Texas Labor Market Case Study

Part One: Introduction to Texas

Texas, located in the South-Central region of United States of America, is the second largest state by both area and population [1]. The population estimate of Texas is 28,701,845 as of July, 2018, which approximately accounts for 8.8% of US population (United States Census Bureau (2018)). The labor force participation rate of the Texas population is 64.2%, which is about two percent higher than the national rate of 62.9%. More specifically, labor force participation rate is 3.5% higher than the national rate (69.1%) for men, but falls short to the national’s (57.1%) by 0.9% in women. Such trend is also shown in unemployment rate. While the overall unemployment rate of Texas (3.8%) is 1% lower than the US average and the men unemployment rate (3.7%) is 2% below US men average, the women unemployment rate (4.1%) is 3% higher than the US women average. (United States Department of Labor. (2018)). In 2018, union members accounted for 4.3% of wage and salary workers in Texas, compared with 4.7% in 2017. Nationwide, union members accounted for 10.5% of employed wage and salary workers in 2018, down from 10.7% in 2017. (United States Department of Labor. (2018)).

“White” accounts for the majority of Texas population of 79.20% with “Black or African American” second at 12.7%. “Asian” takes up 5% of the population and “two or more races” taking up 2%. The remaining percentage is split between “American Indian and Alaska Native” at 1% and “Native Hawaiian and other Pacific Islander” at 0.1%. The foreign-born person accounts for 16.9% of Texas population (United States Census Bureau. (2018))

Part Two: Key Industry

Key Facts:

“Trade Transportation and Utilities” takes up the most percentage of Texas employment(19%)

Information accounts for the least of Texas employment of 1%.

(Bureau of Labor Statistics. (2019)).

Declining Industry: Information

From the time series plot that graphs the employment, Information Industry in Texas is experiencing a gradual decline since March 2018, despite the overall increasing trend since 2010. More specifically, information industry employment decreased four out of the past six months, the drop being as extreme as -1.2% in February 2019.

Information Industry is closely related with computer programming, system design, telecommunication and other information intensive sectors. Much of the driven force of information industry lies in the rise of digital companies that were created by young entrepreneurs in their garages and apartment. However, entrepreneurship has declined steadily both in Texas and the nation as a whole. Decline is measured by entry rate: new businesses each year as a share of all businesses. The lower the entry rate, the fewer new jobs created in this industry. The decline was most substantial after the Great Recession of 2008-2009 (which coincide with our plot as we see a major dip in information industry employment in 2009). Although the rate recovered (the upward trend in our plot since 2009), it still remained well below pre-recession level. Recent research pinpointed two potential cause for declining entrepreneurship: slower population growth and business consolidation. According to an analysis by the Brookings Institution [2], slower population growth in western, southwestern and southeastern states tend to show declines in new business formation. Moreover, higher level of business consolidation makes it more difficult for new businesses to enter, and Texas consolidation ratio rose from 1.23 in 1977 to 1.36 in 2012 [3].

Growing Industry: Trade Transportation and Utilities

Texas is a global trade power house. With its unique combination of strategic location, the largest US rail and road infrastructure, the most US ports of entry, an abundant work force, Texas support internal and international trade by providing warehousing, distribution and manufacturing. Besides the natural advantages, US policies such as Free Trade Agreement opened up foreign markets to US exports [4]. Texas' exports to countries in FTA agreements with the United States have increased by 143% since 2004, and exports to Canada and Mexico increased 473% since NAFTA. With the growth in export, new businesses are generated by Texas’ manufacturers, service providers and farmers, which creates demand for additional labor. As a result, 1 in 5 Texas jobs depends on international trade, and Texas' trade-related employment grew 1.5 times faster than total employment from 2004 to 2014 [5].

Part 3: Unemployment Rate and Gender: A Time Series & Cross Section Study

From the previous introduction section, we discover that for Texas women, both the labor force participation rate is below national average, and the unemployment rate is above national average. Thus, we are interested in whether Texas gender inequality in employment is a reoccurring phenomenon, as well as the breakdown of gender inequality based on race. For the first research question, we analyze the ten-year time series data of unemployment rate for Texas women from 2007 to 2017, and cross reference it to the total population unemployment rate of Texas. For the second topic, we focus on the unemployment rate by gender and race/ethnicity in the year 2017.

Plot 1

Analyzing the plot 1, we found that the unemployment rate of all groups except “Asian” are following similar parabolic shape as the overall unemployment rate (shaded blue line), and reaching a peak in the year 2010 (aftermath of the Great Recession of United States). Moreover, the groups “Black or African American” and “Hispanic or Latino ethnicity” demonstrate highest average unemployment rates and are above the Texas population average every year since 2007. “White” on the other hand, has unemployment rate below average every year since 2007. The Asian subgroup shows a more fluctuated pattern that does not follow the trend of Texas overall population unemployment rate. This is due to a smaller percentage representation of Asian in Texas. This group has overall lowest unemployment rate among all four groups, dropping as low as 2.1% in the year 2015.

Plot 2

We focus on 2017 unemployment rate breakdown by race and gender in Plot 2. The total unemployment rate of Texas in 2017 is 3.8% for men and 4.8% for women. In all groups except “Asian” Male unemployment rate is lower than Female unemployment rate, the gap being as extreme as 1.7% in the Hispanic or Latino Ethnicity subgroup. Among male and female of all four groups, Black or African American women has the highest unemployment rate, reaching a staggering 8%. Black or African American men has the second highest unemployment rate in 2017 of 6.8%. Asian women have the lowest unemployment rate in 2017 of 2.5%, which is approximately half of the women unemployment rate in Texas.

