COVID-19 spikes rate of unemployment in Texas

By Tim Brown

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Unemployment rates increased dramatically as businesses shut down when the first wave of COVID-19 infections washed over Texas’ counties. Numerous reports pointed out the huge, growing numbers of people desperately trying to apply for jobless benefits as state and federal authorities scrambled to expand both their claims systems and the amount of unemployment funding available. Before COVID-19, the Texas Workforce Commission (TWC) received between 13,000 and 20,000 calls to its toll-free phone number on an average day. During the week of March 23, however, that number surpassed 1.5 million in a 24-hour period. Yet, the impact was not felt equally everywhere.

Urban centers such as Houston and Dallas dealt with significant numbers of COVID-19 cases by issuing immediate stay-at-home orders. Other areas, both rural and suburban, issued disaster declarations to prepare for the pandemic, but they did not issue stay-at-home orders as they waited to see what effect, if any, the virus would have on their communities. Eventually, many rural and suburban counties were forced to issue similar orders, affecting local businesses and their employees.

Consequently, the number of unemployed Texans continued to increase over several weeks as the orders expanded outward from the urban areas and as unemployment systems expanded to accommodate the growing number of workers trying to file claims. As the situation developed, TWC reports began showing the rise in weekly initial jobless claims, beginning with the week of March 7. Map 1 shows the percentage change in those numbers by county through the week of May 23, when they peaked.

Some counties had no initial unemployment claims in the week of March 7, and therefore a change cannot be calculated. These are the 35 counties in the N/A group. Of the counties for which a change can be calculated, only Schleicher County saw its number of initial unemployment claims decrease — from two to zero. Three counties experienced no change, and the numbers increased by 100% or more in 209 counties. Andrews County’s 7,000% increase topped the charts, and 32 other counties had increases of at least 1,000%. However, in May, the number of weekly initial unemployment claims began to decrease in many counties. Map 2 shows the change in initial claims from the week of May 23 to the week of June 6.

While the surge in weekly initial unemployment claims continued in many counties, the floodwaters began to recede in 184 of them. Initial claims even dropped to zero in six: Briscoe, Concho, Cottle, Dickens, Jeff Davis and Kent. However, the number of claims continued to increase in the rest of the state, topping the 100% mark in eight of the 51 counties that saw an increase over this period. The percentage change could not be calculated for eight counties; they had no initial unemployment claims for the week of May 23.

Unfortunately, figures for more recent unemployment claims at the county level were not available at time of publication. Across the nation, 1.5 million Americans filed initial jobless claims for the week of ending June 13, the U.S. Labor Department reported. While this was a decline from previous weeks, it marked the 13th consecutive week of more than 1 million initial claims. The agency also reported a modest decline in continuing jobless claims, which dipped to 20.5 million, just 62,000 lower than the previous week. Consequently, it is likely that initial unemployment claims will continue at a high rate among many Texas counties — though possibly remaining below recent highs.

While the number of weekly initial unemployment claims provides an important insight into how quickly conditions are changing, most people want to know the resulting unemployment rate. Map 3 shows the unemployment rates, provided by the TWC, by county for May.

By May the unemployment rate hit double digits in 130 counties. Five counties, mostly along the international border, reached unemployment rates of 20% or more. Often it was the urban counties that saw the higher rates. Harris County reached 14.3%, and the rate hit 14.5% in El Paso County and 12.8% in Dallas County. Even counties in the Panhandle were hit hard, with rates of 9.4% in Potter County and 11.2% in Hutchinson County.

Looking at where the changes have occurred in the unemployment rate gives a similar, but different view. Map 4 shows the percentage change in the unemployment rate from May 2019 to May 2020.

The unemployment rate increased at least 45% in every county. In 241 counties, the rate grew by 100% or more, and the state’s rate rose 295.4%. Many of those 241 counties are in or near the Permian Basin, including the three counties with the largest increases: 594.4% in Midland County, 650.0% in Ector County and 672.0% in Yoakum County. Regrettably for both those counties and the state, more job losses may be forthcoming in the shale industry.

According to a Deloitte study released in May, the U.S. shale industry is entering a period of “great compression” after the plunge in oil prices in March and April, when global fuel demand dropped by as much as a third. Deloitte estimates that at prices around $35 per barrel, 30% of shale operators are technically insolvent. Duane Dickson, vice chairman at Deloitte, stated, “As COVID-19 impacts amplify pressures on shale companies through 2020, a wave of impairments may prompt the deepest consolidation the industry has ever seen over the next six to 12 months.” This could lead to further job losses.

Eventually, the unemployment rate will fall. However, how much or even when it will start to fall, remains to be seen. Gov. Greg Abbott issued an executive order on June 3 to announce the third phase of the plan to reopen the state. Yet, questions remain as the statewide number of positive COVID-19 cases and hospitalizations continue to grow and as a growing number of businesses voluntarily shut down after their employees test positive for the novel coronavirus. In addition, some workers may prefer to stay home rather than return to work because they belong to high risk populations, they lack access to child care or they find it more profitable to collect the weekly $600 federal unemployment benefit, which currently is scheduled to continue through July. Moreover, Federal Reserve Chair Jerome Powell recently recommended that Congress continue those payments past July. “It probably is going to be important that it be continued in some form. I wouldn't say what form, but you wouldn't want to go all the way to zero,” he said.

In the meantime, Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, cautions that the United States is still in the first wave of cases nationally and that the start of the flu season this fall could make things worse.

While at this time no one really knows to what extent COVID-19 will continue to affect our lives from month to month, it is certain that unemployment rates will remain high for some time. Counties that rely on the oil and gas industry will likely be among the hardest hit even if demand begins to return to more normal levels. If COVID-19 cases spike again, whether in this first phase or a second phase, jobless claims will increase once again as will the unemployment rate. Consequently, although some counties will be hit harder than others as seen in the previous maps, all 254 counties are at risk.