Texas unemployment jumps to 8.3%, topping the U.S. rate, as job growth slows statewide

The Texas Workforce Commission says it has overpaid a total of $203 million to about 185,000 people from March 1 through Sept. 15 while attempting to quickly get state and federal benefits to those in need. (JAY JANNER/ AUSTIN AMERICAN-STATESMAN/TNS)
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By Mitchell Schnurman The Dallas Morning News (TNS)

The shaky Texas recovery is looking shakier.

The state’s unemployment rate jumped to 8.3% in September, up from 6.8% in August, according to seasonally adjusted data released on Friday. Almost 1.2 million Texans were unemployed in September, 203,000 more than the month before _ and over twice as many as in September 2019, long before the coronavirus pandemic emerged.

While Texas joblessness rose from August to September, it declined in the U.S. over the same period. The national unemployment rate was 7.9% last month, lower than in the Lone Star State, according to the U.S. Bureau of Labor Statistics.

Other fresh data was less discouraging. In September, Texas added almost 41,000 nonfarm jobs, and most sectors reported an increase in employment, according to the Texas Workforce Commission. But gains were far smaller than in August, when Texasadded almost 107,000 positions.

Texas also lagged the U.S. in the pace of job growth in September _ the fourth consecutive month the state trailed the nation on that measure.

“We’re still recovering, but our growth is slowing, and we’re lagging the national recovery,” said Christopher Slijk, an associate economist at the Federal Reserve Bank of Dallas. “It’s not good news, but it’s not necessarily a sign of another decline in activity.”

In Dallas-Fort Worth, the unemployment rate rose to 7.5% in September, up from 6.3% the month before, TWC said. Over 300,000 in D-FW were jobless and looking for work, compared with 126,000 unemployed for the same month last year.

Statewide, another 122,000 people dropped out of the labor force in September, including almost 44,000 from D-FW _ an indicator of the difficulty of navigating the job market during a pandemic.

“The big story is we’ve got a lot of discouraged workers out there,” said Bernard “Bud” Weinstein, an economist at Southern Methodist University. “At least temporarily, people are giving up. Or they don’t think the opportunities are worth pursuing.”

In the past year, Texas has lost almost 600,000 nonfarm jobs, and every sector has fewer workers than a year ago. That includes financial activities and professional and business services, which had been driving strong job growth before the pandemic. Even government jobs have declined by 17,000, according to TWC.

After much of the economy shut down last spring, the federal government passed a massive relief bill, which cushioned some of the pain. But lawmakers have been unable to agree on a large follow-up package, and that failure threatens to delay and derail a comeback, said Waco economist Ray Perryman.

“Unfortunately, it’s not surprising that the pace of hiring has slowed,” Perryman wrote in an email.

The relief bill, known as the CARES Act, helped stand up the economy when the help was needed most. But it was based on the assumption that conditions would improve in two to three months.

“We are now well beyond that point, and an increasing number of businesses and households are exhausting their liquidity,” Perryman said. “The recovery is going to be uneven at best, and will likely not fully occur until we get to a new normal with regard to the virus.”

Unemployment claims, which hit unprecedented levels early in the pandemic, remain stubbornly high. And in Texas, the energy sector is continuing to struggle, which also drags down the state’s economic performance.

Texas’ mining and logging segment added 1,300 jobs last month, but year-over-year, it’s down by over 55,000. That’s an employment decline of over 22%, which is even worse than the battered leisure and hospitality industry.

The pandemic has pounded restaurants, hotels and entertainment venues. Statewide, the sector has lost 225,000 jobs since last year. But it was a bright spot last month, with leisure and hospitality adding 23,600 workers in September _ far more than any other segment.

The state has been relaxing restrictions in an effort to boost the economy. This month, Gov. Greg Abbott said shopping centers, restaurants and gyms could reopen to 75% capacity and bars could reopen to 50% if their counties have low rates of COVID-19 transmission.

That could boost job growth _ or it could backfire. COVID cases have been rising, and Dallas County raised the perceived risk level to red this week, a signal that the public should limit nonessential activities.

In mid-summer, Texas had to reimpose economic restrictions after COVID cases spiked statewide and threatened to overwhelm hospitals.

“If Texas flares up as a hot spot again, that would be a major headwind,” Slijk said. “The outlook is gradually improving, but the future is fraught with uncertainty.”

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