, many of them are cutting edge and new in our department,” wrote UTPA Mathematics Department Chair Dr. Andras Balogh in his recommendation letter for Pierce to receive the Regents’ award. “His innovative efforts benefit not just his students directly, but other instructors who adopt his techniques.” In his Contemporary Math course, Pierce has students solve problems with applications to real life experiences. In the class, he asks students students he says who have often not had a good experience in math and sometimes have even been traumatized by their negative experiences in math classrooms - to design and conduct a survey on questions that they are interested in, then summarize their results in chalk on the sidewalk outside the classroom.

“I find getting them outside the (mathematics) classroom, you get them out of a situation that causes a lot of stress for them...people just walking by will stop to ask what we are up to and rather than me explaining what we are up to, it’s the students’ job...,” Pierce said. “This is an important exercise in developing the understanding of a learning outcome in a way which will be retained.”

modeling of water waves, information useful in forecasting and analyzing the effects of tsunamis.

Pierce was one of the first faculty at UTPA to use the online software ALEKS, a web-based, artificially intelligent assessment and learning system, which is now used successfully in all of UTPA’s developmental math courses and many of its other courses. He also instituted the use of MatLab, a popular engineering and technical computer software package , in the Math for EE and CE course, which allows students more class time to focus on interpreting results of computations and less on actual computations.

Pierce’s drive to spark students’ interest in applied math research has also led to a number of trips by UTPA undergraduate students to participate in an summer research program at Rensselaer Polytechnic Institute (RPI) in New York, the nation’s oldest technological research university.

“The ALEKS software really rewards students for what they already know. That is completely different from a traditional math class. A traditional math class almost punishes students for coming there already knowing something,” Pierce said. Additionally, Pierce helped implement a prestatistics course option for students who are in degree plans not requiring college algebra - a course that has particularly benefitted students in the University’s nursing program. And in fall 2013 he was a co-principal investigator of a $1,660,000 grant from the National Science Foundation to establish a summer bridge program to calculus aimed at accelerating the progression of engineering students in particular through their math course sequence. Pierce was also instrumental in a four-county South Texas initiative that began Fall 2014 involving all five higher educational institutions and local school districts to develop a college prep math course for students not meeting the state’s college readiness standard. Five hundred students are now registered in the program, which provides high school students with a free online homework system with a goal to have as many as possible to earn a waiver, enabling them a chance to earn a degree, Pierce said. His outreach in math education extends to building a wave tank used to demonstrate the mathematical

“It is portable, breaks down into four foot sections and fits into my Corolla,” Pierce said. “This is part of talking to students about math. You know math can be about talking to students about things that are moving. It’s more than just numbers and equations.”

Esteban J. Melendez (BS ‘12, MS ‘14), an RPI research program participant in 2012, cited in his recommendation letter Pierce’s skill at building comfortable teacher-student relationships by providing individual attention to each student and an open door policy to those seeking advice. “His interest in volunteering to mentor students, which may struggle with a subject, has developed in him strong skills and abilities concerning problem-solving and reasoning background. Dr. Pierce puts a considerable amount of time caring and showing passion to see his students succeed, especially those he knew used to struggle,” Melendez said. In his recommendation letter Dr. Timothy Huber, an assistant professor of math at UTPA, described his colleague since 2009 as an ambassador for mathematics and praised Pierce’s high standards in both teaching and research. “His active research program, extraordinary mentoring of students and innovative teaching approaches clearly impact UTPA students,” Huber wrote. “As UTPA continues to grow, I believe we must continue to attract like-minded faculty to provide students with excellent instruction, meaningful research opportunities and to improve the overall quality of education Original article by: in the Valley. He is precisely the Gail Fagan, Office kind of faculty UTPA needs as it of Public Affairs, transitions to UTRGV and fulfills The University the goal of becoming a studentof Texas-Pan centered emerging research American institution.” B order B usiness B riefs | S ummer 2015

HEALTH

The Elderly Ageism & its effect on their health By Penny Simpson

Imagine a frail-looking old man and his son walking along a busy street. The old man asks you for directions. Would you speak loudly to him, assuming that he canâ&#x20AC;&#x2122;t hear well? Would you speak in simple terms to make sure he understands? Or would you look at the much younger man to provide the directions? 34

