Is Austin's job market going from hot to not?
For years, Austin has been touted as one of the country’s sizzling hot job markets. But these days, local job growth is fizzling.
New data from the U.S. Bureau of Labor Statistics shows the Austin area recorded job growth of just 1.9 percent from December 2015 to December 2016. That figure puts Austin at No. 25 among the 50 largest metro areas for job growth. During that time period, Orlando, Florida, topped the list of fastest growing metro areas, notching a growth rate of 4.2 percent.
The federal statistics underscore a pattern that’s been seen for more than a year. Since the end of 2015, job growth in Austin “has slowed sharply,” according to the Federal Reserve Bank of Dallas. In its most recent report about Austin, the Federal Reserve says the local economy expanded at a “moderate pace” in November.
“Following a sharp recovery and expansion from 2010 to 2015, growth moderated [in 2016] due primarily to persistent labor market tightness and softness in some large sectors such as health care and hospitality,” the Federal Reserve report says.
Jason Stanford, a spokesman for Austin Mayor Steve Adler, says his boss is keeping an eye on the middle-of-the-road rate of job growth, “but with our unemployment rate so low, we have little reason for worry.” In November, the Austin area’s unemployment rate stood at 3 percent, compared with the U.S. unemployment rate of 4.6 percent.
Ryan Robinson, demographer for the City of Austin, says the downturn in job creation is being blamed in part on local employers struggling to fill openings because of a lack of talented, skilled candidates. Jitters over the November presidential election also have contributed to the dampening of job growth, he says.
At the heart of the winding down of Austin’s job growth, though, is what Robinson calls the “Austin differential.”
“This differential was probably at a peak around 2012 or 2013, when Austin was really rocking along in terms of positive job growth, descending unemployment rates, and real estate appreciation while much of the rest of the country was still mired in the depths of the Great Recession,” he says.
By mid-2016, however, Austin’s advantages of a lower cost of living and cheaper housing, at least compared with places like San Francisco and Los Angeles, were starting to diminish, according to Robinson.
“Austin’s economic future is still quite bright, but our shine — at least in relative terms — will be a little less intense, which I think is a good thing,” Robinson says. “I certainly do not want our job growth to go to zero, but we simply couldn’t continue to absorb annualized job growth bouncing between 4 percent and 4.5 percent.”
Robinson says a “perfect” rate of job growth for Austin would be a steady 2.5 percent.
The job slowdown “was bound to come,” he says, “but I think a lot of local observers are surprised at how rapidly we have downshifted.”