Houston Economy at a Glance – June 2013
The Houston commercial real estate market is now getting national recognition as the office, industrial and retail sector are all performing well and to no one’s surprise, the energy industry is the driving force behind improving real estate fundamentals. The latest economic report from the Greater Houston Partnership outlines just how important the upstream energy sector has been to the Houston economic recovery and expansion.
Houston owes much of its current good fortune to the thriving energy industry. Since January ’10, the three pillars of upstream energy – exploration and production, oil field services and equipment manufacturing – have created 39,200 jobs. Though upstream represents only one in every 20 jobs in the region, the sector accounts for one in every eight jobs created in the recovery and expansion. Engineering and fabricated metal products, sectors closely aligned with energy, have created another 24,900 jobs. Together, these sectors represent one in every five jobs created in Houston since the bottom of the recession.
The Multiplier Effect and High Wages
Job growth in energy is important for two reasons that somewhat overlap – the multiplier effect and the high level of pay in the industry. The U.S. Bureau of Economic Analysis (BEA) has studied how inputs from one industry in a region support the outputs of other industries in that region. In Houston, with more than 3,700 firms engaged in the energy business, those supply links are wide and deep. According to the BEA, each exploration job in Houston supports another seven jobs elsewhere in the region. Each job in oilfield services supports another 11 in the region.
Jobs in energy also pay well. According to the Quarterly Census of Employment and Wages (QCEW), the average annual wage in oil and gas extraction in the metro area exceeds $220,000.