California vs. Texas: A Talent and Hiring Landscape Comparison

Let’s compare the key factors that make these two great states attractive to employers and employees, including job demand, salary levels, industry-specific needs, taxes, and skills.

Key Findings:

1. Talent Pool and Supply-Demand Ratio: California is the most populous state with 39 million residents; thus, it has a large workforce with a supply-and-demand ratio of 38.3, making it a competitive job market. Texas isn’t far back with 30 million residents, and when we look at the open position compared to the available talent pool it has a considerably lower ratio of 24.3, indicating an overall tougher hiring environment.

2. Job Demand: California shows a high demand for roles in project management, administrative support, healthcare, and software development. Texas has a more balanced demand across healthcare, administrative roles, and software development.

3. Advertised Salaries and Taxes: California offers higher median salaries but has a state income tax ranging from 1% to 13.3%. California’s minimum wage is $16 per hour excluding fast-food employees who must now be paid at least $20 per hour. Texas offers lower salaries and has no state income tax, making it a more attractive business environment. Texas minimum wage is $7.25 per hour.

4. Top Industries: California has strong demand in healthcare, retail, education, and tech, while Texas shows significant demand in healthcare, food service, construction, and tech.

5. Top Employers: California's top employers include CVS Health Corporation and Kaiser Permanente. Texas features SONIC Drive-In and Baylor Scott & White Health.

6. Job Posting Trends: Both states show a slight cooling in job postings, with California seeing a 1.6% decrease in August 2024 compared to July, and Texas seeing a 0.9% decrease.

7. Top Schools: California's top schools attended by the current workforce include the University of California, Berkeley, and the University of California, Los Angeles. Texas's top schools include Texas A&M University and The University of Texas at Austin.

8. Unemployment: California's unemployment rate in July 2024 was 5.2%, while Texas had a lower rate of 4.1% (BLS).

9. Housing: Texas' median house sale price was $355,400, up 0.8% YoY, while California's median sale price was $838,200, up 6.9% YoY (Redfin.com).

Talent Pool and Supply-Demand Ratio

California has a substantial talent pool with 19.6 million people and 513,000 open job postings. This results in a supply and demand ratio of 38.3 (number of potential candidates per job posting). This ratio indicates an overall competitive job market, however, each occupation and geographical area should be reviewed separately for more detailed analysis. There is a significant demand for roles such as business and operations project managers, secretaries and administrative assistants, nursing assistants, cashiers, general and operations managers, and software developers. The growing demand for software developers underscores California's strong tech industry.

Texas's talent pool contains 12 million people and 496,000 open job postings, resulting in a supply-and-demand ratio of 24.3. A lower supply and demand ratio means a more competitive hiring environment with fewer candidates per job posting. Employers in Texas need to offer higher salaries or benefits to attract top talent. Texas shows significant demand for nursing assistants, business and operations project managers, cashiers, secretaries and administrative assistants, and software developers.

Advertised Salaries and Tax Considerations

Our data shows that California offers higher median and average advertised salaries, with an average advertised salary of $58,427 in 2024. This is high compared to the national average of $49,982. Employers should also consider California's state income tax, which ranges from 1% to 13.3%, impacting both their payroll expenses and the net income of the workforce. The higher salaries in California attract top talent, but employers need to be prepared for the higher cost of living and taxes.

Texas offers competitive but generally lower salaries, with an average advertised salary of $45,606 in 2024. Texas does not have a state income tax, which is a significant advantage for employees, and one of the reasons people from California relocate to Texas. California’s property tax is generally 1% while Texas's property tax is higher at 1.6% as it relies heavily (nearly 50%) on it to pay for the public services. As property prices have been going up due to increased migration of high-skilled workers, this will offset some of the tax benefits in Texas.

Top Industries

California's diverse and dynamic economy supports a wide range of industries, with strong demand in healthcare, retail and wholesale, restaurants and food service, education, recruiting and staffing, and tech. The demand for healthcare professionals is driven by the state's large and aging population, while the retail sector benefits from California's status as a major economic hub. The tech industry, mainly in Silicon Valley, drives high demand for software developers and other tech professionals.

Texas supports a wide range of industries with strong demand in healthcare, restaurants and food service, retail and wholesale, education, construction repair and maintenance services, and tech. The demand for construction workers is driven by Texas's rapid population growth and urban development, while the food service industry benefits from the state's strong tourism and hospitality sectors. The tech industry in Texas, particularly in cities like Austin, drives demand for software developers and other tech professionals. Major companies like Oracle, HP, and Tesla have moved their HQs to Texas from California. Mainly due to tax policies, regulatory climate, and talent availability.

