Pulse slows for metro’s job growth
Staffing for health care, service industry stays robust as energy work plummets
Houston’s once-booming job growth came to an abrupt end in 2015 amid the worst oil bust in decades, but the metro area still added 23,200 more jobs than it did a year ago, even as energy layoffs mounted.
That’s a dramatic slowdown from the 104,700 created in the Houston area during 2014, when oil prices spiked above $100 a barrel, fueling a domestic drilling renaissance and drawing thousands of new people to the region.
Crude has since collapsed to about $30 a bar- rel, and any job growth amid troubling times for the oil and gas industry is considered good news for the energy capital, underscoring its economic diversity and signaling that the metro area continues to play catch-up with the re- cent population surge.
“We’ve had a tremendous amount of built-up momentum,” said Bill Gilmer, the director of the University of Houston’s Institute for Regional Forecasting. “And just because that job machine turned off didn’t mean we had caught up completely.”
Whether Houston can maintain that job momentum through another difficult year remains a mystery.
“The good news is that
there is still job creation, but it’s a whole lot less and the question is: What’s going to happen in 2016?” said Rocky McAshan, senior vice president with the Frost Bank system and a board member of the Houston Economics Club, a local association of economists, analysts, researchers and academics.
Robust hiring last year among the region’s hospitals, restaurants, schools and other governmental agencies helped buffer the energy capital from the deeper pain felt at exploration and production firms, oil services companies and factories that churn out rigs and other oil tools, according to numbers from the Texas Workforce Commission released Friday.
Health care surge
Overall, the metro area’s workforce expanded just 0.8 percent last year, according to the data, which is not seasonally adjusted. The metro area gained 8,500 nonagricultural jobs in December, mimicking the same modest job growth of 4,800 the month prior, according to the commission.
Not surprisingly, the deepest cuts happened in the energy sector, where a combined 24,500 oil extraction and manufacturing jobs were shed between December 2014 and 2015, as oil patch activity slowed and energy companies scrambled to cut costs.
But those layoffs were offset in part by expansion elsewhere. Leisure and hospitality, which encompasses bars, restaurants and hotels, added 19,600 jobs, a 6.8 percent surge from the prior year.
“Restaurants and bars are still very active, even in this current time of oil slump,” said Chris Tripoli, president of A’La Carte Consulting Group, a Houston restaurant consultancy.
In addition, education and health services posted an increase of 19,100 jobs for the year, a 5.3 percent uptick.
The metro area may be bemoaning the oil and gas slowdown, but hospitals and clinics are showing no signs of slowing their hiring, said Laura Bowen, president of Team1Medical, a health care staffing company that primarily recruits for jobs in the Houston area, adding that she often struggles with too many job openings for not enough qualified job candidates.
The ongoing surge of employment in health care institutions across the city underscores how much more diversified Houston is than it was three decades ago, when its economy got clobbered by a crippling oil bust, Bowen said.
“Oil and gas is such a staple of our city, but it’s only an aspect of it,” she said. “Yes, oil and gas is going to hurt the city, but it’s not going to cripple the city.”
Prolonged slump
But it seems unlikely Houston can continue staving off tough times as word leaks that the metro area no longer offers the same amount of job opportunities it once did.
“I’m afraid it’s going to be another slow year,” Gilmer said.
As energy companies continue paring back to cope with crude prices at anemic levels, the troubles that started in oil and gas companies are bleeding into other sectors of the workforce, with losses appearing in the financial and professional sectors.
Last year, the finance and insurance industry lost 1,600 jobs. Legal services shed 700. Architectural, engineering and related services lost 4,500 jobs, according to the recently released workforce data.
In all, the Houston area closed the year with an unemployment rate of 4.6 percent. That’s up from its 4 percent jobless rate at the end of 2014.
The upheaval roiling Houston’s workforce hasn’t stopped following the fresh collapse in oil prices. Oil field services behemoth Schlumberger, which has main offices in Houston, announced this week that it had cut another 10,000 jobs worldwide, bringing the total number of corporate losses to 34,000, although it did not say how many were slashed in Houston.
Other energy companies are expected to make similar announcements as oil prices show no signs of inching significantly higher soon.
Matching predictions
With more energy layoffs expected through the middle of the year, the tumult that defined 2015 likely will play out again in 2016, creating a prolonged regional slump that could discourage new residents from moving here.
“Energy should begin to stabilize sometime this year, but the rest of the economy is going to have to adjust to this new economic reality,” said Barton Smith, professor emeritus of economics at the University of Houston.
That trend will eventu- ally put the brakes on other bright spots of Houston’s workforce, including retail, leisure and hospitality, which have benefitted from the tens of thousands of new people who flocked to Houston during the heydays of the shale boom.
“I would guess the net migration into Houston is zero right now,” Smith said. “We’re down to just natural population growth, births over deaths.”
The 2015 jobs numbers will likely get revised downward in March, because the government often overestimates employment numbers during economic downturns, Smith said.
Still, he still expects the metro area to close the year with a small job gain, which is in line with what most economists have predicted.