The Texas Squeeze: A series examining the high cost of high growth in North Texas.
Dallas-Fort Worth has recovered from the pandemic recession faster than most large meters, and that bodes well for its economic prospects, according to a new Brookings Institution report that compares communities throughout the country.
Two years after COVID-19 arrived, D-FW employment had grown 4.3%, ranking second in job growth among 53 meters with populations over 1 million, the report said.
D-FW also generated strong growth in job listings and home prices, and Brookings gave a shout-out to D-FW, Atlanta, Raleigh, NC, and the Utah area that includes Salt Lake City, Provo and Ogden.
All those regions have rebounded quickly, the report said, “while remaining somewhat more affordable.” As a result, they “could yet become more prominent drivers of national prosperity in the pandemic’s wake,” the report said.
In contrast, several so-called superstar subways — Boston, New York, San Francisco, Seattle and Washington — have yet to overcome pandemic headwinds.
They have not posted strong job recoveries, office workers have not returned in large numbers and rental markets have softened considerably, according to the report.
“The numbers we see for the D-FW economy wouldn’t be a surprise to most local folks, right?” said Alan Berube, co-author of the report and deputy director at Brookings Metro. “D-FW has bounced back quite strongly. That’s been the trend, not just over the last couple of years but over the longer term.
“Dallas remains one of the strongest large markets for job growth,” he said.
Most meters have not recovered jobs lost during the pandemic. Among the 53 largest meters, just 16 had more nonfarm workers two years after COVID-19, according to the report. D-FW is easily the largest to fully recover, and its high percentage gain is notable given the size of its workforce — now topping 4.2 million.
“D-FW has a very diversified economy,” Berube said. “If one sector takes a hit, there are a lot of other opportunities locally.”
While prices for housing and apartments have grown sharply here, the gains were relatively moderate compared with price spikes in Austin, Las Vegas, Nashville and Miami.
Austin was the only large metro to add jobs faster than D-FW. But Brookings didn’t include Austin in the handful of meters that could become “more prominent drivers of national prosperity.”
“They flunked on affordability,” Berube said.
The median price of home listings in Austin rose 61% in the first two years of the pandemic, roughly 2.5 times faster than D-FW’s 24% gain: “The Dallas metro seems to be doing a somewhat better job of accommodating that housing growth, Berube said.
Dallas’ weakest score in the rankings was its unemployment rate. In March, the rate remained 0.9 percentage points higher than before the pandemic, and that was the number used in the Brookings report.
D-FW’s jobless rate improved in April but still stands out. Before and after the pandemic, D-FW had a lower unemployment rate than the nation, often about half a percentage point lower. Those lines crossed in November 2021, and D-FW’s unemployment rate has remained slightly higher since.
Last week, when Texas released May job numbers, the Federal Reserve Bank of Dallas reported a small increase in the seasonally adjusted unemployment rates for Dallas-Plano-Irving and Fort Worth-Arlington. With the national rate unchanged, that means North Texas has posted seven consecutive months of slightly higher unemployment.
Is that a problem? Not necessarily.
Low unemployment is better than high unemployment, of course. But the supply of workers heavily influences the measure.
The unemployment rate can grow simply because more workers move into an area, which is hardly a negative for a local economy. And the rate can fall because more people move away, which isn’t a positive.
Many meters growing slowly before the pandemic — in the Great Lakes, Appalachia and Northeast — continue to grow slowly today, the Brookings report said. And “their unemployment rates remain low, mainly because they are losing working-age residents.”
Metros in Indiana, Minnesota and Ohio had declines in jobless rates, the report said, “because their labor forces grew more slowly — or in many cases, shrank — likely due to a mix of retirements, out-migration and people dealing with sickness ( such as long COVID).”
In contrast, “Texas metro areas were gaining working-age residents even as jobs increased, slowing the decline in local unemployment,” the report said.
That sounds like a good economic trade-off, and D-FW stands far apart from its peers in a measure that wasn’t included in the Brookings report: growth in the civilian labor force.
Among the 11 most populous meters, just four had an increase in the labor force from February 2020 to April 2022, according to data from the US Bureau of Labor Statistics. D-FW leads the pack with a gain of 233,000 workers, which is more than the gains of the next three meters combined — Phoenix, Atlanta and Houston.
In the other largest meters, the labor force has declined by tens of thousands, even hundreds of thousands.
Having a large workforce is vital to a growing economy, especially in today’s tight labor market. Job openings nationwide have been near historical highs for roughly a year, topping 11 million every month since December. In addition, over 4 million a month have been quitting their jobs, adding to the challenge for employers.
D-FW’s expanding labor force could be the foundation of an even stronger economy “provided the growth continues,” Berube said.
That’s uncertain now because the Federal Reserve is acting so aggressively to reduce inflation. If a recession emerges, D-FW’s surplus labor — now a strength — could become a burden.
“Is the market going to remain strong enough to pick up that slack over the next few months?” Berube said “Or if growth slows suddenly, will a lot more folks end up on the sidelines? That’s a question we can’t answer yet.”