Texas Border Business
Despite the current challenges—from geopolitical tension to tariffs—the Texas labor market is holding relatively steady (even with a modest recent monthly decline in June) and even improving in many areas. Texas added 232,500 jobs over the past 12 months, representing a 1.6% growth rate that was significantly above the national rate (0.6%). In addition, a wide range of industries are adding jobs, always a positive signal.
At the same time, the number of job openings across the state has fallen slightly. Lest this feels like a concern, let me hasten to add that excessive job openings are an indicator that the labor force is too small to meet the needs of businesses. As a result, economic expansion is curtailed.
The US Bureau of Labor Statistics (BLS) regularly tracks both job openings and labor turnover, which, even though they don’t always mesh together well, is commonly known as JOLTS (sometimes, we just can’t help ourselves). Texas had 575,000 job openings in June. The number of unemployed persons per job opening in Texas was 1.1, compared to a US average of 0.9. With slightly more unemployed persons than openings, the state is in a generally healthy position compared to areas such as California (with 1.5 unemployed people per opening), Nevada (1.4), Michigan (1.4) or Washington (1.3).
Texas is also better off than places such as Montana, the Dakotas, and Vermont, each of which have only 0.5 unemployed person per opening. Given skills mismatches and other issues, labor shortages are obviously a notable problem in these states. Texas is in something of a Goldilocks situation, with neither an excess of unemployed workers nor too many unfilled positions.
BLS also tracks hires and separations. This latter category encompasses quits (usually a positive sign in that workers are confident they will get a better position), layoffs and discharges (initiated by employers), and others (such as retirement).
In June, Texas had 535,000 hires and 459,000 separations, and over the 12 months ending in June, hires have averaged 494,000 per month, compared to 475,000 separations. This pattern works to reduce job openings. Overall, 293,000 in June were quits and 146,000 were layoffs and discharges. Quits are somewhat below a June 2023 peak, while layoffs and discharges have been fairly stable of late.
Simply stated, Texas is in the enviable position of having a growing labor force crucial to filling jobs. Demographics are quite favorable with a younger population, and well-known opportunities and advantages that are bringing in more workers and enabling further growth. While there are certainly challenges in the labor market (particularly the substantial reliance on immigration across the entire employment spectrum at a time when future availability is clouded), the big-picture view remains positive. Stay safe!
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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 over 3,000 clients over the past four decades.
