The unemployment rate in the Austin metro area fell to a pandemic-era low for the fifth consecutive month — coming in at 3.2% in November — as local businesses continued their scramble to hire workers amid the region’s strong economy.
It’s unclear whether rising concerns about the omicron variant of the coronavirus, first detected in Texas earlier this month, will disrupt the trend.
“Right now, I would say the biggest problem (for companies) is hiring enough people — not the prospect of omicron slowing their business,” said Jason Schenker, president of Austin-based Prestige Economics. “The job market in Austin is very, very tight right now.”
Businesses in the Austin area added 11,800 non-farm jobs to payrolls last month, lifting the total number of people employed in the region to nearly 1.19 million — a record for the fourth straight month and the latest indication that, at least on a macro level, the local economy is fully recovered from the pandemic-induced downturn.
The region’s unemployment rate, which was 3.4% in October, has fallen steadily since June after spending much of the previous 12 months in a range of about 5% to 6%, according to figures from the Texas Workforce Commission that haven’t been adjusted for seasonal factors.
The jobless rate remains above its 2.5% level in November 2019, before the pandemic. But it has improved significantly after shooting up to 11.8% in April 2020, when the shock of the coronavirus first slammed the economy statewide and nationally and triggered huge numbers of job cuts.
The omicron variant of the virus has the potential to deliver a fresh blow to business activity across the United States, although economists said lessons gleaned during the initial months of the pandemic — as well as the availability of vaccines — probably will limit it.
That’s particularly true for the Austin area, they said, which has benefited throughout the coronavirus crisis from the diversity of its employer base and its large proportion of professional and high-tech workers.
“The nature of Austin’s economy is that so many of us are able to work from home” and perform duties remotely, said Matt Patton, an economist with Austin-based Angelou Economics. “What we have seen is that the Austin economy is very resilient.”
But the omicron variant still represents an economic threat if it flares into a major new health crisis, particularly for restaurants, hotels and other businesses in the leisure and hospitality sector that were hit hard by the initial pandemic-induced downturn and have yet to fully recover.
The Austin metro area, which encompasses Travis, Williamson, Hays, Bastrop and Caldwell counties, has added more than 20,000 hospitality-related jobs over the past year — but local employment in the sector still remains about 7,000 short of the estimated 134,000 workers it had just before the pandemic.
Employment is well above pre-pandemic levels in a number of other sectors of the local economy. Jobs in professional and business services, which includes the high-tech industry, are up by nearly 30,000, for a total of 232,300 in the region, while retail trade — which generally tracks with population gains — has added nearly 8,000 jobs, for a total of 117,000.
“Restaurants, tourism, travel (and) some service businesses — if (the omicron variant) becomes a big problem, it could hurt them” because people might become more hesitant again to mingle in crowds and public places, Schenker said. “But those are not the core parts of the economy in Austin.”
Patton agreed, saying the Austin area is poised to keep adding jobs outside of the leisure and hospitality sector despite the ongoing pandemic.
The trend is being driven by major economic development projects underway here — such as Tesla’s electric vehicle factory in southeastern Travis County and Samsung’s recently announced plans for a chip plant in Williamson County — as well as by what has seemingly been a conveyor belt of new companies and residents moving to the region over the past few years, he said.
The omicron variant “is a reminder that we are not out of the woods completely,” Patton said. “But what we have seen all along is people still want to come here.”
Statewide, the November unemployment rate registered 5.2% on a seasonally adjusted basis, according to the Texas Workforce Commission, down from 5.4% in October and from 7.2% in November 2020. Unadjusted for seasonal factors, the statewide rate was 4.5% last month.
Hiring across the state last month brought total employment in Texas to a record 12.99 million people, surpassing the previous record of 12.97 million reached in February 2020 just before the start of the pandemic. The state has added jobs in 18 of the past 19 months.
The Texas Workforce Commission doesn’t immediately adjust its metro area data for seasonal factors. But the Federal Reserve Bank of Dallas released seasonally adjusted numbers for the Austin area Friday that pegged the local unemployment rate last month at 3.5%, down from 3.7% in October and from 5.4% in November 2020.
Overall, the November unemployment rate in the Austin area was the lowest among Texas’ major metro areas, according to the Dallas Fed, with the Dallas metro area second at a seasonally adjusted rate of 4.3%. The McAllen region in South Texas came in highest among the state’s major metro areas at 8.6%.
Schenker said the unemployment rate in the Austin area would be considered “crazy low” even before the pandemic for most places statewide and nationally.
“There is a virtuous cycle of job creation going on in Austin right now, and it’s accelerating,” he said, referring to the phenomenon in which companies moving to an area spark an increase in demand for goods and services and thus more hiring. “There might be some COVID bumps in the road, but Austin has got a lot of tailwinds.”