Migrants to Texas make up nearly half of workforce, are key to maintaining state’s rapid economic growth, says Dallas Fed’s Southwest Economy

For Immediate Release: March 29, 2018

DALLAS — Propelling the rapidly growing Texas economy is a labor force of which nearly half of the workers relocated here from another state or country, according to “Gone to Texas: Migration Vital to Growth in the Lone Star State,” in the latest issue of the Federal Reserve Bank of Dallas’ Southwest Economy.

These migrants, who have numbered roughly 200,000 annually since 2000, have brought skills vital to meeting the demands of a diversifying economy that has moved well beyond its energy industry roots, write Pia Orrenius, Alexander T. Abraham and Stephanie Gullo. The state’s overall annual population growth rate of 1.8 percent, which includes the natural increase due to births, is double that of the nation.

“Employment opportunities in Texas are a clear draw,” the authors write. “Besides adding jobs at a rapid clip, employment growth in the state has been widespread across industries and has required a wide skill distribution. Since the end of the Great Recession, every major industry has added jobs, led by 35 percent gains in professional and business services, 33 percent in leisure and hospitality, and 22 percent in construction.”

The article updates a Dallas Fed special report in 2013 that outlined the economic contributions of new Texans. Since then, the influx has contributed to what the authors call a “brain gain” for Texas, the arrival of college-educated new residents with higher education than the existing Texas population. Domestic transplants to Texas from New York, Il­linois and Georgia are the most educat­ed, while internationally the largest number of such skilled immigrants come from India, China, Korea and Canada.

Given an aging population across the U.S. and Texas, the authors note that migration is key to economic expansion. “Texas and the U.S. will need mi­gration to fuel labor force growth in coming decades,” they write.

The Texas economy started 2018 firing on all cylinders, poised for economic growth across most regions and sectors, note Keith R. Phillips and Christopher Slijk in their annual outlook. Bolstered by a resurgent energy sector and overcoming the midyear impact of Hurricane Harvey in Houston and along the Gulf Coast, the Dallas Fed’s forecasting model shows employment growth of between 2.9 and 3.9 percent this year.

Texas faces challenges from tight labor markets that have made hiring difficult, with the unemployment rate hovering near 4 percent, and from federal trade policies. Texas is the nation’s No. 1 exporting state.

The robust U.S. economy also poses challenges for Texas, Phillips and Slijk note. “With the U.S. unemployment rate likely below its natural rate, it will be more difficult to entice workers to migrate to the state.”

Southwest Economy’s “Go Figure” infographic, “Texas Home Prices Head Through the Roof,” explores the reasons for price increases in the Austin, Dallas and Houston metropolitan areas. The increases have begun to erode housing affordability, one of the state’s long time competitive economic advantages. The “Spotlight” feature examines Mexico’s economic resurgence amid renegotiation of the North American Free Trade Agreement, and Dallas Fed Senior Research Economist Jason L. Saving discusses recent changes in federal tax law and their implications for Texas.

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Media contact:
Jennifer Chamberlain
Federal Reserve Bank of Dallas
Phone: (214) 922-6748
E-mail: jennifer.chamberlain@dal.frb.org