Note: This article is part of our State of the City project, in which The Dallas Morning News explores the most critical issues facing our communities. Find more topics in our look at the Dallas economy in the coming days.
Some forces are too powerful to hold back, even in Dallas-Fort Worth.
In spring 2020, the great jobs machine that turned D-FW into an economic powerhouse for decades ground to a halt under the weight of a pandemic. After the nation and state locked down businesses to slow the spread of the coronavirus, North Texas lost over 450,000 jobs in two months — more than the gains of the previous four years combined.
Hiring resumed in May 2020 and has generally continued, albeit at an uneven pace. By April 2021, a year after the worst of the economic hit, the region still had 138,000 fewer jobs than before the pandemic. Over a quarter-million North Texans remain unemployed, about 100,000 more than before the health crisis.
The numbers tell only part of the story. The pandemic economy, like COVID-19 itself, slammed certain industries and workers, especially minorities and women. But others were hardly affected — or even thrived.
Overall, there’s reason for optimism. While Dallas and the North Texas region are recovering in fits and starts, some job sectors have already surpassed pre-pandemic employment levels. Companies are increasing pay and many now say their biggest challenge is finding enough qualified workers.
Jobs have bounced back faster here than in most metros and the nation, and D-FW is expected to post the biggest annual job gains ever in 2021. The pandemic may leave lasting effects — some for ill, some for better — but it hasn’t tarnished the region’s appeal.
Newcomers continue to flock here and business executives are brimming with confidence. The economic trajectory, though interrupted, is still onward and upward.
The human toll
Carletta Castillo, 41, has had a difficult time. She had worked in the hotel industry for 21 years when the coronavirus pandemic was declared a national emergency on March 13, 2020. She was laid off the same day and couldn’t get back into the business or match her $65,000 annual salary.
A year after losing her job, Castillo was temporarily delivering packages in downtown Dallas. She started at 6:30 a.m. at a warehouse and would be handing out boxes 12 hours later.
The physical work helped her lose over 70 pounds, which she appreciates, but she was eager to leave it behind. Last month, she agreed to start as an inside sales rep for a freight company in Allen.
“I took a pay cut,” Castillo said, “but they have bonuses and incentives, and it’s a growing industry. It was probably time to end my career in hotels anyway.”
Since the pandemic, Texas has lost over 33,000 jobs in the accommodations sector, a 25% decline. During the same period, the state added the same number of jobs in transportation and warehousing.
Castillo’s career follows the decline of the first and the rise of the second, and shows how COVID has reshaped the labor market and spread economic pain.
The pandemic economy devastated restaurants, hotels, event-planning firms and over a quarter of small businesses in North Texas. But it catapulted e-commerce companies, transportation and warehousing, groceries and home improvement stores, and many technology sectors.
Winds of change
Residential real estate is booming and driving home prices to record highs, sometimes beyond the reach of middle-income families. Builders cannot keep up with demand, but the vast majority of new homes — nearly 97% of more than 47,000 single-family homes in D-FW last year — were built outside the Dallas city limits.
Despite the hot residential market, job losses on the nonresidential side have surpassed the gains. As a result, D-FW had a net loss of 3,900 jobs for specialty trade contractors since February 2020.
Commercial real estate faces a potential reckoning if remote work remains popular, as many predict. That’s a threat to the economic fortunes of downtown Dallas and large employment centers in North Dallas, Irving, Plano and Fort Worth.
Such contradictions have been described as two economies. Or as CitySquare’s John Siburt put it: “Dallas is a tale of two cities.”
In that vein, the best of times may be coming back soon because D-FW is expected to add over 250,000 jobs this year, eclipsing the previous high of just over 130,000 in 2014. Credit COVID vaccinations, months of pent-up demand and a history of job generation that few places can match.
“Thankfully, the Dallas economy is very diverse,” Dallas Mayor Eric Johnson wrote in an email. “We lost some outstanding businesses, which was heartbreaking, but our business community is strong.”
Johnson cited “a massive hit” to the services and entertainment industries, and the damage done to DFW International Airport and Love Field. He also criticized the federal government and health authorities for not providing enough help early in the pandemic. Closing schools and daycare facilities was “especially taxing on families and on kids,” he said.
“I don’t oversee our schools, but it was clear that we — collectively, not just the city government — need better plans to deal with public health challenges going forward,” Johnson wrote. “Our schools and businesses need a playbook to help us deal with infectious diseases, and we could all use stockpiles of personal protective equipment.”
The pandemic interrupted one of the strongest economic runs in D-FW’s history. From 2013 through 2019, the region created an average of 103,000 jobs a year, roughly three times the average annual gain in the years before.
Unemployment declined steadily, from 6.9% in January 2013 to 2.9% in April 2019. The last time D-FW’s unemployment rate was below 3% was almost 20 years earlier.
From 2013 to 2019, only the New York metro area created more jobs per year than D-FW, and New York has over 5 million more workers. Such size has drawbacks, too. Last year, New York lost nearly 1 million more jobs than D-FW and has been slower to recover from the pandemic, giving New Yorkers more reason to move here.