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All of these possible responses to the old man are evidence of age-based discrimination, otherwise known as ageism. While almost everyone believes that they have been discriminated against for some reason at some time in their life—for being young, female, Hispanic, tall, short, etc.—research by Isla Rippon, Cesar de Oliveira, Panayotes Demakakos and Andrew Steptoe at University College London and Dylan Kneale at International Longevity Centre in the UK suggests that about a third of seniors believe they have been subjected to discrimination because of their old age. Perception of the elderly being senile, forgetful, hard of hearing and at the end of their life is unfortunate given that almost all of us will experience old age! Even more unfortunate is the fact that the elderly may be discriminated against by their physicians, which may endanger their lives. Research by Todd Nelson at California State University-Stanislaus shows that some medical professionals view diseases of the elderly as inevitable and a natural part of aging and are less likely to order diagnostic tests for diseases such as cancer and to offer cardiovascular interventions that may save lives. New research by UTPA current and former faculty members Penny Simpson, Steven Foy, Darrin Rogers and Liza Talavera-Garza examined the subject of physician ageism as perceived by Winter Texans as part of a larger survey of Winter Texans in the Rio Grande Valley conducted by the Business and Tourism Research Center at UTPA biennially. Winter Texans are generally retirees who routinely visit the Valley each winter to escape the harsh cold climate of the more northern regions of the U.S. and Canada. The primary purpose of the Winter Texan studies is to determine the economic impact of Winter Texans on the RGV economy. In the survey conducted in Winter 2014, Winter Texans in the Valley were asked questions about their spending and activities while in the Valley, and about ageism, ageism and their physician, and communications with their physician. They were also asked questions about their overall health, life satisfaction, stress levels and their tendencies to follow—or not—their physician’s treatment recommendations. A total of 1,394

Winter Texans responded to the survey either by answering questions online or by completing and returning a survey that was inserted into the Winter Texan Times, a free news publication distributed throughout the Valley. The research found that retirees who believe their physicians were ageists were more likely to have poorer communications with their physicians and were less likely to follow doctor’s recommendations or to even avoid doctor visits altogether. Not surprisingly, failing to follow physician’s treatment recommendations and avoiding doctor visits leads to poorer health. To compound the negative health outcomes, perceived ageism and poor communications with doctors leads to increased levels of stress and to a greater lack of confidence in ability to accomplish tasks which, in turn, leads to diminished health and life satisfaction. In summary, the research findings demonstrate that a physician who speaks down to the elderly, treats them as if they are senile, and ignores them by communicating with relatives who may accompany the elderly, may actually be contributing to the decline in health of the elderly. Often, the elderly fear the aging process and have real concerns about their own well-being, their diminishing ability to cope and their value to society. Consequently, communications with the elderly that are direct, interactive and not condescending or demeaning may help the elderly to maintain their selfconfidence, reduce stress and continue to feel as though they are a valued member of society, all contributors to good health and well-being. Next time a frail old man asks you for directions, look him in the eyes, smile and treat him as if he were 30. You may be contributing to his better, more meaningful life. Dr. Penny Simpson is Professor of Marketing and Associate Dean at The University of Texas-Pan American Endnotes: Nelson, T. D. (2005). Ageism: Prejudice against our feared future self. Journal of Social Issues, 61(2), 207–221. Rippon, I., Kneale, D., de Oliveira, C., Demakakos, P., & Steptoe, A. (2014). Perceived age discrimination in older adults. Age and Ageing, 43, 346-351. Simpson, P. M., Foy, S. L., Rogers, D. L., & Talavera-Garza, L. (2015). Effects of ageism on health status and satisfaction with life. Working paper.

