Texas Border Business
The US Bureau of Labor Statistics recently released data related to the employment growth by state in 2024. Texas led the way by a substantial margin, but job numbers were up for most states. Let’s explore a few interesting points.
During 2024, nonfarm payroll employment increased in 33 states and was essentially unchanged in the remaining 17 and the District of Columbia. The largest net job gains occurred in Texas (up 284,200), followed by California (180,500), and Florida (147,900). The largest percentage increase occurred in Idaho (3.6%, though that represents only 31,100 workers added in the relatively small state economy). The Texas gain of 2.0% over the year is double the California pace (1.0%) and significantly greater than Florida (1.5%).
The Texas unemployment rate at the end of 2024 was 4.2%, up slightly from a year prior when it was 3.9%. Although the pace of employment expansion has slowed somewhat in Texas, it continues to generate over 50% more new jobs than any other state. The reason the unemployment rate modestly increased is that the state’s labor pool is growing rapidly. For example, California’s labor force expanded by about 57,300 over the year, while in Texas the gain was 445,300. Because the unemployment rate is the number of unemployed persons divided by the size of the labor force, it’s just basic math that the Texas unemployment rate has risen.
There is a “sweet spot” for unemployment; it’s not a situation where lower is always better. About 4% is considered full employment by economists, since a little slack is needed for optimal performance (people changing jobs, accommodating new businesses, etc.). Below that level usually means worker shortages which can constrain future growth. Some states are falling into this category including South Dakota (1.9% unemployment) and Vermont (2.4%), among others. In other areas, there are too many people looking for work including Nevada (5.7%), California (5.5%), District of Columbia (5.5%), Illinois (5.2%), Kentucky (5.2%), and Michigan (5.0%). Some Texas MSAs also have extremely tight labor markets,
People continue to move to Texas for the opportunities (among other reasons). Because long-term demographic patterns are clearly pointing to stalled population growth in most areas, this influx of workers (many of them with excellent skillsets) will be a competitive advantage. Texas also has a younger population with higher birth rates than most places.
As I have emphasized repeatedly for years, the key to future growth and even sustainability is for Texas to continue to develop its workforce, from supporting high-quality public and higher education to developing innovative training and retraining programs to support workers as technology evolves. If we do it, we win! If we don’t, we lose! It is just that simple! 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.
