In The Race Out Of The Recession, Houston Pulls Ahead

We’re no stranger to how strong Houston’s economy has been since the recession. It’s been a regular player when we’ve looked at top growth corridors, markets for retail jobs, and the ongoing oil and gas boom. So it wasn’t a huge surprise to us when our friend Derek Thompson at The Atlantic created a splash by highlighting how well the Houston job market has recovered since the recession. Using BLS data provided by the Greater Houston Partnership, Thompson makes a startling discovery:

The ten largest metros have recovered 98 percent of the jobs lost during the recession, on average. But Houston, the first major city to regain all the jobs lost in the downturn, has now added more than two jobs for every one it lost after the crash. That’s incredible.

He goes on to make some interesting observations about the way Houston’s many unique economic features — including its proximity to Mexico and Latin America, its oil industry, and the way it seems to have “learned” from previous recessions. What caught our eye, though, was the percentage of lost jobs that had been recovered since the recession — 230.6%! Any time we see a number like that, we’re too intrigued not to dig deeper.

Job Growth Since the Recession

Using Analyst, we ran our own comparison of the top 10 metropolitan statistical areas (MSAs) in America, over the period from 2008 to 2013 (The Atlantic’s article doesn’t specify a time frame for the recession, but 2008-2009 seems like a useful approximation). Our data comes together a little differently than the Greater Houston Partnership’s. It measured the percentage of jobs lost that have been recovered. Thus, if Houston had lost 50,000 jobs from 2008 to 2009, and then added 50,000 from 2009 to 2013, that would be described as a 100% recovery.

To get a slightly different perspective, we looked at overall job market fluctuation in Houston and each of the 10 largest MSAs in America. In actual fact, we found that Houston had lost just under 57,000 jobs from 2008 to 2009. That’s only a 2% decline, the smallest decline of any of the 10 largest MSAs. From 2009 to 2012, Houston then added about 137,000 jobs. That’s about 230% of the 57,000 jobs Houston lost during the recession, which matches up nicely with what The Atlantic reported. It also puts Houston ahead of the rest of the MSAs on the list in absolute job market growth from 2009 to 2012.

It’s a somewhat less eye-catching number than a 230% recovery, though. In absolute terms, Houston’s job market has grown by 4.5% from 2009 to 2012. That’s still the highest growth rate among the top 10 MSAs. For a look at how all 10 of them are doing, check out this table. It’s been a tough four years for Philadelphia.

We also looked into similar figures for all of the nation’s top 50 MSAs, to get a broader context on how Houston is doing. Looking at this larger set of regions means comparing workforces of radically different sizes; the top 50 range from over nine million jobs (New York City) to barely 500,000 (Birmingham, Ala.). But even with this more volatile set of data, Houston’s recovery remained noteworthy. Only three MSAs have added a higher percentage of jobs since 2009 (Detroit, Nashville, and Austin). And even with 50 regions in the set instead of only 10, Houston’s overall growth since 2008 is still the highest. For a complete table of how the 50 largest MSAs have rebounded from or stayed mired in the recession, see the appended table.

Houston’s Leading Industries

While 4.5% growth doesn’t sound as exciting as 230%, it’s still a remarkable achievement. What industries are growing fast enough to push Houston ahead of the pack? The top 10 answers aren’t terribly surprising:

There’s no avoiding the major role that the oil and gas industry sector is playing in Houston’s economic surge. Of these 10 industries, four are directly tied to that sector, and especially to natural gas. And scientific and technical consulting is likely heavily dependent on the demands of oil and gas industries, as are other professional, technical and scientific services. Together, the oil and gas industries in this group have, on their own, generated almost 30,000 new jobs since 2009. And those industries offer a jaw-dropping average earnings per job of $124,262.

Not all of the growth in Houston’s job market is as reassuring, or as financially exciting, though. The largest single industry in the top 10 was the less-encouraging temporary help services. This is hardly surprising in the wake of a recession; people can be expected to find temporary jobs while they search for more career-oriented employment. And Houston’s average earnings for temp jobs is about $47,000, one of the highest of all the nation’s MSAs and well above the average of about  $33,000. But for more than 11,000 of Houston’s new jobs to come out of this weak sector suggests that Houston’s economic boom may have a dark side.

Overall, though, with that outstanding 4.5% job growth since 2009, Houston is still in a strong position as it moves forward. While its apparent success is partially a result of its minimal losses during the recession, the ongoing strength of its oil and gas sector makes Houston one of the US’s most encouraging metros for 2013.

Appendix: Post-Recession Recoveries of the Top 50 MSAs

Data shown in this post comes from Analyst, our web-based labor market data and analysis tool. For more information on EMSI, contact Josh Wright ([email protected]). Follow us on Twitter @DesktopEcon.