B order B usiness B riefs | S ummer 2015

HEALTH

By Jim Limon

According to the May 2009 Entrepreneur magazine the baby boom generation is a force to be reckoned with. 76 million strong, they comprise a $2 trillion market. Born between 1945-1964, boomers are capable of sustaining the long-term services and support (LTSS) sector. 36

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The Issue What is LTSS? As defined by the Congressional Research Service in their 2013 report: LTSS refer to a broad range of health and health-related services and supports needed by individuals who lack the capacity for self-care (i.e. bathing, dressing, transferring) due to a physical, cognitive, or mental disability or condition. Often the individual’s disability or condition results in the need for hands-on assistance or supervision over an extended period of time. Medicaid plays a key role in covering LTSS to aged and disabled individuals. Much of the LTSS sector has been built around the more lucrative private pay sector. These are individuals who have saved (self-pay), have family members who finance and/or have insurance policies that can finance LTSS. This group of LTSS customers offers higher margins then their government funded counterparts. Such trends have created disparities in services available to persons in need (elderly, disabled, or both), especially for those with elevated assistance requirements of 24-hour supervised care. Most of this sort of care comes with housing accommodations included, such as Nursing Facilities (NF), Assisted Livings (AL), and other state-funded facilities. The two predominant options are NFs and ALs. Generally speaking, NFs offer the highest level of care and ALs offer assistance with activities of daily living such as eating, toileting, and transferring (to name a few). Cost wise, NFs are higher than those of ALs due to their more stringent requirements. Medicaid and Medicare are government funded. Medicaid is jointly funded with state and federal

funds and is only available to low-income individuals. Medicare is primarily age driven (65 and over), federally funded and tends to pay more than Medicaid. Among the many programs available to seniors, there is an increasing need for LTSS that is combined with housing accommodations. As reported in the 2003 State of Texas Senior Housing Assessment: Key Informant Survey, one state leader in housing policy was quoted as saying, “the largest unmet need is affordable assisted living.” Several other respondents in the same report remarked that while there is a growing market for the development of new AL’s many disadvantaged seniors could not afford them. There are also those who claim that there are no AL options available for low-income elderly and as a result, it was argued, unaffordable ALs in Texas forces people into NFs or forces them to stay at home without appropriate services. This creates a lose-lose situation, on the one hand taxpayers are asked to pay the higher costs associated with NFs (due to a lack of low-cost alternatives) and on the other hand the consumer (benefit recipient) loses by not having access to appropriate levels of care. Another point made by the aging network state that the state’s waiting lists for benefits as an additional cause of many elders seeking NFs. According to a 2003 report by Stanley Ingman and Iftekhar Amin of Texas Institute for Research and Education on Aging at University of North Texas, an administrator and planner from South Texas echoed this sentiment by suggesting that there needs to be more emphasis on subsidized ALs to alleviate this problem. A Brief Explanation of What’s Happening

Total Population

65 & Older

On Medicaid

% On Medicaid

Bexar

1,817,610

199,937

16,508

8.3%

Dallas

2,480,331

235,631

18,153

7.7%

Harris

4,336,853

477,054

34,045

7.1%

El Paso

827,718

90,221

15,481

17.2%

RGV

1,233,275

131,673

31,998

24.3%

Travis

1,120,954

90,797

5,362

5.9%

Table 1. 2013 Selected Population Statistics

Sources: U.S Census Bureau 2013 Estimates & HHS 2013 report on “Point-In-Time Medicaid Count”

The lack of (24-hour care) housing options to low-income elderly forces them to stay in their homes where they are provided with limited inhome care. Often, the care is not commensurate with what is required and before long, what is a routinely manageable, turn into an aggravated medical condition that eventually lands them in the hospital. According to a 2011 article in Emerging Trends in CCRC Environments, among the leading culprits are obesity and diabetes. Once there, the hospital addresses the condition and the B order B usiness B riefs | S ummer 2015

elderly may possibly qualify for Medicare to temporarily pay for their stay in a NF. After a short period, Medicare funds are exhausted and a lower paying Medicaid kicks in. Eventually, the medical issue is stabilized and the patient/resident is discharged back into the community via a program called Money Follows the Person (MFP). In some instances, due to limited housing options they find themselves back at square one. Then it’s only a matter of time before the process repeats itself.

interests of the disabled. According to Texas Health & Human Services the initiative is to promote an individual’s choice to live in the most integrated residential setting and to receive appropriate LTSS. The order by occurrence is as follows:

Ironically, this also happens to be the method for moving ahead on the state’s four-year interest list (aka waiting list) for Medicaid benefits. The MFP policy helps individuals who are receiving LTSS in a NF return to the community to receive services without placement on a Medicaid waiver program interest list. This program enables them to jump to the front of the line. This is a generalized overview of one key issue. However, it is significant enough to be continuously mentioned in both the state’s Housing Assessment Report and Health & Human Services System (HHSS) 2009-13 Strategic Plan. In defense of our government, there have been many initiatives both state and federal that attempt to address the growing needs of our elderly population.

