Remove workers from LA, NY and Chicago, and jobs will follow

It’s an economic version of the chicken and egg question: which comes first – jobs or workers?

Dallas-Fort Worth has been a leader in job creation, having recouped all the jobs lost during the pandemic and then some. It is no coincidence that it is also a leader in workforce growth, and it is no small feat after COVID-19 fears have driven many people to the difference.

At the end of November, D-FW had almost 4.2 million active people, which means they were working or looking for work. This is 145,000 more than before the pandemic.

In contrast, Houston had 6,300 fewer people in its workforce, and the United States had lost more than 2 million workers by the end of November.

An expanding workforce helps attract new employers and strengthen existing ones, fueling stronger economic growth. Since the pandemic and the increase in remote working that comes with it, there have been even more benefits for a larger workforce.

“It’s not just for the companies here that are hiring,” said Thomas Vick, D-FW regional manager of Robert Half, a large recruiting firm. “In Silicon Valley, New York, Boston, Chicago, Los Angeles and other high-priced areas, they know there is an abundance of talent here with great knowledge, experience and exposure. The companies there are deliberately targeting the talents of D-FW.

This helps raise local wages, in part because employers on expensive coastal subways typically pay more. In Dallas, the salaries of professionals employed by Robert Half are about 10% higher than the national average, said Vick, “And that number is increasing because employees know there is this demand from the outside. “

When companies move or grow, they usually cite the workforce and they look for a talent pool that can grow with them. Unlike D-FW, some major rival metropolises have seen thousands of workers relocate elsewhere, often to Texas.

A recent report by researchers at the Federal Reserve Bank of Dallas used data from credit reports to see where people were moving before and during the pandemic.

“We saw a huge spike in net migration to Texas,” said Yichen Su, senior research economist at the Dallas Fed.

Su and her co-researcher counted net migration from the first quarter of 2020 to the second quarter of 2021, and compared it to the moving average of several five-quarter periods before the pandemic.

Texas saw a net gain of 174,000 migrants in the five quarters following the start of the pandemic, up from 109,000 in the previous comparable period, according to the report.

D-FW led the way with a net increase of over 16,000 people, a gain of 35%. Austin, San Antonio and Houston also recorded big gains.

Where did these migrants come from? California, New York and Illinois were the biggest contributors, as they have been in the past. But during the pandemic, net outflows from California and New York to Texas nearly doubled, and they increased sharply from Illinois, according to the Dallas Fed report.

The pandemic has prompted more companies to allow more employees to work from home, and many have taken the opportunity to relocate – or change jobs remotely. In some of the larger and more expensive subways, a large portion of the workers had the option of moving away, and many came to North Texas, as well as other places in the United States.

Los Angeles, New York, Chicago and San Francisco recorded the largest gains in net migration to D-FW. During the pandemic, D-FW recorded a net gain of nearly 33,000 migrants in 10 subways, up from around 19,000 before the pandemic, the researchers said.

“The good thing about people moving to Texas is that the talent pool gets bigger and bigger, and it starts to become attractive to businesses,” Su said.

He pointed to the San Francisco area, which is famous for its high concentration of tech workers in Silicon Valley. Despite being one of the most expensive cities in the country, plenty of tech companies still want to be there, especially startups.

“They have a lot of talent that specializes in what they want to do,” Su said.

Austin has a large base of tech workers and is growing, aided by several Silicon Valley companies setting up large operations there. In D-FW, no industry is the source of the net migration, as in Austin. This is probably because the North Texas region is so diverse with a large number of large and medium business employers and service companies.

From November 2019 to November 2021, D-FW added nearly 59,000 workers in professional and commercial services, a gain of 8.9%, according to data from the United States Bureau of Labor Statistics. In contrast, New York, Los Angeles and Chicago recorded net declines in these workers over the same period.

During those two years, which include the pandemic, D-FW added more than 10,000 workers in financial activities, a gain of 3.1%. New York, Los Angeles, Chicago and San Francisco recorded sharp declines in the number of financial workers.

It’s as if their job losses translate into our gains, and the strengthening of the economy in North Texas has become a big part of the pull.

“People are moving here for career opportunities, even in a world where remote working has become a bigger factor,” said Jay Denton, chief labor market analyst at ThinkWhy, a software services company based in Dallas.

His company predicts that Dallas will rank second in net migration gains this year, behind only Phoenix: “So expect us to continue to show very strong growth in our workforce,” Denton wrote in an email.

The flip side of this virtual cycle of migration and job growth is that wages are rising, sometimes sharply. As workers welcome change, it is more difficult for employers to hold on to people.

“They’re a little in shock because they’re competing with these companies that maybe aren’t local or even come to D-FW,” said Robert Half’s Vick. “They have to get a lot more aggressive.”

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A restaurant worker cleans a table at Beto & Son in Trinity Groves in Dallas.  Nationwide, hotels and restaurants had more than 1.2 million job openings in May, about 441,000 more than before the pandemic.  Employers believe that more immigration could ease the labor shortage.

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