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Lower Involuntary Part-Time Employment Points to Texas Labor Market Strength, Says Dallas Fed

Southwest Economy also looks at new business formation, enterprise zone impacts

For immediate release: September 16, 2016

Dallas Fed Insights: Involuntary Part-Time Employment in Texas

DALLAS—Involuntary part-time employment has remained elevated since the Great Recession nationally, though the trend has been less pronounced in Texas, according to the latest issue of the Federal Reserve Bank of Dallas’ Southwest Economy.

Involuntary part-timers—workers who want full-time work but are unable to find it—are a closely watched measure of labor market health, senior research economist Anil Kumar and economic writer/editor Michael Weiss write in “Less Involuntary Part-Time Work Suggests Texas Economic Strength.”

The rate of involuntary part-time employment rose less sharply during the recession and has improved more rapidly in Texas than the U.S.

“A less-severe recession in Texas and a stronger recovery—particularly in services and construction sectors—have contributed to Texas’ relatively good performance,” Kumar said in a video accompanying the report’s release.

Among involuntary part-time workers, the share of those citing a lack of full-time employment is also lower in Texas, suggesting that there is more full-time work available in the state.

The authors point to cyclical factors as well as structural differences, such as a relatively low minimum wage, more labor market flexibility and a lesser regulatory burden, as possible explanations for the state’s stronger performance relative to the nation.

Another area in which Texas has outperformed the nation is business formation, economic analyst Jack Wang and Weiss write in “Texas Business Starts Outperform U.S.; Formation Rates Decline.” While the rate of business formation has trended lower both in Texas and the U.S., the state’s entry rate still exceeds that of the nation, likely as a result of the state’s welcoming business climate.

In “Texas Enterprise Zone Benefits for Poor Prove Elusive,” senior research economist Wenhua Di and visiting scholar Daniel Millimet explore the impact of a program established in the late 1980s to promote economic development and job growth in impoverished areas through the use of tax breaks and other assistance. The authors find that while the Texas Enterprise Zone Program may have modestly improved the repayment of retail loans, “there is no evidence of overall improvement in the financial well-being of the residents of targeted locations.”

Also in this edition, financial industry analyst Michael Perez looks at how mobile payment technology is reaching the “unbanked” population in Mexico, where approximately 90 percent of transactions are still settled in cash. In “Mobile Payments Promise to Improve Financial Accessibility in Mexico,” Perez looks at the opportunity afforded by new payment technologies as well as the challenges for regulators and developers of the new systems.

This edition of Southwest Economy also includes an “On the Record” conversation with Alan D. Viard, an expert on tax policy and resident scholar at the American Enterprise Institute. He outlines a plan for revising the tax code that would make it less attractive for U.S. companies to shelter profits abroad.

“The plan would dramatically reduce corporate income taxes, which are based on where profits are booked and corporations are chartered, and would increase shareholder taxes, which are based on where shareholders live,” Viard writes.


Media contact:
Jennifer Chamberlain
Federal Reserve Bank of Dallas
Phone: (214) 922-6748