2001 Senate Bill 367

The Promoting Independence Initiative & Plan This initiative represents a coming together of a variety of key issues that span from laws, decisions, and state actions that were issued to serve the

1990 The Americans with Disabilities Act (ADA) 1999 The Olmstead Decision 1999 George W. Bush Executive Order GWB-99

2002 Rick Perry Executive Order RP-13 In compliance with the Social Security Act’s Community Waiver Program, the state expands its Community Based Alternative program. The CBA program looks to offer options for LTSS and was established to handle and assist with the overall responsibility of managing community integration. Its focus is to ensure that people with disabilities are provided opportunities to live productive lives in their home communities. A Comparative Analysis Major Cities in Texas by County Below I present county comparison analyses that include population estimates (overall & 65+), eight-year Medicaid enrollment trend (65+), and percentage of persons 65+ on Medicaid for 2013. In addition, I included the Rio Grande Valley. Long viewed as a cluster of small farming communities it now boasts a size and population that rivals other

% of Persons 65 & Older on Medicaid at Year End 2013

U.S. Census Bureau 2013 Estimates 30.0% 5,000,000

25.0%

4,000,000 3,000,000

20.0%

2,000,000

15.0%

1,000,000

Figure 1 38

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Figure 2

Travis

RGV

El Paso

65 & Over

Harris

0.0%

Dallas

Travis

RGV

5.0% Bexar

Total Population

El Paso

Harris

Dallas

10.0% Bexar

large Texas communities. I have chosen to combine Cameron and Hidalgo counties as one large metropolitan area in order to make comparisons to other cities. The selected cities and counties are as follows: San Antonio ............................................................Bexar Dallas.......................................................................Dallas Houston...................................................................Harris El Paso..................................................................El Paso Austin.........................................................................Travis

addressed, will soon spiral into an uncontrollable demand for LTSS. There will be losers on all sides, starting with the elderly and ending with taxpayers. The government is currently pursuing a multilevel coordination of programming and services with such waiver programs as MFP along with interagency cooperation to help bring resources forward. As Ingman and Iftekhar put it, more money is needed since Texas ranks 49th in expenditures under the Older American Act program. Maybe the answer lies with the state’s recent move to utilize Managed Care Organizations (HMOs) to manage such services. In either case, something has to be done to raise awareness among entrepreneurs and give them enough incentives to provide more resources and services to the poor and disabled elderly.

In table 1 I combined data collected from the U.S. Census Bureau’s most recent population estimates and the Texas Medicaid “Point-InTime” enrollment statistics. I used this information to create Figures RGV El Paso Travis Bexar Harris Dallas 1 & 2. Figure 1 shows that the 2006 29,614 14,666 4,535 15,860 28,911 16,534 Valley ranks fourth among the 2007 29,907 14,858 4,438 15,892 29,554 16,625 six metropolitan areas analyzed in terms of total population and 2008 30,501 14,961 4,467 16,147 29,887 16,866 persons 65 & older. However, in 2009 30,882 15,073 4,556 16,336 30,906 17,259 the Year-End Medicaid “Point-In2010 31,198 15,070 4,729 16,476 31,624 17,847 Time” enrollments for the same 2011 31,666 15,195 5,001 16,420 32,507 17,943 year the Valley leads in the 65 and older population that also received 2012 31,797 15,374 5,240 16,326 33,281 17,994 Medicaid benefits in 2013. About 2013 31,998 15,481 5,362 16,508 34,045 18,153 a quarter of the 65 and older population (24.3%) in the Valley Table 2. Year End Medicaid “Point In Time” Enrollments of Persons 65 & Older. Source: HHS 2006-2013 reports on “Point-In-Time Medicaid Count” received Medicaid benefits. Table 2 shows another important finding about the Valley in that it had the highest Medicaid enrollment increase for the period starting in 2006 and ending in 2013. In terms of overall enrollments for 2013, the Valley was only second to Houston. Not surprisingly, one can see that the greatest need for government services is usually tied to areas with the highest levels of income disparity. As a final note, the average growth rates for the period covered in Figure 3 shows that the Valley ranks fourth at under a 1%. Conclusion Each state is faced with a growing need to address issues afflicting its elderly population. The Valley finds itself among the higher ranked areas in the size of elderly population share on Medicaid. The baby boomers have arrived and what was once considered a growing concern, if not appropriately

