Jobs! Jobs! Jobs!
By: Dr. M. Ray Perryman
Published in syndication January 25, 2023
The 2022 employment numbers have just been released, and Texas set the pace by a significant margin. Over the year, nonfarm payroll employment increased in 42 states and was essentially unchanged in eight plus the District of Columbia according to the US Bureau of Labor Statistics. Texas gained 650,100 net new jobs, while California rose 621,400 and Florida was up 440,000. The largest percentage increase also occurred in Texas (+5.0%), followed by Florida (+4.8%), and Oregon (+4.2%).
Looking at net job growth since February 2020 (the month before the pandemic), the United States has gained about 1.24 million jobs and Texas has gained around 740,000. In other words, some 60% of the net employment increase in the entire country has been in Texas. I've seen a lot of numbers in my time, and that one is pretty remarkable!
There are several factors contributing to the state's strong growth. One is the continuing pattern of people moving to Texas. Whether you look at Census data or other indicators such as the U-Haul Growth Index, it is obvious that people are leaving states such as California, New York, and Illinois and coming to Texas. Many of these individuals are highly skilled professionals who are helping to overcome the acute worker shortages and enabling future gains.
Another significant phenomenon is the ongoing momentum in activity in the oil and gas sector. There are about 100 more rigs running in Texas than a year ago and output is at record levels. Not only does that mean jobs in major production areas, but also in other industries and locations up and down the supply chain. Add to that the ongoing gains from the major corporate locations and expansions and record volumes of cargo at the ports in the state, and the stage is set for notable growth.
Even with these positive attributes, however, it would be difficult (likely impossible) to maintain a 5% growth rate as the recovery matures. In fact, the monthly pace has recently slowed considerably. We've already captured much of the bounce from reopening the economy and resuming travel and other activity. In addition, a potential national recession continues to be a concern, although I think there is a lot of overreaction and any downturn we might see will be relatively mild and brief. The layoffs in the tech sector will also ripple through Texas.
Even with these notable headwinds, the positives should far outweigh the negatives going forward. We are projecting healthy growth for the state economy over the next few years, and Texas will remain one of the leaders among all states. Having said that, job growth in the 2.0-2.5% range is more probable than sustaining the recent surge. Stay safe!