Texas Town with Biggest US Pay Raise: Midland, TX Pay Raise Capital of America

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Anyone who wonders why the Federal Reserve hiked interest rates last month, even in the middle of a banking storm, might find the answer in Midland, Texas.

Thousands of miles away from the turmoil on Wall Street, the city that ranked No.1 in the US for inflation just over a year ago has since ceded that title – only to lay claim to a different one: the country’s pay-raise capital.

What that looks like, to an inflation-fighting central bank, is a wage-price spiral – where pay and prices drive each other higher. And if that kind of dynamic can take hold in places like Midland, it can spread to the rest of the economy too.

For America’s monetary policymakers, at least as of now, that remains a bigger worry than the risk that financial contagion — after the collapse of Silicon Valley Bank — will set off a credit crunch that stalls the economy.

In Midland, a city of 130,000 smack in between El Paso and Dallas, swings in the economy are often tied to energy markets. But at the moment, almost a year after oil prices peaked, employers across all industries face an unprecedented hiring challenge – one that’s forcing them to get creative, as well as open their checkbooks.

The city’s hospital is recruiting high-school students to draw blood, with nurses in short supply. Oil companies offer free tuition at the local university to keep employees in town. And the region’s biggest hotel offers its maids a share of profits as well as full benefits.

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For Midland’s workers, times are pretty good right now, on net. Yes, they’re paying more for rent to groceries. But at least inflation has eased a bit – to around 8.3% in February, from a nation-leading high of 10% last year, according to Moody’s Analytics. Meanwhile, wages climbed at a 13.9% pace in the third quarter of 2022, the last for which regional data are available. That’s more than any other city.

For Midland’s employers, desperate times prompt desperate measures.

Even energy firms in the region — which raked in billions in profits last year, making it easier to raise pay — are concerned about a shortage of workers.

The Permian Strategic Partnership, a group of local energy businesses, has contributed $10.6 million to fund scholarships for students in certain four-year programs at the University of the Permian Basin.

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The university is facing its own hiring challenges for professors and faculty. “It’s hard to keep up with wages,” says Sandra Woodley, the university’s president. “But we need to for the talent.”

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