Far more Texans are out of work than the state’s latest 4.7% unemployment rate indicates because the government data released Friday predates the widespread business closures and layoffs that escalated as the coronavirus crisis worsened. Analysts said the actual rate of jobless Texans is likely greater than 10%, which could be a record high for the state.
More than 22 million Americans have already lost their jobs or had their incomes slashed over the last four weeks, including more than 1 million people in Texas, and even those numbers don’t show the full picture of the economic toll.
“It’s always a backward-looking indicator,” Cullum Clark, director of the George W. Bush Institute’s Economic Growth Initiative at Southern Methodist University, told The Texas Tribune. “When layoffs are skyrocketing every single day, the number that comes out will not capture how bad things are today.”
The state’s unemployment rate, released Friday by the federal Bureau of Labor Statistics, is the share of Texans in the labor force who are out of work. The 4.7% rate is an increase from February's 3.5% unemployment rate for the state. The rate was also 3.5% in March 2019. The unemployment rate is different than the raw number of people filing for unemployment insurance because some of those filers are still employed but have been furloughed or had their hours cut.
The number of people filing for unemployment insurance with the Texas Workforce Commission gives a more up-to-date glimpse into the economic devastation in Texas because those figures use data more recent than the unemployment rate released Friday.
But straining matters more is the Texas Workforce Commission’s significant understaffing. Millions of calls and online queries have gone unanswered over the last month as the coronavirus pandemic has spread, the agency said.
“The basic lesson from the Humpty Dumpty story is when he falls off the wall, it’s not very easy to put him back together again. The same thing is true for labor markets.”— Cullum Clark, George W. Bush Institute
Never before have this many Texans been jobless, but the pandemic has presented simultaneous public health and economic crises that in some ways have hit the economy in Texas harder than elsewhere. The general shock of business closings has been felt here and across the country, but the sudden plunge in global oil demand has already overwhelmed the energy industry. More devastation is expected in that sector.
“Our single disadvantage with this relative to America as a whole is our huge employment in oil and gas,” Clark said. “Essentially the whole industry is reeling.”
The steps Texas has taken over decades — pursuing economic goals through energy independence and limited government — will be tested, Clark said. Throughout the twin crises, the government’s presence has been abundant, as officials closed businesses and ordered people to stay home to help stop the spread of COVID-19, the disease caused by the new coronavirus, which has killed Texans every day for the past month, with at least 393 dead as of Thursday.
“Is this just a kind of ‘war time’ measure where the role of government has surged upwards because it’s managing an emergency, and as soon as the emergency recedes, the government recedes with it?” Clark said. “That’s a huge question. General history of the U.S. and other countries is that the role of government in economy grows incredibly during disasters, and when the disaster recedes partly, the whole government is bigger than before.”
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Nine conservative state lawmakers have started pushing Gov. Greg Abbott to lift his statewide shelter-at-home order, a practice deployed by most states and countries to combat the virus. Meanwhile, Republican U.S. Sen. Ted Cruz said there is a “longstanding role for government in a time of disaster. One of the reasons we elect government leaders is to marshal resources to combat disaster and combat catastrophe.”
“That being said, there are no magic government policies that will cure the economic disaster we have today until small businesses are allowed to open their doors and begin doing business again,” Cruz told The Texas Tribune.
Abbott is expected to announce a plan Friday to begin reopening the economy, but he has not indicated what that will look like. Clark said it cannot be done quickly.
“The basic lesson from the Humpty Dumpty story is when he falls off the wall, it’s not very easy to put him back together again,” Clark said of the old nursery rhyme. “The same thing is true for labor markets. It takes a lot longer for labor markets to recover.”
Timothy Fitzgerald, an economics professor at Texas Tech University, wasn’t sure if businesses immediately reopening would even make much of a difference.
“I just don’t know if people will show up — whether they have kids or they’re just scared,” said Fitzgerald, who worked in the White House on the Council of Economic Advisers during the Trump administration. “Texas has a lot of people who are at risk, and we don’t know how infected people have become yet, and that uncertainty terrifies people. “
Disclosure: The George W. Bush Institute, Southern Methodist University and Texas Tech University have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.