Top Employers

Several major companies are actively hiring in both states:

California:

1. Healthcare: CVS Health Corporation (3,505 job postings), Kaiser Permanente (2,724 job postings)

2. Technology: Apple Inc. (2,010 job postings), TikTok (1,283 job postings)

3. Retail: Walmart Inc. (1,779 job postings), Target Corporation (1,380 job postings)

4. Education: University of California, Los Angeles (1,746 job postings), California State University (1,386 job postings)

5. Food Service: Starbucks Coffee Company (3,141 job postings), Del Taco Restaurants, Inc. (2,582 job postings)

Texas:

1. Healthcare: Baylor Scott & White Health (2,739 job postings), Houston Methodist (2,290 job postings)

2. Technology: HCA Healthcare, Inc. (1,076 job postings), Deloitte Touche Tohmatsu Limited (1,123 job postings)

3. Retail: Walmart Inc. (2,261 job postings), HEB Grocery Company, LP (1,665 job postings)

4. Education: University of Texas Medical Branch (1,224 job postings), Texas Health and Human Services Commission (1,481 job postings)

5. Food Service: SONIC Drive-In (3,592 job postings), Whataburger (3,331 job postings)

Job Posting Trends

According to our labor marker data, California had 514,462 job postings, a 1.6% decrease compared to July in mid-August 2024. The January-August average was 505,650, showing a 1.7% increase. The three-month average was 522,381, indicating a 1.5% decrease. This trend suggests a slight cooling in the job market, but overall, the demand remains strong.

Texas had 491,633 job postings in mid-August 2024, a 0.9% decrease compared to July. The January-August average was 477,613, showing a 2.9% increase. The three-month average was 497,876, indicating a 1.3% decrease. This trend also suggests a slight cooling in the job market, but the demand remains robust. Notable here is that the amount of job postings is nearly as big as in California although Texas currently has a 38.7% smaller talent pool.

Skills

Both California and Texas boast a large and diverse talent pool with top skills such as customer service, Microsoft Office, management, leadership, and Microsoft Excel. California’s larger talent pool can be advantageous for employers looking for a wide range of skills, particularly in tech and management roles. Texas also offers a robust selection of skilled professionals, making it a versatile state for hiring across various industries.

Top Schools

California's top schools, attended by its current workforce, include:

- University of California, Berkeley: 251,994 alumni

- University of California, Los Angeles: 227,246 alumni

- University of Southern California: 226,712 alumni

- San Jose State University: 218,278 alumni

- San Francisco State University: 169,393 alumni

Texas' top schools, attended by its workforce, include:

- Texas A&M University: 328,764 alumni

- The University of Texas at Austin: 304,326 alumni

- University of Houston: 214,335 alumni

- University of North Texas: 201,404 alumni

- Texas Tech University: 160,955 alumni

Unemployment

California's unemployment rate in July 2024 was 5.2%. This rate is higher than the national average unemployment rate of 4.3%, which indicates economic challenges that can affect business operations.

Texas had a lower unemployment rate of 4.1% in July 2024, suggesting a more robust job market. This lower rate can be beneficial for the state's economy but may pose challenges for employers looking to fill positions quickly.

Housing

According to Redfin.com, Texas's median sale price was $355,400, up 0.8% YoY. This relatively affordable housing market can be attractive for employees, making Texas a more appealing option for relocation.

California's median house sale price was $838,200, up 6.9% YoY. The much higher cost of housing in California is a significant factor for both employers and employees. While the state offers higher salaries, the high cost of living can offset these benefits. Employers need to offer additional incentives or benefits to attract and retain talent in such a high-cost environment.

Summary

California and Texas are both thriving states, that each offer unique advantages for hiring. California is ideal for employers seeking a large, highly skilled workforce, particularly in the tech, healthcare, and retail sectors. The higher salaries and competitive job market attract top talent but also come with higher overall operating costs. Texas offers cost-effective hiring with a large talent pool, ideal for healthcare, retail, food service, and tech sectors. The lower median salaries and business-friendly environment, including the absence of a state income tax, make it an attractive option for companies looking to manage costs while still accessing a skilled workforce. To add valuable context to your labor market research and reports, contact me for access to our labor market intelligence platform.