From the analysis of the two plots, we can see that gender inequality and race inequality in employment is a prevalent characteristic for Texas. Women unemployment is generally higher than male unemployment rate, the difference being more drastic in African American and Latino ethnicity. There are many reasons why Texas women are falling behind Texas men. One reason is the lack of female political representation, where it ranks 47th in the nation. Just 37 of Texas’ 181-member legislatures are women, and only three women serve among the state’s 38 federal lawmakers [6]. The lack of representation explains Texas’s prolonged war on Planned parenthood. Without supporting legislations, Texan women might find it harder to find suitable jobs. Another reason is the gender gap in educational attainment. According USA today, Texas ranks first in gender gap in educational attainment and seventh in the racial gap in educational attainment in the nation [7]. With a lack of higher education, women, especially minority women, will find it increasing hard to find a job in the current competitive labor market.

Part 4: Legislation Environment

Texas adopts the federal minimum wage rate 7.25 dollars per hour [9]. No Texas or federal law requires private-sector employers to provide paid or unpaid leave of any kind, although some amount of unpaid leave may be necessary as a reasonable accommodation in the event of a disability, pregnancy, or other condition protected under a specific statute [10]. Texas legislations do not require employers to provide employees with breaks; while nursing breaks, lunch breaks are unpaid, rest breaks are paid since they are regarded as promoting productivity [9]. Texas is one of the 28 right-to-work states, meaning workers aren’t obligated to join a union. In 2017, its union rate was less than half the national average of 10.7% [11].

These legislations tend to favor the employers more than the employees. For instance, two working adults with two children making minimum wage would only earn half of the amount of money needed to make a living ($30,160 compared to $60,989) [8]. Moreover, since no Texas law require private sector employers to provide paid maternity or parental leave, new parents might find it hard to balance between the parental responsibilities and family finances.

Part 5: Conclusion: How Healthy is Texas’ Labor Market?

Texas labor market would earn a score of 6 out of 10. Regarding Industry prosperity, all but one industry (information) are experiencing positive growth, which coincides with the healthy national labor market. Comparing the unemployment rate for minorities and women, Texas’ rate for African American is lower than national average of 7.5% at 6.9%, but higher than national average for women (4.3%) at 4.4%. Although many new jobs are created in Texas, they are not distributed evenly across gender and racial groups. Moreover, Texas follows the federal minimum wage and mandatory breaks policies, indicating minimum benefit for the employees. Based on the growing industries potentials, gender and race inequality, and inadequate employee benefit, we believe a score of 6 out of 10 is fair for Texas’ labor market.

Work Cited:

[1] Texas. (2019, May 01). Retrieved March 06, 2019, from https://en.wikipedia.org/wiki/Texas

[2] Hatheway, I. (2014, July). The Other Aging of America: The Increasing Dominance of Older Firms. Retrieved May 4, 2019, from https://www.brookings.edu/wp-content/uploads/2016/06/other_aging_america_dominance_older_firms_hathaway_litan.pdf

[3] Accounts, T. C. (n.d.). Entrepreneurship on the Decline. Retrieved May 4, 2019, from https://comptroller.texas.gov/economy/fiscal-notes/2016/january/decline.php

[4] Downie, R. (2019, March 12). Texas' Economy: The 9 Industries Driving GDP Growth. Retrieved May 06, 2019, from https://www.investopedia.com/articles/investing/011316/texas-economy-9-industries-driving-gdp-growth.asp

[5] How Texas Economy Benefits from International Trade ... (2013, March). Retrieved May 06, 2019, from http://tradepartnership.com/wp-content/uploads/2015/01/TX_TRADE_2013.pdf

[6] Nowlin, S. (2019, March 14). Texas Lags the Rest of the Country in Women's Equality, New Report Says. Retrieved May 5, 2019, from https://www.sacurrent.com/the-daily/archives/2018/08/21/texas-lags-the-rest-of-the-country-in-womens-equality-new-survey-says

[7] WalletHub: Texas has the largest gender gap in educational attainment. (2018, January 23). Retrieved May 5, 2019, from https://www.caller.com/story/news/education/2018/01/23/wallethub-texas-has-largest-gender-gap-educational-attainment/1059841001/

[8] Waller, A. R. (2018, December 20). As most states raise their minimum wages, Texas refuses to budge. Retrieved May 5, 2019, from https://www.texastribune.org/2018/12/20/most-states-raise-their-minimum-wages-texas-refuses-budge/

[9] Texas Wage Legislation. (n.d.). Retrieved May 5, 2019, from https://twc.texas.gov/news/efte/flsa_does_and_doesnt_do.html

[10] Texas – Leave Laws. (n.d.). Retrieved May 5, 2019, from https://www.employmentlawhandbook.com/leave-laws/state-leave-laws/texas/

[11] Union Members Summary. (2019, January 18). Retrieved May 5, 2019, from https://www.bls.gov/news.release/union2.nr0.htm

United States Census Bureau. (2018). Quickfacts, Texas, United States [Data file]. Retrieved from https://www.census.gov/quickfacts/fact/table/tx,US/PST045218

United States Department of Labor. (2018). Expanded State Employment Status Demographic Data [Data file]. Retrieved from https://www.bls.gov/lau/ex14tables.htm

Bureau of Labor Statistics. (2019). Southwest Information Office, Texas [Data file]. Retrieved from https://www.bls.gov/regions/southwest/texas.htm#eag_tx.f.3