The saying goes “everything is bigger in Texas,” and this even applies to economic measures: Texas has the largest economy in the South and one of the largest state economies in the United States based on Gross Domestic Product (GDP).1 Lower taxes, fewer regulations, and lower cost of living make Texas an attractive relocation site for firms and workers.2 Following the 2020 recession, Texas saw a large influx of domestic migrants—particularly from California and New York.3 What are the job opening and turnover trends in Texas that set this state apart?
The U.S. Bureau of Labor Statistics (BLS) Job Openings and Labor Turnover Survey (JOLTS) publishes estimates on job openings, hires, and separations. JOLTS estimates provide insight into labor market dynamics, such as labor demand and labor turnover, that other employment measures cannot.4 This Beyond the Numbers article will examine these labor market trends in Texas. Using JOLTS total nonfarm state estimates from December 2005 to December 2021, we compare Texas to states with similarly sized economies—California, Florida, and New York—as well as to the United States during the two most recent recessions.
JOLTS state estimates allow for labor market comparisons among states, regions, and the nation. Through job openings, hires, separations, and other unique measures, JOLTS state estimates provide valuable information about labor demand and labor turnover during business cycles. JOLTS state-level estimates allow researchers and policymakers to better understand state-level labor market trends, and help businesses and workers make informed decisions using more refined and accurate data than national and regional estimates. State estimates also allow jobseekers to evaluate labor market opportunities across states.
Chart 1 shows the number of job openings—defined as all positions that are open on the last business day of the month—for Texas.5 Prior to the Great Recession, Texas job openings followed a clear upward trend. The job openings trend flattened during the beginning months of the Great Recession, which lasted from December 2007 to June 2009, then sharply decreased for 12 months before leveling off.6 In May 2008, job openings declined from 440,000 to 167,000 just over one year later in July 2009. Job openings then generally trended upward until March 2016, followed by a dip in job openings over the next two years.
During the COVID-19 recession, job openings in Texas dropped from 531,000 in February 2020 to 287,000 in April 2020—a decrease of 244,000. The job-openings level soared over the next 20 months, reaching a series high of 968,000 in December 2021.
As chart 2 depicts, the Texas job openings rates were generally higher than those for California, Florida, and New York, and the nation during the first half of the Great Recession. During the COVID-19 recession, rates for all four of the large states were lower than the national rate of 3.5 percent in April 2020. When compared to the other large states, Texas had the largest drop in the job openings rate from 3.9 percent in February 2020 to 2.4 percent in April 2020—a decrease of 1.5 percentage points.
All job openings trends experienced rapid growth directly following the trough of the COVID-19 recession in April 2020. By December 2021, the Texas job openings rate of 6.9 percent was just under the national rate of 7.1 percent.
Chart 3 plots the unemployed people per job openings ratios. A ratio less than 1.0 indicates a tighter labor market exists, in which firms have fewer people seeking work than there are open positions. Conversely, a ratio greater than 1.0 indicates there are more people looking for work than there are available positions to fill.7
The Texas unemployed people per job opening ratio reached its highest point at 6.2 after a sharp continuous increase during the Great Recession. The ratio generally trended downward in the period following the Great Recession but had flattened just a few years before the COVID-19 recession. The shock of the COVID-19 recession resulted in a spike in the unemployment people per job opening ratio from 0.9 in February 2020 to 5.6 in April 2020. To put this into perspective, Texas had 1.6 million unemployed people compared to 287,000 job openings in April 2020.
Texas had a lower unemployed people per job openings ratio than the nation during the Great Recession but had a higher ratio during the COVID-19 recession. During the Great Recession, the Texas ratio was lower than that for the United States, averaging a decline of 0.9 throughout the recession. The Texas ratio remained consistently lower than the national ratio from October 2011 to July 2016. At the height of the COVID-19 recession, the Texas ratio exceeded the national ratio by 0.7 in April 2020. California and New York had higher ratios than Texas, at 6.5 and 5.7 in April 2020, respectively. Florida had a ratio of 4.6 in April 2020, which was lower than the national ratio by 0.3. After the initial shock of the pandemic, Texas and Florida trended closely while California and New York trended together at a slightly higher rate. Texas also had the lowest unemployment rate of all four large states and the nation at 12.6 percent in April 2020.
JOLTS defines hires as all additions to the payroll during the month. Hires are a procyclical measurement of the demand for labor—that is, hires typically increase during economic expansions and decrease during economic contractions.
