Job openings in Texas reached an all-time high in February at 932,000, far exceeding unemployment (about 635,000 at present). While that’s beneficial for those looking for work, it’s presenting notable challenges. Businesses unable to fill positions are often forced to respond by reducing operating hours or even closing locations, and the economy is functioning at less-than-optimal efficiency.
For perspective, prior to COVID-19, the number of job openings across the state had never topped 623,000 and was generally well below that level. In February 2020, just before the pandemic, there were 534,000 openings. With the ensuing disruptions, openings dropped as low as 302,000 (April 2020) before beginning to rise.
By the end of 2020, they were back in pre-pandemic ranges. As the Texas economy continued to gain momentum through 2021, the number of open positions started trending toward 900,000 or even higher.
Many factors are contributing to the current labor shortages. Texas is reflecting national trends, with the retirement of the baby boomers coinciding with decisions by younger people to start working later. The so-called Great Resignation, where millions of Americans purportedly left the workforce, is also contributing modestly (although, in reality, the workforce participation rate is only about 1% below pre-pandemic levels). Restricting lawful immigration is also a factor, and with the backlog in processing visas and the lack of willingness to enact meaningful reforms, it will take time to even approach more normal levels.
The bottom line, however, is that we’ve seen these labor shortages coming for a long time, although the pandemic accelerated things moderately. Underlying demographic patterns are the primary culprit, and they are not changing any time soon. Strong economic expansion in Texas is obviously also raising labor demand. Fortunately, Texas is seeing more growth in younger age ranges than many parts of the country, which is helping the situation. In fact, the U.S. population under 18 was about one million lower in the 2020 census than 10 years ago, while this age group increased by more than 400,000 in Texas.
A variety of actions can help. Greater use of technology is part of the solution, as is encouraging people back to work through better compensation and other benefits. Companies can also make it easier for workers by offering childcare and parent care, more flexibility, remote work options, and other enticements. Immigration has long been a crucial source of labor, and reform can help speed the flow of the needed workers. Programs to improve adult literacy can help now, and improved public educational outcomes are essential going forward.
Texas has a robust economy and bountiful opportunities. Nonetheless, it is an inescapable fact that worker shortages are going to be with us for a while. Stay safe!!
Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com), which has served the needs of over 2,500 clients over the past four decades.