Houston Business Journal - by G. Scott Thomas and Jennifer Dawson
A new national study naming Houston as the hottest job market in America confirms what some local economy watchers already expected.
The Bayou City rose to the top spot by adding 48,100 private-sector jobs from June 2007 through June 2008, according to data compiled by bizjournals, a division of American City Business Journals, parent company of the Houston Business Journal.
Houston has made a couple of quantum leaps since 2006, when the city ranked No. 28 in the first annual bizjournals survey. Houston vaulted to No. 5 in the following 2007 study.
Barton Smith, director of the Institute for Regional Forecasting at the University of Houston, says Houston would likely be experiencing additional job growth if it weren’t for the dismal housing market nationwide. People who might come here to work are stuck where they are because they can’t sell their homes.
“The housing market mess that we’re in has made labor much less mobile,” Smith says. “So many of the people cannot make a move because they have a home with negative equity. The only way to make a move is to foreclose on a property.”
He notes that homes sell for an average of $75 per square foot in the Houston area compared to an average of $300 per square foot in California, so less of a housing correction will occur here.
Eric Nielsen, managing director of the Houston office for employment firm Korn/Ferry International, says Houston is performing well because it has a leading position in many of the sectors within the energy industry.
In addition to oil and gas gains, Houston is seeing an uptick in pipelines, utilities, new power generation and the business of managing those commodities.
“I think you’re going to see continued job growth, especially in these sectors,” says Nielsen, who handles recruitment of top-level executives.
Patrick Jankowski, vice president of research at the Greater Houston Partnership, says Houston is also benefitting from the weak dollar because energy-related products and services that originate here are distributed throughout the world.
The dollar disparity applies to equipment, infrastructure project management, as well as legal and other professional services.
Says Jankowski: “It makes what we sell here more affordable.”
Three cheers for Texas
The entire Lone Star State is prospering at a time when the overall U.S. economy has been rocky.
Texas markets grabbed the top three spots in the bizjournals rankings.
The nation’s 100 largest metropolitan areas are measured according to a nine-part formula that analyzes employment trends derived from mid-year data compiled by the U.S. Bureau of Labor Statistics.
Austin, which added 11,600 jobs over the past year, came in at No. 2 in the latest rankings. Dallas-Fort Worth, which added 47,500 jobs, was No. 3.
The three Texas markets have added a total of 107,200 private-sector jobs since mid-2007, while keeping their unemployment rates below 5 percent.
The nation has seen 394,000 private-sector jobs slip away since mid-2007, equaling a loss of 7,570 jobs each week. The unemployment rate has shot up a full point during the same span — from 4.7 percent at the halfway point of 2007 to 5.7 percent this year.
Recent volatility in the U.S. economy has shuffled the standings dramatically in the past year. Phoenix, No. 1 in the bizjournals 2007 employment rankings, dropped all the way to 28th place this year. Six of last year’s 10 hottest markets have fallen out of the Top 10 this year.
Last place belongs once again to Detroit, which has ranked as the coldest job market in America for the past two years.
Heavy reliance on domestic automakers has reduced the Motor City employment rolls by 30,800 jobs since mid-2007.
jdawson@bizjournals.com
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