Chart 4 shows the number of hires in Texas. Before the Great Recession, Texas hires were gradually trending upward. Hires increased to 511,000 in June 2008, but then decreased for the remainder of the recession, ending at 320,000 in June 2009. Hires increased over the 10 years following the Great Recession but experienced a slight decrease in the months leading up to the COVID-19 recession.
The COVID-19 pandemic resulted in lower hires levels across the nation, with Texas being no exception. Texas hires decreased by 47 percent from 588,000 in February 2020 to 313,000 in April 2020. In May 2020, hires increased over 140 percent to 753,000. This increase of 440,000 in May is the largest over-the-month change in the series’s history. By July 2020 hires decreased to prerecession levels, before beginning to trend up. By December 2021, hires had rebounded to 657,000, the second highest point in the series.
Chart 5 compares the hires rate in Texas to the national rate and to California, Florida, and New York. Six months into the Great Recession, Texas hires rates spiked, reaching 4.8 percent in June 2008. This was 1.2 percentage points higher than the rate for the nation and higher than the other three states. The hires rate in Texas declined steeply to 3.1 percent by June 2009, but was generally higher than those for California, Florida, New York, and the nation during the entire recession.
Texas hires rates trended up steadily in the 10 years between the Great Recession and the COVID-19 recession—reaching as high as 5.0 percent in both May 2018 and January 2019. In April 2020, the hires rate in Texas dropped to 2.7 percent, the second lowest hires rate of the Texas series. The lowest hires rate occurred in October 2009 at 2.6 percent. The Texas hires rate more than doubled to a series high of 6.4 percent in May 2020 but dropped to 4.6 percent in June 2020. By December 2021, the Texas hires rate of 5.0 percent surpassed the hires rates of the other large states and the nation.
JOLTS defines separations as the number of employees separated from the payroll during the month. The components of total separations, quits and layoffs and discharges, in Texas are discussed below.
Quits are voluntary separations initiated by the worker and can show worker confidence in the labor market. Conversely, layoffs and discharges are involuntary separations initiated by the employer and can be an indicator in employer confidence in the labor market. Quits are procyclical and increase during economic expansions, while layoffs and discharges are countercyclical and increase during economic contractions.
Chart 6 shows the number of total separations, quits, and layoffs and discharges levels for Texas. During the Great Recession, the number of quits in Texas decreased while layoffs and discharges increased. In January 2009, during the latter half of the recession, quits and layoffs and discharges converged. In April 2009, Texas layoffs and discharges reached a recessionary peak of 277,000. After the recession, the two trends diverged, with quits increasing and layoffs and discharges remaining flat. The Texas separations trends follow the nation closely; however, the month-to-month movements in Texas are typically more volatile than those of the nation.
Texas layoffs and discharges spiked from 167,000 in February 2020 to 871,000 in March 2020, while quits rapidly dropped from 337,000 in February 2020 to 192,000 in April 2020. During the recovery period following the COVID-19 recession, quits trended strongly upwards while layoffs and discharges had a slight decreasing trend.
Table 1 gives a breakdown of the average annual quits rates and layoffs and discharges rates within Texas, other comparable large states, and the United States.8 Texas and Florida had average quits rates higher than those of California and New York, as well as the nation overall, during the years of the Great Recession and the COVID-19 recession. In 2020, Texas and Florida had average annual quits rates of 2.4 percent. In 2021 Texas and Florida average annual quits rates increased to 3.0 percent and 3.1 percent, respectively, exceeding the national rate of 2.7 percent. California and New York had rates lower than the national rate during the two recessions.
|Layoffs and discharges||1.5||1.4||1.6||1.8||1.4||1.3||1.4||1.3||1.3||1.3||1.1||1.0||1.1||1.2||2.6||0.9|
|Layoffs and discharges||1.6||1.7||1.8||1.6||1.3||1.6||1.6||1.4||1.2||1.3||1.1||1.2||1.2||1.1||2.2||0.9|
|Layoffs and discharges||1.2||1.2||1.3||1.6||1.5||1.5||1.3||1.4||1.1||1.1||1.2||1.2||1.2||1.2||2.5||0.9|
|Layoffs and discharges||1.3||1.2||1.3||1.7||1.4||1.3||1.3||1.2||1.3||1.4||1.3||1.3||1.5||1.3||2.2||0.8|
|Layoffs and discharges||1.4||1.4||1.5||1.7||1.4||1.4||1.4||1.3||1.3||1.3||1.2||1.2||1.2||1.2||2.4||1.0|
Source: U.S. Bureau of Labot Statistics.
