Texas Job Growth Remains, but Quality Versus Quantity at Issue

If you just read the headline data from the Texas Workforce Commission on January’s job trends, you would think it’s still great news. The Texas economy added some 31,400 jobs in January on a monthly reading. And on a year-over-year basis, the Texas non-agricultural economy added some 187,400 jobs, versus January of 2015. Another boost was that the seasonally adjusted unemployment rate fell to 4.5% in January from 4.6%  in December.

It sounds great on the surface when you hear that Texas experienced job growth for the tenth consecutive month. Unfortunately, there is more to this story. The quality and pay of these jobs is at issue. The energy sector is losing many high-paying jobs. The manufacturing sector, which also largely caters to the energy and infrastructure industries, also lost many jobs. And with this a report for January, it does not even take into consideration the layoffs that were confirmed in February.

What happens when you consider that Texas employers added 187,400 jobs over the past year is that it may highlight a changing diversity of the Texas economy. That being said, the story is not all bad news. Taking a look at the quality of jobs is another issue.

The Education & Health Services industry added 11,500 jobs on a monthly basis and added 62,100 jobs from a year ago. Leisure and Hospitality employment added 7,300 jobs in January from December, and this was up by 68,400 jobs from January of 2015.
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Texas is considered an energy economy by outsiders. These are higher-paying jobs than other sectors, often by a rate of two-times to three-times the pay. The Mining & Logging sector, which is oil and gas, saw a drop of 1,700 jobs in January 2016 from December — but this is down a sharp 61,800 from January 2015.

Manufacturing employment expanded by 4,300 jobs in January versus December. This was the industry’s largest over-the-month gain since April 2014, but it remains down some 36,100 jobs from a year earlier. The raw numbers are harsh: 253,600 versus 315,400 in a year, a drop of some 19.6%.

All in all, the goods producing number was down 1,500 in January from December but was down by 79,200 from the prior January. If you add up the gains elsewhere as an offset from January of 2016 from January of 2015, the offsetting numbers were as follows:

• Education and Health Services added 62,100.
• Leisure and Hospitality added 68,400.
• Government added 30,100.

Another key industry in goods producing sector is the Construction sector. This was listed as 694,100 jobs in January 2016. That figure was down 4,100 from December 2015 but up 18,700 from a year ago.

The question to ask here is not just about a raw jobs number. People working in teaching, hotels and restaurants, and for the government just do not have the same economic impact in spending when it comes to energy jobs. Other gains and services were as follows:

• Trade, Transportation & Utilities added 53,300.
• Financial Activities added 22,500.
• Professional & Business Services added 25,100.

The Amarillo Metropolitan Statistical Area (MSA) recorded the month’s lowest unemployment rate among Texas MSAs at 3.0%. This figure is not seasonally adjusted like much of the other reporting, but other areas of strength or weakness were as follows for unemployment rates in other major MSAs:

• Austin-Round Rock at 3.2%
• Beaumont-Port Arthur at 6.7%
• Brownsville-Harlingen at 7.1%
• College Station-Bryan at 3.5%
• Corpus Christi at 5.5%
• Dallas-Fort Worth-Arlington at 3.8%
• El Paso at 4.9%
• Houston-Woodlands-Sugar Land at 4.8%
• Lubbock at 3.3%
• McAllen-Edinburg-Mission at 8.1%
• Midland at 3.8%
• Odessa at 5.4
• San Antonio-New Braunfels at 3.7%

Again, the numbers look great on the surface when you consider the bruising and battering that has been seen in the energy sector and the sectors that service the energy sector. The economic footprint and the spending waterfall that follows each sector’s jobs is another matter entirely.