Jim Limon is Lecturer of Accountancy at The University of Texas-Pan American Endnotes: 1.Colello, Kirsten (December 2013). Congressional Research Service. “Medicaid Coverage of Long-Term Services & Supports. (Retrieved from http://fas.org/sgp/crs/misc/R43328.pdf on 3/5/2015.) 2. Thornhill, Matt (May 2009). Entrepreneur Magazine. “What Are You Waiting For? Tap into the $2 trillion boomer market” pp 47-49. 3. Durso, John; Grey, Dan; Mashner, Marvin; Moore, Jim (May 2011). Senior Living Business. “Emerging Trends in CCRC Environments” Volume 5, Issue 5. pp 1-10 4. Ingman, Stanley; Amin, Iftekhar (August 2003). State of Texas Senior Housing Assessment: “Key Informant Survey” pp 5-10 5. Texas Health & Human Services (2006-2013) report on “Point-In-Time Medicaid Counts.” (Reports retrieved from http://www.hhsc.state.tx.us/ research/MedicaidEnrollment/me-results.asp on 3/5/2015.) 6. Texas Health & Human Services. “System Strategic Plan 2009-2013” Chapter VI: Department of Aging & Disability Services. Vol. 1 pp 162168. (Retrieved from http://www.hhsc.state.tx.us/about_hhsc/strategicplan/2009-2013/index.shtml on 3/5/2015.) 7. Texas Health & Human Services. “System Strategic Plan 2011-2015” Chapter II: HHS System Overview. Vol 1 pp 15-16. (Retrieved from http:// www.hhsc.state.tx.us/about_hhsc/strategic-plan/2011-2015/index.shtml on 3/5/2015.) 8. U.S. Census Bureau. “2013 Population Estimates.” (Retrieved from http:// quickfacts.census.gov/qfd/states/48000.html on 3/5/2015.)

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ECONOMY

Mexican Shoppers How much do they spend in the Rio Grande Valley? By Adrian Cadena and Eduardo Saucedo

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Retail trade is an important sector in the economy of the Rio Grande Valley. In 2013, this sector represented 5.6% of the economy of Texas. However, to the Valley retail sector it represents 11.8% of the economy. This means, the economy in the Valley is two times more dependent on retail trade activity than the rest of state. This is in part due to the large number of Mexican shoppers who visit the area with the sole purpose of purchasing goods to take them back to their home country. According to the Bureau of Transportation Statistics, 26 million Mexicans crossed the border and visited the Valley in 2013, most of them due to shopping needs. This vast number of Mexican consumers represents a significant inflow of money, which accelerates and stimulates the economy in the Valley.

It is common knowledge that Mexican nationals spend millions of dollars per year in retail transactions throughout the Rio Grande Valley. However, we donâ&#x20AC;&#x2122;t know how many millions of dollars they spend because the amount is not easy to estimate. One of the reasons is because most of the retail trade conducted by Mexican nationals on the U.S. side of the border is done in cash, making it difficult to estimate the total amount spent. Nevertheless, different studies have attempted to estimate the amount spent by Mexican Nationals when they visit different U.S. border cities. The grand majority of these studies have been done through survey techniques. These surveys are generally administered to Mexican nationals when they are at the mall, airport, or in the international bridge when they are driving back to Mexico. Unfortunately, many of these studies are regional, expensive, time-specific, and labor-intensive. In addition, such surveys are only conducted in some specific U.S. border cities and are strongly influenced by particular socio-economic conditions happening in the neighboring Mexican cities. As a result, such studies cannot be performed consistently over time or applied to make inferences across other cities along the U.S.-Mexico border. Due to these factors, we implemented a different methodology to estimate such numbers.

