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Migration, job gains drive Dallas-Fort Worth to the top as nation’s best-performing labor market

Last year, the U.S. economy slowed to a standstill as the COVID-19 pandemic spread from coast to coast.

Nearly 18 months later, the Dallas-Fort Worth labor market is outpacing its metro-area competitors in growth, according to Dallas-based ThinkWhy’s new ranking of best-performing cities through July.

Net migration to North Texas and job gains drove Dallas-Fort Worth to the top. It was followed by the Phoenix-Mesa-Scottsdale and the Austin-Round Rock areas.

ThinkWhy, a software company that specializes in artificial intelligence labor market information, forecasts Dallas-Fort Worth will see a net migration of 79,530 people this year, a number it expects to jump to 84,000 people in 2022.

“Dallas has been either one or two in the rankings since October,” said ThinkWhy’s chief analyst Jay Denton. “To be able to stay that strong for that long, especially as other metros are starting to have bigger job gains, or their growth might be better simply because they lost more jobs.”

The company’s LaborIQ intelligence software tracked 10 performance indicators to rank labor markets around the country. Of the top 10 markets, eight ranked in the top 25 for net migration, which represents people moving to those areas as opposed to natural population growth.

For Dallas-Fort Worth, job opportunity is driving that migration, rather than family or retirement location. The Austin-Round Rock area also saw high net migration.

This trend isn’t surprising, given the spike in companies moving to Texas, which had the most new projects in 2020 of any state, according to Site Selection magazine. Already, 21 companies have moved from California to Texas this year, while 31 made the same jump in 2020.

“We’re benefiting from people moving from one place where the labor and employment situation is not as good, and they’re coming here,” Denton said. “That’s helped keep our talent pipeline full so we have a better shot of maintaining this type of job growth, even when we get past the pandemic.”

Dallas saw significant job gains after last year’s sharp pandemic-related job losses, according to the ranking, although some industries saw bigger increases than others. The tech sector, for instance, did particularly well, Denton said, while construction and manufacturing jobs struggled to keep pace.

The Federal Reserve Bank of Dallas said in its latest Beige Book that labor shortages continue to worry companies, particularly those looking to staff low- and mid-skill positions. Some companies think the labor shortage will slow because of the recent expiration of federal supplemental unemployment benefits in the state.

As a result of labor shortages, Dallas pay is increasing faster than other markets as companies fight for workers. “So many companies are trying to hire. Even with people moving to town, they can’t hire fast enough,” Denton said.

The financial sector is already back to pre-pandemic employment rates, while government and trade, transportation and utilities industries are expected to recover by the end of the year, ThinkWhy said. Leisure and hospitality isn’t predicted to return to pre-pandemic employment until 2024.

“Our labor force is essentially back to where it was before the pandemic,” Denton said. “That is something that is different here than some other locations in the U.S.”

Denton expects that job growth in the area will eventually begin to moderate. “That’s actually a good thing,” he said. “That means we’re closer back to normal or even past it.”

By 2022, Dallas-Fort Worth is expected to have recouped all jobs lost in the pandemic, although the types of jobs will likely look different than they did before.

Despite ThinkWhy’s positive outlook for the Dallas-Fort Worth labor market, other analysts are worried that recent policy changes could hurt Texas’ reputation as a business-friendly state. One recent study by CNBC dropped Texas to fourth in a ranking of best states for business.

Veteran Waco economist Ray Perryman said the state’s drop in the ranking, which included measures of inclusivity and education, was “eerily disturbing.” Texas’ battle over voting rights gained special attention in his study.

The Perryman Group, where Perryman is president and CEO, said policies restricting voter access could lead to a $14.7 billion decrease in business activity in annual gross product by 2025.


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