Dallas-Fort Worth’s Biggest Asset and Liability – Labor
by King White, on May 15, 2018 9:09:05 AM
The Dallas-Fort Worth metro area is one of the hottest labor markets in the country and continues to attract some of the biggest corporate expansions in the country. In 1950, Dallas-Fort Worth only had a population of 1,136,144. The metro area has since exploded to an estimated 7,418,556. This is a staggering 553 percent population increase over 68 years. When compared to the New York City metro area, which only increased by 44 percent during the same time, you really begin to understand how much our city has changed and the challenges that this growth has created for companies.
Many macro-economic forces have fueled this growth over time and enabled this type of socio-economic evolution to happen. One of the driving forces that has made it all possible is labor. Dallas-Fort Worth’s ability to develop, attract and retain labor has been critical to support existing businesses and attract new companies over the decades. The labor force of the region has grown intensely strong and diverse; however, there are some potential challenges ahead related to the labor market that everyone needs to be prepared to deal with.
Labor is the No. 1 asset of Dallas-Fort Worth
Labor conditions are the No. 1 factor that companies typically consider during the site selection process at both the local and national level. Dallas-Fort Worth has a lot to offer employers which is evidenced by the following labor market statistics:
- The projected population growth rate is 7.74 percent over the next five years which is over double the national average.
- Four of the 10 fastest-growing counties in the state are in Dallas-Fort Worth. The following counties had some of the highest population growth between July 2016 to July 2017:
- Tarrant County – population increase of 32,729
- Dallas County – population increase of 30,686
- Denton County – population increase of 27,911
- Collin County – population increase of 27,150
- 9 percent of the population have bachelor degree or higher which is over 3 percent higher than the national average.
- 73 percent of the labor force is employed in the IT professional occupations, which is over 35 percent higher than the national average.
DFW labor market tightens
Despite the positive factors above, Dallas-Fort Worth is entering uncharted territory of labor market tightness with the average unemployment rate of 3.6 percent in 2017. Employers across the region are finding it difficult to recruit and retain talent across most industry sectors. The following statistics will help to understand why:
- The metro area is fully employed with an average unemployment rate of 3.6 percent in 2017.
- There were over 2.3 million job postings in Dallas-Fort Worth in 2017. The ratio of postings per person in the labor market was the highest in the state when compared to the other major markets. The following table illustrates the job market intensity:
- Labor costs are increasing at a far greater rate than other metro areas. The following table illustrates how Dallas-Fort Worth wages increased by 1.7, percent for all occupations which is unusually high compared to other regions of the country.
- To keep up with demand for tech jobs, Dallas-Fort Worth has become fairly dependent on H-1B visas to help supplement the demand for tech workers. The metro area obtained 74,000 H-1B visas between 2010 and 2016 which was the 2nd highest in the country behind New York City. If the Trump administration limits these visas then the Dallas-Fort Worth region could be negatively impacted. The following map created by the Pew Group helps illustrate how Dallas-Fort Worth compares to the rest of the country.
Strategies to navigate the DFW labor market
The Dallas-Fort Worth economy is peaking along with the rest of the United States. With any peaking market, a downturn is inevitable. Many economists are anticipating a slowdown later this year or in early 2019. As a result, employers are going to need to be prepared to ride out the storm, increase wages, recruit nationally and utilize local site selection strategies to attract the desired talent. In addition, it will be critical to create a desirable workplace environment and corporate culture for long term sustainability in what has become a highly competitive labor market.