Texas Town With Biggest US Pay Raise Keeps Powell on Hiking Path


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.

Prices Shock Local Economy Rattling Labor Market
Sondra and Toby Eoff 
Photographer: Sergio Flores/Bloomberg

“The new norm to support higher inflation is higher wages,” says Toby Eoff, who with his wife Sondra co-owns the Marriott hotel and conference center in Odessa, Midland’s sister city. “Wages will be the very last thing to fall.”

They’ve raised pay for staff continuously since 2021 when hotel guests began trickling back to the region after the Covid freeze. That still wasn’t enough, so to keep staff from being tempted by higher-paying energy posts they also now offer full health benefits, plus a share of annual profits, to everyone who works 30 hours a week or more.

The hotel is at full occupancy four days a week, and the bar’s regularly jammed until it closes, so they need all the help they can get.

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.  

Prices Shock Local Economy Rattling Labor Market
A sign reads in Spanish, “truck owners wanted,” in Midland
Photographer: Sergio Flores/Bloomberg

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

Midland Memorial Hospital is scouring local high schools for workers. Like many health providers nationwide, it’s been unable to recruit nurses at any wage. So executives have partnered with the Boy Scouts of America to host a one-year training camp, where students learn to do things like draw blood. About 40 have signed up so far. The goal is to hire some of them for evening or weekend work, at $16 an hour.

Part of the lure for kids might be the gruesome stories they’ll get to tell their friends — “What did you see that was the grossest thing in the ER” — chief nurse Kit Bredimus jokes during a staff meeting one March afternoon.

The hospital has also hired an HR company to recruit nurses from Canada, the Philippines, and Africa, he says – after boosting wages last year. 

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. The university also offers free tuition to Texas residents in households earning $100,000 or less are eligible, and about 40% of the incoming class of freshmen are part of the initiative. Most of the school’s graduates end up staying in the region.

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.”

Adrian Carrasco, who runs Premier Energy Services, recently started working with Midland College on a part-time program that includes a paid internship. 

The idea came after Carrasco engaged in a fruitless search for more truck drivers – even though the offer included a salary of up to $100,000 a year plus discounted housing in some cases. The problem was the training period. Getting a commercial driving license takes eight weeks of school, and many potential candidates can’t afford that much time without a salary, especially if they’re supporting a family. 

Prices Shock Local Economy Rattling Labor Market
Karl Boroski
Photographer: Sergio Flores/Bloomberg

While jobs in the Permian Basin, in the vast fields surrounding the city’s main through-road, can be lucrative, they’re not available to everyone. Even in a booming jobs market like Midland, people get left out. 

Karl Boroski runs ROPE Youth, a nonprofit that provides meals for those who can’t afford them. His program fed 4,300 children in 2021, and twice as many last summer. This summer he estimates it’ll be closer to 12,000 – often kids from single-parent households, whose mothers work multiple jobs for lower pay.

He buys the same nine items for the food bags he doles out to kids each week, including cans of ravioli and dry pasta. It cost $1,300 per pickup last year – and now it’s closer to $1,900. Boroski says he’s often surprised by who shows up to get help.  

“You’re seeing more of the ‘soccer mom’ crowd now, pulling up in new SUVs to get food,” he says. “When the pay goes up, so does rent, food, and other stuff.”

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