Unfortunately, this methodology also has limitations since it does not utilize rigorous econometric techniques or inferential statistics, but through simple calculations we were able to obtain numbers similar to those obtained by previous survey studies, avoiding the problems associated with the survey techniques above specified. In our calculations, we used the North American Industry Classification System to identify the products included in the retail sector. In addition, we used the total amount spent in retail activities for different US border counties. The most recent available value comes from 2007, for that reason our estimations are only for that year. We use U.S. American Community Survey data to calculate the number of households by deciles in each U.S. border county according to their income level, and calculate how much is spent in retail products by people living in each U.S. border county. Adrian Cadena is an Then we subtract undergraduate student in Economics and Finance at The this amount from University of Texas-Pan American. the amount available in the U.S. Census Dr. Eduardo Saucedo is a Lecturer and we get the in the Department of Economics amount consumed by and Finance at the University of Texas Pan American Mexican nationals. B order B usiness B riefs | S ummer 2015

Hidalgo County

Cameron County

Webb County

El Paso County

$2,714,289,361

$1,028,871,522

$1,230,612,956

$1,838,170,543

Percentage of Total Retail

34.4%

26.3%

42.2%

21.7%

Average consumption per Mexican (People crossing in cars) (Amount in dollars)

$167

$76

$86

$70

Average consumption per Mexican (People crossing in bus+pedestrians) (Amount in dollars)

$30

$13

$18

$12

Average consumption per Mexican (Total) (Amount in dollars)

$139

$63

$65

$54

Consumption Mexicans

Table 1: Retail activity of the Mexican nationals along the Texas-Mexico Border

Source: Estimates were produced with data from the U.S. American Community Survey, U.S. Census, Bureau of Transportation Statistics and INEGI.

For example, Hidalgo County retail sales in the U.S. Census data is the total amount consumed by Hidalgo County residents and visitors. For this reason, we calculate the amount spent in retail products by Hidalgo County residents. Then we subtracted such amount from the amount available in the U.S. Census data and assumed that difference is attributable to people not living in the county, Mexican nationals and Winter Texans. The Business and Tourism Research Center at The University of Texas-Pan American produces estimates of what Winter Texans spend in the RGV. With this data we are able to estimate retail sales attributed to Mexican nationals. Finally, we split this value into total retail trade consumed by Mexican nationals that crossed into the U.S. either as pedestrians and/or by car. To get these estimations we also used the Encuesta Nacional de Ingreso y Gasto (ENIGH) from the Instituto Nacional de Estadística y Geografía (INEGI). The estimations are presented in Table 1. Hidalgo County and Cameron County, respectively, were originated by Mexican nationals into the Valley. Table 1 also displays the amount spent by Mexican nationals who crossed the international bridge either walking or by car. We calculated this difference because we assumed that pedestrians 42

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coming into the Valley spend on average less money in retail activities than Mexican nationals that visited the area in a car. Our estimations for Hidalgo County show people crossing in cars consume on average $167, while pedestrians consume $30. The prevalent pattern where visitors in vehicles consume more than pedestrians is consistent along all Texas border counties. The table shows that Mexican nationals spend on average more money in Hidalgo County than in any other county. A possible explanation is that Hidalgo County not only receives visitors from the Mexican neighboring city of Reynosa, but it also has many visitors from Monterrey, Mexico, which is the thirdlargest city in the country (3.5 million inhabitants in 2005), and is a wealthy city by Mexican standards. This particular characteristic makes Hidalgo County different from the other U.S. border counties mentioned in the table. In addition, Monterrey is by car approximately three hours away from Hidalgo County. Given such distance factor we expect that people from Monterrey don’t come very often to the McAllen area for shopping reasons, and because of this they spend more money on average than a Mexican national who lives in a Mexican neighbor city like Reynosa. As stated above, the estimations in this study are for 2007 because it is the most recent data available for retail sales.

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