The Texas job market showed surprising resilience at the start of 2025, even as waves of layoffs swept across the state and country. According to new data reported by the Houston Chronicle, job cuts in Texas rose sharply in the first quarter, but overall employment growth kept pace—at least for now.
Nationally, layoffs surged in March, with U.S. employers cutting over 275,000 jobs, a 60% jump from February and more than three times the number reported in March 2024. In Texas, first-quarter job cuts were up 41% compared to the same period last year, according to figures from outplacement firm Challenger, Gray and Christmas. Yet, job creation continued to slightly outpace losses, maintaining a relatively stable unemployment rate of 4.1%.
Pia Orrenius, vice president and labor economist at the Federal Reserve Bank of Dallas, told the Chronicle that Texas job growth reached about 1.9% in early 2025, just under the state’s long-term trend. “We’ve actually seen a little bit of improvement in the first two months of the year relative to last year,” she said, noting that these figures reflect past performance.
Despite steady growth, signs of strain were clear. Challenger’s data shows that nearly 17,500 jobs were lost in Texas during the first quarter, with the services sector taking the biggest hit—more than 8,200 jobs lost, up from just over 1,000 a year earlier.
Federal policy changes appear to be a major driver of the cuts. Andrew Challenger, senior vice president at the firm, noted that much of the March spike in layoffs was linked to the Department of Government Efficiency’s plans to reduce federal staff.
“Job cut announcements were dominated last month by Department of Government Efficiency [DOGE] plans to eliminate positions in the federal government. It would have otherwise been a fairly quiet month for layoffs,” Challenger stated.
Among the most affected were organizations contracted for federal work. Catholic Charities of the Archdiocese of Galveston-Houston laid off over 350 workers—more than 20% of its staff—after funding for refugee and migrant programs was frozen. In El Paso, over 1,000 jobs were lost due to cuts at two companies—MVM and Luke Holdings—both tied to federal contracts related to migrant services.
Whether the overall Texas job market can sustain its growth remains to be seen. Orrenius noted that March’s service sector outlook survey showed flat revenue growth—a potential red flag. And with new tariffs announced by the Trump administration not yet fully reflected in the data, more disruption could be on the horizon.
