Tight labor market: August jobless rate declines to 3%

Area’s monthly unemployment figures have been logging near two-decade lows throughout 2018.

Local businesses that have been having a tough time hiring workers amid an extremely tight regional labor market won’t find much relief in Austin’s latest unemployment rate, which ticked down another notch in August.

For anyone looking for a job, however, the new figures indicate the Austin metro area should remain high on the list of places to send a résumé.

August unemployment in the metro area — which includes Travis, Williamson, Hays, Bastrop and Caldwell counties — slipped to 3 percent, according to nonseasonally adjusted numbers released by the Texas Workforce Commission, down from 3.1 percent in July and 3.3 percent in August 2017.

The area’s monthly unemployment rate has been logging near two-decade lows through-

out 2018, and August was no exception.

The latest figure was the lowest for the month of August since 1999, when it hit 2.2 percent.

The civilian labor force in the Austin metro area has climbed to about 1.18 million people since then, from about 710,000.

“People can come to Austin and pretty readily find employment,” said Michael Sury, a University of Texas finance lecturer. “It is a sign of a very robust economy.”

Still, Sury and other economists contend the low unemployment rate in Austin has reached the point of a labor shortage that is likely to constrain regional economic growth.

Federal statistics released earlier this week pegged the Austin-Round Rock area as the No. 1 large metro in the country last year in terms of increases in its gross domestic product — with a gain of 6.9 percent, bringing the size of the local economy to nearly $149 billion.

The second-place finisher, the Seattle area, lagged significantly with a 2017 growth rate of 5.2 percent.

But the Federal Reserve Bank of Dallas already has revised downward its estimate of growth in the Austin area’s economy through the first six months of 2018, pegging the number at an annualized 4.7 percent from an initial projection of 6 percent.

It cited a constrained local labor market as a primary reason.

Sury said the Dallas Fed’s revision isn’t surprising.

“Once you get below about 4 percent (unemployment), you tend to have a real strain on future growth because it’s just unsustainable,” he said. “It’s not necessarily a bad thing — it’s just that you can’t keep up that rate of growth because you’re going to run out of people” to fill jobs.

Sury said Austin’s economy is likely to remain healthy, however, and still should rank “in the Top 10 of U.S. metros” even if it retrenches a bit from its breakneck pace of growth achieved in 2017.

Regardless, the low local unemployment rate hasn’t been a panacea for all job-seekers.

Tiffany Daniels Wallace, chief spokesperson for Workforce Solutions Capital Area, called Austin’s job growth and economy solid but said many residents who want better-paying work or who have been trying to enter the labor force are still struggling to benefit from the local boom.

“Finding a job is less of the challenge now, but finding the right kind of job is,” said Wallace, whose organization helps with Austin-area workforce development.

“There are a lot of people working,” she said. “But they may be working two or three part-time jobs that are certainly helping to put food on the table but make it extremely challenging for them to then look at a training program” to obtain skills necessary to move up the economic ladder.

The Texas Workforce Commission pegged the total number of unemployed people in the Austin region last month at about 36,000. But Wallace said at least as many are “underemployed” — meaning they lack skills for higher-paying jobs that might suit them, or they’re in jobs that don’t utilize the skills they possess.

Overall, local nonfarm employment in August climbed by 33,600 jobs from the year-ago period, or by 3.3 percent.

The increase was fueled by hiring in the professional and business services sector, which added nearly 10,000 local jobs over the 12-month period. The local leisure and hospitality sector added about 9,500 jobs, and the sector that includes retail and wholesale trade added about 9,000.

Employment figures for the Austin metro area and other regions of the state released Friday by the Texas Workforce Commission aren’t adjusted for seasonal workforce patterns. But seasonally adjusted figures released by the Dallas Fed indicated only minor — if slightly tighter — labor market conditions in the Austin region.

According to the Dallas Fed’s figures, the Austin area’s jobless rate came in at 2.9 percent in August on a seasonally adjusted basis, up slightly from 2.8 percent in July but down from 3.2 percent in August a year ago. Austin had the lowest August unemployment rate among the state’s top metro areas, the Fed’s figures showed.

Drew Scheberle, a senior vice president at the Greater Austin Chamber of Commerce, heralded the local area’s low unemployment rate for August as the latest in a pattern that illustrates the strength of the region’s job-growth engine.

“These are again a strong indicator of a robust local job growth across all private sector industries,” Scheberle said. “We have a ton of opportunity for those here, those who are moving here and those who are upskilling to be prepared for next economy jobs.”

Statewide, the Dallas Fed pegged the seasonally adjusted unemployment rate at 3.9 percent in August, down slightly from 4 percent in July and from August a year ago.