What is Oklahoma's employment outlook for 2023?

Editor's note: This is an excerpt from the recently released 2023 Greater Oklahoma City Economic Outlook. 

READ THE FULL 2023 GREATER OKLAHOMA CITY OUTLOOK 

READ THE 2023 GREATER OKLAHOMA CITY OUTLOOK OVERVIEW

LOOK BACK AT 2022'S BIGGEST RELOCATIONS AND EXPANSIONS

Oklahoma’s labor market remains in the recovery stage, working to regain ground lost during the pandemic. Regaining lost ground will be more difficult in the year ahead as general economic conditions weaken. At the same time, some trends in the data will persist as the pandemic and resulting relief policies saw an initial shift to goods consumption. A robust rebound in services consumption has been experienced as pent-up consumer demand for experiences was released. Oklahoma nonfarm payroll employment will end 2022 up 2.5% from the 2021 year-end. Growth will moderate in 2023, with year-end growth up 1.1% and another 1% in 2024. While it is increasingly clear that economic weakness is moving into the state economy, the depth, duration, and timing remain unknown. We continue to encourage awareness of the downside risk in 2023 and the upside potential that a rebound is underway in a much stronger economy in 2024.

The onset of the pandemic disrupted a long-standing shift from goods production to service providing sectors in the economy. Demand for goods expanded aggressively as people shifted to a
work-from-home and safer-in-place attitude. But as the economy reopened with consumers flush with savings, a pent-up demand for services like travel, eating out, and recreation was unleashed.
The resurgence of service sectors should eventually settle back into the long-run trend of strength in these sectors. Payroll employment in the service-providing industries will end 2022 up 2.2% from 2021 Q4.

As economic challenges loom in the year ahead, service sectors are projected to hold current gains and add modestly to their ranks. Year-end Q4 growth is projected to be up 0.8% in 2023, followed by 0.7% growth in 2024.

Two service industries particularly impacted by the pandemic cycle are financial services and health services. Successive rounds of pandemic relief policies relied heavily on financial institutions for implementation, leaving consumers with unprecedented strength on their household balance sheets. The result was an increased need for financial services from nearly every corner of the economy. The short-run need for additional employment should be distinct from the longer-run trend toward financial services in the state. We expect the industry to show enough strength to hold the jobs added in 2022 and add modestly in the outlook years. Beyond the outlook period, we continue to see financial services as an industry poised for long-run strength, particularly in the state’s urban markets. Payroll employment in the sector will grow 2.8% in 2022, followed by 0.9% and 0.8% growth in 2023 and 2024.

Another sector experiencing a unique mix of short and long-run forces is healthcare and social assistance. The pandemic strained the sector as institutions struggled to add employees even as existing employees faced an incredibly challenging environment.

In the long run, the demand for health services is a function of population size, population age, and income.

Areas of the state experiencing a mix of population growth, population aging, and income gains will continue to experience increased demand for healthcare services. Across the state, healthcare and social assistance payroll employment will grow 2.6% in 2022 from year-end 2021. We expect growth to slow through 2023, with 2023 Q4 growth of only 0.4% from 2022 Q4. Growth will start to rebound in 2024 with year-end growth up 0.8% from 2023.