The U.S. Bureau of Labor Statistics released the Regional and State Employment and Unemployment Summary recently for October 2015 and here is the Texas Workforce Commission’s press release.
The labor market data for the states with the largest populations and economies—California, Texas, New York, and Florida—and U.S. averages show that the Texas model continues to outperform in most employment measures but faces headwinds. The Texas model’s continued support of prosperity during the last 15 years is highlighted in the Foundation’s recent study A Labor Market Comparison.
Texas has now had positive nonfarm job creation in 59 of the last 61 months with 20,000 net jobs added in October in most industries. Figure 1 shows that Texas’ annual job creation rate is slowing after reaching a peak in December 2014 and surpassing others for years.
Figure 1
Texas’ 4.4 percent unemployment rate in October marks the 106th straight month it has been at or below the U.S. average and remains below the others in Figure 2. However, the rate is up by 0.3 percent since bottoming in August.
Figure 2
The Lone Star State’s sustained lower unemployment rate is impressive when you consider how many people have moved to Texas and Americans have stopped looking for work since the last national recession, which is coined the Great Recession, started in December 2007 and even after it was dated to have ended in June 2009. While the nation’s reported 5.0 percent unemployment rate in October is near what some consider “full employment,” it doesn’t tell the whole story. Figure 3 presents evidence of the drop in the U.S. labor force participation rate and the fact that Texas’ rate remains higher than other large states though it has recently declined sharply from factors related to the mining sector, as lower oil prices influencing oil producers to shutdown wells, and the manufacturing sector, as the global economy weakens.
Figure 3
Given the false signal a lower unemployment rate might send from fewer searching for a job, the employment-population ratio provides valuable information. Figure 4 shows that Texas’ share of the population employed has taken a steep decline since March and should be watched closely. Specifically, as noted in this blog piece, there has been divergence between non-farm employment that is up 89,900 since March and civilian employment that is down 154,096—it was up in October for the first time since February.
Figure 4
Figures 5 and 6 below illustrate that Texas has been the nation’s primary job creator since the Great Recession began. Total employment didn’t decline then when oil prices dropped about 75 percent compared with the recent roughly 60 percent drop since July 2014. Though this provides some indication of the potential consequences of the current smaller drop in oil prices, this drop has lasted longer and the declines in total employment since March indicate this time could be different.
Figure 5
Figure 6
Though Texas faces headwinds, strengthening the Texas model by continued economic diversification, more international trade, and pro-growth policies will help the Lone Star State weather the storm.