Before COVID, D-FW had racked up 10 straight years of job gains, a streak that shouldn’t be taken for granted. In the 2000s, the region had a net loss of workers in half the years — early in the decade around the 9/11 terror attacks and near the end during the Great Recession.
North Texas has continued to be a leader in business relocations and expansions, despite the pandemic. Last year, D-FW landed 262 projects that cost at least $1 million, created at least 20 jobs or added at least 20,000 square feet, according to Site Selection magazine. D-FW attracted one more project than in 2019, enough to place No. 2 among large metros in the annual ranking of top destinations.
Every year in the past decade, D-FW has ranked in the top five among large metros, and it usually placed second or third.
Drawing residents and companies from other states is a big part of D-FW’s growth history. Last year, almost 75,000 people moved to North Texas — more than in 2019 and second only to the number moving to Phoenix, according to estimates from the U.S. Census Bureau.
The most transplants — over 16,000 last year — came from California, according to a study by CBRE, a commercial real estate company. Over 7,600 came from Florida, about 5,000 from Illinois and 4,500 from New York.
The attraction? North Texas’ cost of living remains affordable, at least compared with coastal metros. Executives regularly tout business-friendly policies, including light regulation, tort reform and the lack of a state income tax. They also talk up the size of the workforce and the usually booming economy.
Migration has accelerated to Sun Belt cities and drawn many young, talented professionals, said Eric Willett, CBRE’s director of research. “It’s been supercharged by the pandemic,” he said.
So far, the recovery has followed a “K” shape, rising for some, falling for others. That’s created significant challenges for many in Dallas — people of color, lower-income workers, those without a college degree and women, who often shoulder extra caregiving burdens.
Blacks and Hispanics account for two-thirds of Dallas’ population, and their unemployment rate in Texas is several times higher than for whites. In Lancaster, south of Dallas, the April unemployment rate was more than twice as high as in Frisco, in the far north.
“One year into the pandemic, Texas’ labor market disparities are glaring,” researchers at the Federal Reserve Bank of Dallas wrote, noting that unemployment among minorities surpassed the peak reached in the Great Recession.
“Texas is a majority minority state — more than half of Texas’ population is Hispanic or Black — and the consequences are far-reaching if those groups lag behind economically,” wrote research analyst Carlee Crocker and senior economist Pia Orrenius.
The Dallas area has long had great disparities in economic prospects, depending on education, race, gender and geography. The pandemic has made them worse, and shone a spotlight that cannot be ignored.
“It’s really important that people understand the pandemic didn’t cause certain problems,” said Susan McElroy, an associate economics professor at the University of Texas at Dallas. “It didn’t create the unemployment gap between Blacks and whites. It didn’t create the challenges women face with having young children, holding down a full-time job and managing responsibilities in the household.
“The pandemic exposed, magnified, illuminated and made clear all of those things, right?” she said. “And now we can see it.”
Earlier in the pandemic, there were long food lines at Fair Park and other signs of distress, including many families having difficulty covering expenses. More recently, there’s been a sharp decline in graduation rates at some Dallas high schools, which could exacerbate income inequality for years.
In D-FW, over 66% of Black adults have reported a loss in work income in their households since the pandemic started, according to surveys by the U.S. Census Bureau. Numbers also were high for whites (51%) and Hispanics (47%), and for those with less education.
Big hit, record bounce-back
The Dallas Fed compared the pandemic downturn to the economic blow from Hurricane Katrina in 2005. The impact on Louisiana was deep and immediate, rather than gradual as with many recessions. Jobs also recovered faster than during a typical recession.
D-FW already is outpacing many peer cities in the recovery. Through April, total employment was 3.6% lower than before the pandemic while Miami, Philadelphia and Chicago were down roughly twice as much. Jobs in Los Angeles and New York were still down by over 10% in April.
“What we’re dealing with here is much different than other places,” said Jay Denton, chief analyst at ThinkWhy, a Dallas-based software services company that focuses on the labor market. “The challenge, particularly for Dallas and Austin, is they’re going to run out of talent.”
He projects Dallas will be fully recovered in 2022, two years ahead of San Francisco and New York. And Las Vegas, New Orleans and Orlando, Fla., aren’t expected to recover until after 2025.
Demand is surging for certain high-skilled positions in Dallas and pay is rising sharply, Denton said. But the outlook isn’t uniform, just as the pandemic’s impact hasn’t been.
Denton illustrated the disparity in a recent presentation to Dallas executives. A group of white-collar workers in fields such as management, computers, architecture and engineering had an average salary of $94,000 — and an unemployment rate of just 3.1%, one of Denton’s slides showed.
A group of blue-collar employees in food preparation, personal care and building maintenance earned an average of $28,000 — and had an unemployment rate near 10%.
“We’ve seen increasing income inequality before, but the pandemic accelerated that process,” said Luis Torres, research economist at the Texas Real Estate Research Center at Texas A&M University. “Who benefited? People with higher education and higher training. They were able to work in industries that allowed them to flourish, even during a pandemic.”
