Over 6.6 million Americans lost their jobs in the first week of April due to the impact of coronavirus. In Texas, 51,000 jobs were lost in March, which is the largest decline in a single month since the Great Recession. Texas has been hit doubly hard by current events, with the crashing oil market meeting the loss of a large number of jobs in the service and hospitality industries.
Oil Market Flooded While Demand Dropped
US oil prices dipped into negative figures for the first time earlier this month due to the drop in demand for fuel. This makes it impossible for producers in Texas to make money. Kenny Istre, vice president of a machine shop in Houston, recounted customers withdrawing their orders for drilling equipment even before oil prices plummeted. Mr. Istre saw the majority of his workforce confined to their homes amidst lockdown restrictions at the same time as the oil-supply surged. “This is like a double whammy,” he told The Wall Street Journal. “They were canceling flights every day, and now people aren’t driving to work. The market is going to be flooded with oil.”
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Job Losses Across All Sectors
Meanwhile, unemployment benefits claims in Texas increased by 259,652 in the last two weeks of March, with job losses felt in businesses ranging from health care to transport, oil and gas, the hospitality sector and real estate. Houston employers reported that the local economy lost 18,200 more jobs in March than it had in February as lockdown orders forced businesses to close. Unemployment hits the individual hard, but the impact will also be felt by business owners. Texas is unique in that it doesn’t require businesses to have worker’s compensation insurance. However, employers who elected to have Texas worker’s comp insurance will be glad they took it out, as many insurance providers are helping businesses soften the blow while their operations are at a standstill.
The growth of the Texan economy has been intrinsically linked with oil since the early 1900s. This has afforded the state much prosperity, but it means it’s vulnerable to the state of the oil market. Previous blows have been cushioned by economic diversity, but with so many industries ground to a halt, the situation is much starker this time. The impact on the job market is predicted to be 0.5-1% worse in Texas than in other states due to its role in energy production.
The impact of coronavirus has been felt across the nation, but for those states whose economic well-being is also tied to the oil industry like Texas, the blow is even greater. While everything will be done to get the economy back on its feet as the pandemic slows, it’s clear that its impact will be felt for a long time.
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