Whence Workers

By: Dr. M. Ray Perryman
Published in syndication August 10, 2022

Recent data indicates that the Texas economy continues to generate jobs at a torrid pace. In June, the state added 82,000 positions, pushing the year-over-year gain to 778,700. The 6.2% growth rate is second only to Nevada, which Texas dwarfs in size by a factor of more than nine. In May, Texas had about 974,000 jobs open, and fewer than 508,000 unemployed persons. The pace of expansion may moderate given challenges such as inflation, higher interest rates, and greater uncertainty on many fronts. Nonetheless shortages are most assuredly going to persist.

Long-term demographic patterns are not encouraging. Texas is better situated than most of the country given our younger population, opportunities relative to other states, and higher birth rates. Even so, as the baby boom generation continues to leave the workforce, they will be missed.

It's also uncertain when or even if some of the pandemic disruptions will be completely resolved. It is exceedingly difficult to find childcare in many areas, and it can be very expensive. The pandemic also accelerated decisions to leave the workforce for thousands of people, some of whom will not return (although the participation rate is now only about 1% below pre-COVID levels).

It will be difficult to maintain our health and quality of life without conscious efforts to attract people into the workforce, and we certainly can't sustain economic expansion. Part of the long-term solution may well be automation and capital investment, but until we invent robots to prepare food, provide home health care, and work in retail stores, that alone will not solve the problem. In fact, over the long sweep of history, technological advances have increased – not decreased – the demand for workers (although the nature of the jobs has radically changed).

Clearly, there are individuals on the sidelines who could potentially be enticed to work (the participation rate peaked around 2000). As shortages become more acute, we'll see rising wages and added benefits. Childcare, parent care, flexible hours, and remote or hybrid options will be increasingly offered by forward-looking firms. Some potential employees would look favorably on incentives such as tuition grants and other support for additional education, advancement opportunities, and a greater sense of being valued and appreciated. Ensuring potential workers have access to methods to enhance their employability is also worth exploring, whether that's literacy initiatives (a topic for another day), English classes, or basic skills of other kinds. Investment in public education is also imperative.

Sensible immigration reform for individuals of all skill levels is essential, simply because Texas and the United States need the workers. Texas must also be a welcoming state and avoid discriminatory social policies. The solution is "all of the above" – and then some! Stay safe!