Mass layoffs appear to be on the rise in Texas.
Despite Texas’ rapidly growing economy and low jobless rates, more layoffs are on the way for the state’s white-collar workers, according to research published by the Federal Reserve Bank of Dallas based on WARN disclosures.
The Worker Adjustment and Retraining Notification (WARN) Act ensures advanced notice to employees and state officials in cases of qualified plant closures and mass layoffs. In general, WARN notices must be sent to affected employees at least 60 days before the facility closure or mass layoff occurs.
Overall, the majority of 2023 layoffs were seen in professional, scientific, and technical services, retail trade, finance and insurance, and healthcare industries.
These sectors had greatly expanded payrolls during the pandemic shutdowns, according to Luis Torres and Prithvi Kalkunte, economists with the Dallas Fed and co-authors of the report.
“Many of these sectors are also interest-rate sensitive and harmed by declining business investment and capital expenditures,” wrote Torres and Kalkunte in the report. “Some also have a disproportionate concentration of white-collar workers with relatively high formal education who work in office environments that involve administrative or managerial duties.”
Even though Texas saw a rise in mass layoffs over the last two years, the report notes that “mass layoffs in 2023 remained at very low levels.”
However, a jump in recent WARN notices and an uptick in the state’s unemployment rate signal a “slowing” labor market in 2024, according to the Dallas Fed.
“WARN notices suggest the unemployment rate will rise to around 4.2 (+0.1%), while employment growth should remain below 2022 levels,” the co-authors wrote.
Although Dallas-Fort Worth and Houston are the two Texas metros typically hit hardest by mass layoffs, the report notes that Austin saw a large increase due to “high-tech downsizing following a period of aggressive pandemic-era hiring.”
Meanwhile, despite its dense concentrations of professional services and high-tech jobs, DFW did not experience increased mass layoffs through the first 10 months of 2023.