Over half the U.S. workers in computer and math fields worked remotely in April, according to the U.S. Bureau of Labor Statistics. Over 30% of managers worked from home. But in construction, food prep and serving, no more than 2% of workers did their jobs remotely.
Remote work remains popular in D-FW, and participation is closely related to education. Among those with a bachelor’s degree or higher, almost 62% of D-FW households had an adult working remotely in the previous week, according to census surveys from late April. Just 12.5% of those without a high school degree were working from home.
The recovery has been tougher on low-paid workers, too. As of March 20, the number of jobs paying less than $27,000 a year in Dallas County was still 21% lower than before COVID. The number of jobs paying over $60,000 annually was up 1.5%, according to the Opportunity Insights Economic Tracker.
The downturn has disrupted many women workers, often because their kids lost child care or in-person schooling. About 1.8 million U.S. women have left the workforce since the pandemic, more than the number of men dropping out. And men outnumber women workers by roughly 8.5 million.
“As we come out of this pandemic, we’re going to really have our work cut out for us to get women back into the workforce,” Robert Kaplan, CEO of the Dallas Fed, said in a virtual town hall in January. “It’s very critical that we’re able to get women’s participation rate up.”
Improving access to child care is essential, he said, and many workers need more education, training and certificate programs. Investing heavily in skills training is the No. 1 way to boost workers’ productivity and pay, Kaplan said recently.
Chalse Harvey, 24, is heading down that path. She started to improve her prospects during the pandemic, when she also had her first baby.
“A lot of people said last year sucked, but in a weird way, I benefited,” said Harvey, who lives in Arlington with her partner. “It allowed me to really focus and concentrate on something I’ve been trying to do for a long time — improve a lot of skills.”
Harvey had been fascinated by technology and computers, and she took a three-month course in tech support just before the pandemic. Her baby was born soon after she finished the course, and between parenting responsibilities and the lockdown layoffs, she couldn’t break through, even with a new certificate.
That changed about four months ago when she started working from home as a tech adviser for Apple. She said she makes about $35,000 a year, enough “to pretty much survive on my own.”
This summer, she expects to graduate from Tarleton State University with a degree in psychology. She wants to add more tech credentials and explore software engineering because she loves the flexibility of remote work.
“That’s kind of the best part about it,” Harvey said. “I still have time to be around my son and manage school.”
Shirley Yu, 47, went deeper into the training pool. A telecom industry veteran, she was laid off last summer — at least the eighth time she had lost a tech job since the 1990s. A colleague suggested adding skills and credentials, and she passed enough courses and tests to earn four certificates by December.
Then she took another course, and by April she was certified as a project management professional. Less than two weeks later, Yu was hired as a project manager at AT&T.
“When the opportunity came, I wanted to be ready,” said Yu, who’s married with two older children and lives in Sachse.
Despite the potential payoff from skill-building, many don’t stick with training programs.
“The problem is persistence in education,” said Laurie Larrea, president of Workforce Solutions Greater Dallas, a nonprofit that manages government funding programs for workers in the region. “We get them in the door, we get them started, we do virtual, we do in-person [programs]. And we have large dropout numbers no matter what we’re working on.”
Many people quit if they get a job offer, even a low-paying one: “It’s almost like immediate gratification,” she said.
Leaving no one behind
As the economy bounces back, it’s important to realize that some are being left behind — and to identify them, said McElroy, the UTD professor whose research topics include race, gender and inequality.
McElroy cited women with children, people of color, those without credentials or a college degree, and even residents of certain cities.
Lancaster, for example, doesn’t merely have twice the unemployment rate of Frisco. It has less than half the per-capita income and twice the share of residents without health insurance. Lancaster has one-third as many college grads and a poverty rate that’s over four times higher than in Frisco.
Not coincidentally, there’s a big racial difference, too. Nearly two-thirds of Frisco residents are white while 70% of Lancaster’s population is Black.
The United States has a history of not helping everyone reach their full potential, McElroy said, and uneven treatment usually can be traced to race, gender or geography. Public policies often benefit selective parts of society while others miss out, and the pandemic exposed some of the enduring problems.
“We don’t have the luxury anymore of not developing all our human capital,” McElroy said. “Smart people are everywhere, smart children are everywhere, but our policies don’t really reflect that. If they did, your ZIP code wouldn’t matter as much as it does.”
Features in our State of the City project’s look at the Dallas economy:
Overview: Pandemic deepened North Texas’ economic divide
Editorial: To give poor kids a chance, Dallas should address these trends
What’s next: Dallas faces post-pandemic challenge of attracting workers
SWOT: An analysis of the Dallas economy
Jobs: Labor market is about to turn — with lasting changes
Income: Wages are rising, but not for everyone
Real estate: Why building homes in Dallas is tough
Small business: Can small businesses bounce back?
Mayor Q&A: Eric Johnson discusses the Dallas economy
Opinion: Strong local partnerships help economic mobilty, says Dallas Fed
Opinion: What suburbs can teach cities like Dallas on economic mobility
Opinion: Small business startups create economic mobility