Texas economy

Ray Perryman: Despite headwinds, Texas economy is generating jobs

May was another strong month for the Texas labor market, with the state posting by far the strongest job increase across the country (+74,200), well above California (+42,900) and New York (+26,800). Texas was also near the top in percentage increase, an unusual feat for such a large state.

Over the past year, Texas has added 762,400 jobs, and employment is now about 400,000 higher than before the pandemic (the United States remains about 900,000 behind the previous peak) . Not all states are so lucky and some continue to cut jobs. In May, employment fell in Michigan (-14,600), Alaska (-4,400) and Wyoming (-2,800).

Another piece of good news in the Texas jobs numbers is that the gains were spread across goods- and service-producing industries. Particularly strong growth occurred in leisure and hospitality, business and professional services, and construction. Thousands of manufacturing jobs have also been added.

The unemployment rate also fell even as the labor force grew. More than 14.5 people make up Texas’ workforce, up from nearly 322,000 over the past year. Although unemployment is slightly higher in Texas, the state is in a much healthier position economically. In fact, the time required to integrate the influx of workers into jobs is one of the main reasons for the slightly high rate.

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Labor is actually shrinking in places like New York, New Jersey and Maine, a significant issue in a market where labor shortages are likely to be a long-term concern. Over the past year, for example, New York’s labor force has fallen by nearly 118,000, while Dallas-Fort Worth-Arlington has seen gains of about that amount. The state’s other major urban centers have also seen impressive labor force expansion.

Looking across Texas, most metropolitan statistical areas (MSAs) are now well above their pre-pandemic employment levels. The greater Austin area leads the way, with April employment at 108% of the February 2020 total. The Dallas area, Waco, Brownsville-Harlingen, McAllen-Edinburg-Mission, Sherman-Denison, Lubbock, Fort Worth- Arlington-Grapevine, Killeen-Temple, Amarillo, Tyler, greater San Antonio, College Station-Bryan and areas of Houston have all now exceeded pre-pandemic levels.

Several other metro areas are close, including Abilene, El Paso, Laredo, San Angelo, Corpus Christi, Wichita Falls, Victoria and Longview, all of which exceed 97% of pre-COVID-19 employment. Beaumont-Port Arthur is over 94%, with Midland and Odessa above 90%. However, most regions that have yet to fully recover have strong ties to the energy sector, and the recent surge in activity will likely translate into strong monthly job gains going forward.

Despite headwinds such as inflation, labor shortages, supply chain issues and geopolitical tensions, the Texas economy continues to generate jobs at an impressive rate and the scene is set for long term growth. Be careful!

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Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com), which has served the needs of more than 2,500 customers over the past four decades.