Senator Eliot Shapleigh - El Paso, Texas

Freida Branch of Dallas, who was laid off from Wachovia after working there 12 years, stood in line at a job fair at the Renaissance Dallas Richardson Hotel on Friday.

The grinding U.S. recession caught up to Texas in December, as state employers slashed 25,700 payroll jobs and the unemployment rate hit 6 percent, from 5.7 percent the month before, the Texas Workforce Commission said Friday.

"Our state's economy has been fairly resilient during these months of economic uncertainty, but the national economic storm has reached Texas," said Tom Pauken, commission chairman.

Moreover, the job losses turn out to have begun in November, when the state shed 11,300 jobs, according to significantly revised figures released Friday. Preliminary figures released last month showed the state had gained 7,300 jobs in November.

The state's weakening job market is already apparent to job seekers such as Kris Tyler, 42, a Plano mom who recently found out she's going to lose her marketing job at computer giant Hewlett-Packard Co. at the end of March.

Tyler was one of hundreds of people who crowded into a Friday job fair hosted by Career Builder.com and others at the Renaissance Dallas Richardson Hotel.

"For me, it's scary because I still have to pay tuition and a house note," Tyler said. "But I don't think I'm the only one. It seems like all of my friends are getting laid off every day."

To be sure, Texas remains far healthier than the national average. In 2008 as a whole, the state added 153,600 jobs, while the U.S. as a whole lost nearly 2.6 million.

In December, a year after the U.S. economy went into recession, the national unemployment rate was 7.2 percent. In California, one of the epicenters of the housing bust, the jobless rate hit 9.3 percent last month.

At 6 percent, the Texas jobless rate is nearly two percentage points higher than the 4.2 percent rate registered in December 2007.

"The longer we're in this downturn, the more Texas is going to get mired down with the rest of the country," said William Wallace, a former Federal Reserve official who now teaches economics at the University of North Texas.

Many seeking jobs

At the job fair Friday in Richardson, some people waited an hour just to park, and another hour in line to talk to recruiters.

"Employers were overwhelmed with the response," said Lisa Truett, district sales manager for Avon, who said she received hundreds of resumes and business cards. "It took us back a little bit. It was so humbling."

Meanwhile, layoff announcements continue to abound:

• Avnet Inc., a Phoenix-based distributor of electronic components and computer products, told the Texas Workforce Commission it was phasing out its Grapevine plant over 18 months, eventually wiping out 366 jobs. The company plans to offer jobs at other locations to qualified employees.

• Bowne & Co. Inc., a New York provider of financial and marketing communications services, said it was cutting 68 Dallas employees next month.

• Virbac Corp., which makes pharmaceuticals and other products for dogs, cats and other pets, is shutting down its Fort Worth manufacturing operation to consolidate its manufacturing in St. Louis. The plant closure will put 44 people out of work this year. Virbac, a subsidiary of France's Virbac SA, will retain its corporate office in Fort Worth.

Range of industries

December's negative Texas jobs report, as well as November's downward revision, may have been somewhat worsened by a change in how government statisticians use survey data to estimate job changes.

But Veronica Downey, a labor-market analyst at the Texas Workforce Commission, said the U.S. recession was the main culprit behind the weakening of the Texas job market, which hit a broad range of industries.

Employers cut 8,100 jobs in the trade, transportation and utilities sector, which includes the retail business. Manufacturing payrolls shrank by 8,000 jobs.

Natural resources and mining – which includes oil and gas extraction and has been hit by the huge fall in oil prices – shed 5,100 jobs. Construction payrolls dropped by 3,300. Professional and business services shed 2,700 jobs.

By contrast, the leisure and hospitality industry added 3,800 jobs.

Rising job losses may fuel another problem facing the Texas Workforce Commission, which said earlier this week that the state unemployment compensation fund is projected to have a $447 million shortfall as of Oct. 1.

That revelation came nearly a year after Gov. Rick Perry announced a temporary suspension of part of the unemployment-insurance tax, saving employers $90 million.

The fund contains about $1.3 billion, but that's expected to fall as unemployment rises.

It is projected to have just $414 million by October, when it is supposed to have about $861 million. The fund is required to have an amount equal to at least 1 percent of all taxable wages in Texas.

Pauken, the TWC chairman, said jobless claims would be paid. But the state may need to reassess employer tax rates, issue bonds or take other measures to make up the shortfall.

The Texas Workforce Commission reported high call volume this week.

"Due to the increased calls and workload, and the difficulties that customers are having reaching staff, TWC will not penalize claimants when they are unable to reach us in a timely manner," it said in a statement.