El Paso Labor Pool Shrinks as Payrolls Fall
Employers in the metro face a smaller available workforce as hiring conditions tighten.
Updated on Nov. 2, 2026 in Employment
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El Paso employment fell at an annualized 1.3 percent in September, following an 1.8 percent decline in August, while unemployment edged down to 4.2 percent. Operators in the metro should note the contraction is broad-based across sectors.
Why it matters
The decline is occurring while Texas employment fell an annualized 1.6 percent in September and national employment grew 0.2 percent, pointing to a local softness rather than a national trend. The recent nationwide decline in international immigration has placed greater strain on the area's labor force, tightening the pool of available workers even as payrolls shrink.
El Paso's median home price rose 2.9 percent to $288,000 in September, a 7.2 percent year-over-year increase, with home inventory at 3.3 months. Manufacturing led payroll growth from June to September at 5.2 percent, the fastest of any sector.
The players
Texas Workforce Commission
The state agency that compiles and publishes employment and labor force statistics for Texas metropolitan areas, including El Paso.
The details
Employment declines were broad-based across sectors rather than concentrated in one industry, which suggests the contraction reflects general conditions in the local labor market. Manufacturing was the notable exception, posting the fastest payroll growth from June through September at 5.2 percent. The shrinking labor force is the more consequential signal for hiring: with the labor force contracting 1.4 percent, employers face a smaller pool of available workers even as the unemployment rate ticked down to 4.2 percent.
Timeline
August 2026: El Paso employment fell an annualized 1.8 percent.
September 2026: Employment fell 1.3 percent and unemployment ticked down to 4.2 percent.
Third quarter 2026: Payroll employment fell an annualized 0.9 percent.
Market Landscape
The El Paso contraction runs counter to national employment growth of 0.2 percent in September and is steeper than the 1.6 percent decline seen statewide in Texas. The divergence points to a metro-specific labor supply constraint layered on top of the broader immigration-driven tightening now visible across the region.
Operators in El Paso should plan for a smaller available labor pool, since the labor force contracted 1.4 percent even as unemployment eased to 4.2 percent. Wage budgeting merits attention given the three-month average hourly wage of $25.17 and 2.9 percent year-over-year wage growth, and owners should consult a qualified accountant on how payroll cost assumptions should be adjusted.
The takeaway
The most actionable signal is the shrinking labor force, which makes hiring harder regardless of the unemployment rate. Local employers should track the next monthly El Paso employment release to see whether the labor force contraction and payroll decline persist into the coming quarter.
Further reading
For broader context on hiring and payroll conditions, explore the latest El Paso Employment coverage.
Source note: This article includes information reported by Dallasfed.
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