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Texas has added a lot of jobs lately. But hiring could slow later this year.

 A large "now hiring" banner greets customers at a San Antonio thrift store on Aug. 6.
Rachel Osier Lindley
The Texas Newsroom
A large "now hiring" banner greets customers at a San Antonio thrift store on Aug. 6.

Whether on storefront windows or restaurant doors, “help wanted” or “now hiring” signs are still a common sight across many parts of Texas. At the same time, large companies with footprints in Texas have laid off hundreds of employees over recent months, while others contemplate trimming staff.

So, are the only jobs available in Texas low-skilled or service jobs? Are larger companies preparing for another quarter of negative growth? Is Texas about to feel the brunt of a recession?

The answers aren’t simple, but the consensus from the Federal Reserve Bank of Dallas is that the state’s economy is strong. And hiring trends are likely to continue for some time, said Pia Orrenius, a vice president and senior economist and the bank.

She cited as proof last month's jobs report for Texas, which showed that 82,500 jobs were added in June. The job growth put the state’s unemployment rate at 4.4%. (The unemployment rate in the United States was 3.5%, according to a report issued Friday.)

“That's like the labor market on steroids,” she told The Texas Newsroom. “We're seeing jobs added in every industry. So, it's not true that it's just the low-skill industries or the low-wage industries. It's every industry adding.”

At first glance, that appears to contradict recent reports about some companies in Texas announcing sizable cuts to their workforces. In July, the Dallas Morning News reported that 20 Texas-based companies had laid off about 3,700 employees during the first six months of 2022.

Among them was Plano-based First Guaranty Mortgage Corp., which let go about 430 of its 565 employees. Orrenius said that’s likely due to interest rate hikes the Biden administration has implemented to curb record-high inflation.

“There's contraction in the mortgage lending and refinance business and that's makes total sense with the interest rates going up,” she said. “But the rest of the labor market is really still and, in general, just doing extremely well, especially in our region.”

Texas is also home to the country’s largest energy sector, which affects other industries as well.

“When oil prices are high and gas prices are high, even though consumers are hurt in our state on that, we benefit because we're a huge producer and exporter of those products,” said Orrenius. “It has big spillovers on manufacturing, has been big spillovers on professional business services. Plus, it pays really high wages. And so those guys spend money and it's a kind of percolates through the economy.”

On the tech side, she added, some companies that increased their labor forces during the pandemic are now scaling back. Among them is Tesla, which announced in June a 10% cut to its labor force.

“[The sector] kind of had a huge boom during the pandemic, and it's cooling off at the moment,” she said.

Help still wanted. But for how long?

Despite the gains made in June, job growth could cool slightly in the coming months, the Dallas Fed said in a report released Thursday. A key reason, along with a decline in manufacturing, is that staffing shortages remain, said Yichen Su, an economist with the Dallas Fed who co-authored the report.

“The Texas economy continued to expand in June and July though at a slower pace than earlier this year,” he said in the report. “Supply chain bottle necks and staffing shortages continue to be challenges. Business outlooks turned negative in June and remained there in July.”

A survey of nearly 360 business executives in Texas indicated a majority of employers are seeking job applicants, though that dipped slightly from previous months. According to the survey from the Federal Reserve Back of Dallas, 61.6 % of employers were looking to recall or hire new employees. That’s down from about 66% in April. Nearly three quarters said a lack of qualified applicants — or no applicants at all — were among the biggest impediments. And more than half of executives surveyed said a hurdle is applicants looking for more pay than is being offered. Only a quarter of respondents said the availability of applicants has improved compared to the month before.

In the low-skilled job market, the number of employers seeking applicants fell below 50% for the first time in more than a year.

Of those surveyed, about 44% said they were seeking low-skilled job applicants (low-skilled is defined as “typically requiring a high school diploma or less and minimal work experience” according to the survey). That’s down from about 52% in November and 51% in May of 2021.

Texas is no longer the top state for business

Despite the rosy outlook for the state’s economy — and the praise the business climate has garnered from lawmakers and economists — Texas isn’t deemed as business friendly as it has been.

In an annual report from CNBC ranking the country’s top states for business, Texas fell to fifth place in its 2022 rankings. That’s down from its fourth-place ranking in 2021 and it’s No. 1 rank in 2018.

That slip was due, in part, to the state’s F grade in the “Life, Health and Inclusion” category and its D grade in the “Business Friendliness” category.

“We rate the states on livability factors like per capita crime rates and environmental quality. We look at inclusiveness in state laws, including protections against discrimination of all kinds, as well as voting rights,” the CNBC said of its methodology for the “Life, Health and Inclusion” category. For “Business Friendliness”, they said: “We measure each state’s lawsuit and liability climates, regulatory regimes covering areas such as trade and labor, as well as overall bureaucracy. We also consider how hospitable states are toward emerging industries including cryptocurrency and cannabis.”

Ray Perryman, the president and CEO of The Perryman Group, a Waco-based economic research and analysis firm, warned that the drop in rank shouldn’t be taken lightly.

“More problematic [than business friendliness] is the bottom-of-the-barrel rank of 49th in Life, Health, and Inclusion,” he wrote in an opinion piece last month. “The big issues here are the high uninsured rate and the lack of inclusiveness in state laws.”

Perryman indicated that the state needed to embrace inclusivity if it wants to remain on top of the pack.

“Although Texas has many advantages, the state needs to be more inclusive to successfully compete for many types of high-growth companies. Our firm has measured the potential effects of a variety of social policies (such as voting rights and gender identity),” he wrote. “The benefits of being more inclusive are measurable and real, and, in the wake of the recent reproductive rights decision, are likely to become much more important in the future.”

Got a tip? Email Julián Aguilar at can follow Julián on Twitter @nachoaguilar.

Copyright 2022 KERA. To see more, visit KERA.

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