From 2008 to 2009, Texas had the highest average layoffs and discharges rate change with a 0.4 percent increase when compared with the other large states and the nation during the Great Recession. Conversely, during the COVID-19 recession, Texas had the relatively smallest average layoffs and discharges rate change of 0.9 percent from 2019 to 2020. The average Texas layoffs and discharges rate in 2020 was tied for the lowest with Florida at 2.2 percent and was the lowest average rate compared with the other large states and the nation in 2021 at 0.8 percent.
The churn rate is the sum of the hires rate and the separations rate. A high churn rate indicates the labor market has a high hires rate, a high separations rate, or both. It can also signify greater job-to-job movements in the labor market. Conversely, a low churn rate indicates a labor market with a low hires rate, a low separations rate, or both, and can signify fewer job-to-job movements in the labor market.
Chart 7 compares churn rates among California, Florida, Texas, New York, and the United States. In the period before the Great Recession, the Texas churn rate trended above the national rate and the rates for New York and California, but below the Florida rate. However, following the onset of the Great Recession, the Texas churn rate trended above those for Florida, California, New York, and the nation. The national and state churn rates followed a decreasing trend during the Great Recession, and while the recession ended in June 2009, the Texas churn rate reached a series low of 5.8 percent in August 2009.
The churn rate gradually increased in the period following the Great Recession. Texas churn rates decreased slightly in the few months leading up to the COVID-19 recession but shot up in March 2020—reaching a series high of 12.7 percent. This was mainly because of an increase in the Texas total separations rate from 4.1 percent in February 2020 to 9.2 percent in March 2020. Texas had the smallest spike in the churn rate in March 2020 between the four large states as the churn rates for Texas, New York, California, and Florida were 12.7 percent, 13.2 percent, 13.9 percent, and 16.0 percent, respectively, while the national churn rate was 14.3 percent. Texas churn rates returned to prepandemic levels by June 2020 and followed a slight upward trend in the period following the COVID-19 recession.
Among the large states, Texas had the largest drop in the job openings rate during the COVID-19 recession. Texas had the highest hires rates during and in the period following the Great Recession when compared to the other large states and the nation. Texas had the highest churn rates among the four large states and the nation during the Great Recession but had the smallest spike in churn in March 2020 at the onset of the COVID-19 pandemic.
This Beyond the Numbers article was prepared by Robert Haigney, an economist and Soo Jee Choi, a student trainee in the Office of Employment and Unemployment Statistics: Job Openings and Labor Turnover, U.S. Bureau of Labor Statistics. E-mail: Haigney.Robert@bls.gov or Choi.SooJee@bls.gov
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Robert Haigney and Soo Jee Choi, “Texas: job openings and labor turnover state spotlight ,” Beyond the Numbers: Employment & Unemployment, vol. 11, no. 8 (U.S. Bureau of Labor Statistics, November 2022), https://www.bls.gov/opub/btn/volume-11/texas-job-openings-and-labor-turnover-state-spotlight.htm
2 Joseph Vranich and Lee Ohanian, “California business headquarters now leaving twice as fast, with no end in sight,” Hoover Institution, August 24, 2021, https://www.hoover.org/research/california-business-headquarters-now-leaving-twice-fast-no-end-sight.
3 Yichen Su and Wenli Li, “Largest Texas metros lure big-city, coastal migrants during pandemic,” Southwest Economy, https://www.dallasfed.org/research/swe/2021/swe2104/swe2104b.aspx.
5 JOLTS uses the Current Employment Statistics (CES) program second closing employment data to calculate hires, total separations, quits, layoffs and discharges rates. The job openings rate is computed by dividing the number of job openings by the sum of employment for the pay period that includes the 12th of the month and job openings and multiplying that quotient by 100. Hires, total separations, quits and layoffs and discharges rates are calculated by dividing the levels during the month by the number of employees who worked during or received pay for the pay period that includes the 12th of the month and multiplying that quotient by 100. For more information, see https://www.bls.gov/ces/.
6 Recession start and end dates are designated by the National Bureau of Economic Research (NBER). The NBER defines a recession as a “significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” See “U.S. business cycle expansions and contractions” (Cambridge, MA: National Bureau of Economic Research, September 2010), http://www.nber.org/cycles.html.
7 For more information on the unemployed people per job openings ratio, see https://www.bls.gov/opub/btn/volume-11/what-is-the-unemployed-people-per-job-openings-ratio-a-21-year-case-study-into-unemployment-trends.htm.
8 Average annual separations rates are not published by JOLTS.
Publish Date: Thursday, November 10, 2022