Texas expected to lose 1M jobs this year

Texas the laggard? The Lone Star State often has been a leading economic light, surpassing the rest of the nation on job growth, output and other key measures. That probably won’t happen this year.

The coronavirus pandemic and stay-at-home orders have locked down much of the economy, and Texas has some especially vulnerable sectors, including air transportation and food services.

The energy industry also is in a world of hurt, compounding the state’s financial problems.

According to researchers at the Federal Reserve Bank of Dallas, “Economic distress caused by the COVID-19 pandemic has sent the Texas economy into a tailspin.”

“I don’t think I’ve used that word in years, probably a decade,” said Laila Assanie, a senior economist who co-wrote the report released last week.

Indeed, the last time Texas employment declined from December to December was in the wake of the Great Recession. In 2009, nonfarm jobs fell 3.5 percent, the U.S. Bureau of Labor Statistics notes.

This year’s decline is projected to be more than twice as deep — down 7.6 percent by the end of the year, the Dallas Fed said.

With about 13 million workers at the end of 2019, Texas is expected to lose more than 983,000 jobs for the year. And that’s after a rebound in hiring in the second half.

“The gains will not be enough to offset the losses,” Assanie said.

One key reason: “We don’t know how many workers will actually be called back,” she said.

Layoffs already have been widespread, and the depth of the damage was reflected in the national jobless numbers released last week.

The U.S. lost an estimated 20 million jobs in April and the unemployment rate reached 14.7 percent, the highest since the Great Depression.

To identify the hardest-hit sectors in Texas, Assanie tallied state unemployment claims as a share of sector employment. From March 7 to April 25, more than 20 percent of workers in arts and recreation and in lodging and food services had claimed unemployment benefits.

Other services, which include repair, maintenance and nail and hair salons, also had a high share of unemployment filers — as did mining, education and retail trade.

Assanie said the filings are likely to grow as the state processes more claims for people who’ve lost their jobs. In Texas and elsewhere, unemployment offices have been swamped by the demand for benefits.

For many holding on to their jobs, the pay is getting lower. In a survey of Texas companies last month, a quarter of employers said they had reduced salaries, and the share was higher among service companies and retailers. Many also reported cutting work hours.

“That’s how they’re preserving cash, and it’s not just a handful of companies,” Assanie said.

The federal relief bill includes an extra $600 a week in unemployment benefits through July. Some workers are realizing they can make more from unemployment than from their old jobs, wrote one respondent to the Dallas Fed survey.

“This could be a problem down the road, driving wage increases,” an executive from a professional services company said.