Ranking metros by percentage share of employment in

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1 OCTOBER 2013 Texas Economy PUBLICATION 2041 A Reprint from Tierra Grande magazine Real Estate Center. All rights reserved. By Ali Anari Texas economy is all about jobs. To better understand how the state s metropolitan and nonmetropolitan areas contribute to total jobs in Texas, the Real Estate Center researched the relative contributions of various regions on the aggregate economic activities of Texas. Employment, income and gross domestic product were analyzed. There were four key findings: Jobs are highly concentrated in the state s metropolitan areas because of the high degree of metropolitanization of the Texas economy. Four major Texas metros (Dallas-Fort Worth-Arlington, Houston-Sugar Land-Baytown, San Antonio-New Braunfels, and Austin-Round Rock-San Marcos) account for more than two-thirds of Texas jobs. Two giant metros, Dallas-Fort Worth-Arlington and Houston-Sugar Land-Baytown, are home to more than half of Texas jobs. Changes in the relative shares of jobs in the state s metros are attributable to changes in the relative growth rates of metro industries, particularly since 2000, because of higher oil prices. Regional Shares of Texas Jobs More jobs in a region necessarily generate business for real estate professionals. New workers mean more homes to be bought and sold, and more businesses needing commercial, office and industrial real estate. The Texas economy comprises 25 metropolitan areas in addition to nonmetropolitan and micropolitan areas (see table). The high degree of metropolitanization of the state s labor market is reflected in the high proportion of metropolitan jobs 9.5 percent of the total in The share of nonfarm jobs in nonmetropolitan and micropolitan areas was 10.5 percent. The high degree of metropolitan concentration of jobs is also reflected in the concentration of most jobs in four major metros. Ranking metros by percentage share of employment in 2012, Dallas-Fort Worth-Arlington ranked first with 27 percent of Texas nonfarm employment, followed by Houston-Sugar Land-Baytown (24 percent), San Antonio-New Braunfels (.1 percent) and Austin-Round Rock-San Marcos (7 percent). These four major metros accounted for 6.1 percent of total Texas nonfarm jobs. The remaining 31.9 percent of jobs were distributed among 21 smaller metros in the same year.

2 Contributions of Texas Metropolitan and Nonmetropolitan Areas to Texas Employment Employment (in thousands) Percent of Contributions Jobs in 2012 Growth Rate Rate Percent of Rate Texas 10,79. 10, Metropolitan Texas 9, , Micropolitan and Nonmetropolitan Texas 1, , Metropolitan Areas: Dallas-Fort Worth-Arlington 3, , Houston-Sugar Land-Baytown 2, , San Antonio-New Braunfels Austin-Round Rock-San Marcos El Paso McAllen-Edinburg-Mission Corpus Christi Beaumont-Port Arthur Brownsville-Harlingen Lubbock Killeen Amarillo Waco Longview College Station-Bryan Tyler Laredo Midland Odessa Abilene Wichita Falls Texarkana Victoria San Angelo Sherman-Denison Sources: Texas Workforce Commission and Real Estate Center at Texas A&M University Regional Contributions to Employment Growth The Texas employment growth rate in any period is the weighted average of employment growth rates of its local economies. Nonfarm employment growth rates from 2011 to 2012 for Texas as a whole and for its metros and nonmetro areas are in column 4 of the table. The total nonfarm employment growth rate for Texas in 2012 was 2.7 percent, a weighted average of employment growth rates of all metros and nonmetros. They ranged from a high of more than percent for Odessa and Midland to zero percent for College Station-Bryan to minus 0.35 percent for Texarkana. Thanks to higher oil prices, Odessa and Midland posted the highest employment growth rates among the 25 Texas metros in These two metropolitan areas, with their large shares of the oil extraction industry, are also referred to as petroplexes. Multiplying the employment growth rate for each metro by the area s employment share in 2012 gives each area s contribution to Texas total employment growth rate (column 5). Houston-Sugar Land-Baytown contributed percent to Texas nonfarm employment growth rate of percent, the largest contribution among metros, followed by Dallas-Fort Worth-Arlington (0922 percent), Austin-Round Rock-San Marcos (0.264 percent) and San Antonio- New Braunfels (0.133 percent). Despite their more than percent employment growth rates, the contributions of petroplexes Odessa (0.054 percent) and Midland ( percent) were small because of their small shares of total Texas jobs, 06 percent for Odessa and 04 percent for Midland. Dividing employment contributions for each metro in 2012 by Texas percent employment growth rate gives contribution percentages for each area (last column). Houston-Sugar Land-Baytown accounted for percent of the state s employment growth rate in 2012, followed by Dallas-Fort Worth- Arlington ( percent), Austin-Round Rock-San Marcos ( percent) and San Antonio-New Braunfels ( percent). Note that the employment contributions are reported with four decimal places to accurately reflect the contributions of smaller metro areas. Methodology An area s share of employment in any period is the number of employed persons in the region divided by total number of employed persons in Texas. The first two columns of the table show total nonfarm employment for Texas metropolitan areas and the nonmetropolitan portion of the state s labor market in 2012 and Dividing the number of employed persons in 2012 in each area by the total number of employed persons in Texas in the same year and multiplying by 100 gives the percentage shares of employed persons for each area of the state s total employed persons in 2012, shown in the third column of the table.

3 Changing Market Shares Texas regions shares of employment change over time (Figure 1). The graphs show that the state s metropolitan areas fall into three groups: those with shares of Texas jobs trending upward since 1990: Austin-Round Rock-San Marcos (Figure 1.3), College Station-Bryan (Figure 1), Killeen-Temple-Fort Hood (Figure 1.11), Laredo (Figure 1.12), McAllen-Edinburg- Mission (Figure 1.15), and San Antonio-New Braunfels (Figure 0); those with shares of Texas total employment trending downward: Abilene (Figure 1.1), Amarillo (Figure ), Beaumont-Port Arthur (Figure 1.4), Corpus Christi (Figure 1), El Paso (Figure 1.9), Lubbock (Figure 1.14), Sherman- Denison (Figure 1.1), San Angelo (Figure 1.19), Texarkana (Figure 1), Tyler (Figure 2), Victoria (Figure 3), Waco (Figure 4), and Wichita Falls (Figure 5); and those with employment shares that changed direction since 2000: Dallas-Fort Worth-Arlington s employment share was increasing until 2000 but then trended downward (Figure 1.); Houston-Sugar Land-Baytown (Figure 1.10), Longview (Figure 1.13), Midland (Figure 1.16) and Odessa (Figure 1.17) shares were trending downward until 2000, and then trended upward. These changes were caused by differences in the employment growth rates of Texas industries since 1990 (Figure 2). Regions with growing (declining) industries increased (decreased) their shares of total employment. The state s industries fall into four groups according to trends in their job shares: those with shares of jobs trending downward since 1990: manufacturing (Figure 2.3), trade (Figure ), transportation, utilities and warehousing (Figure 2.5), and other services (Figure 2.11); those with shares of employment trending upward since 1990: professional and business services (Figure 2.), education and health services (Figure 2.9), leisure and hospitality (Figure 2.10); those with job shares that changed direction in The state s mining industry employment share trended downward from 1990 until 2000 but since has posted an upward trend (Figure 2.1). By contrast, the employment share of the information industry trended upward until 2000, but after the dot.com bubble burst it has been decreasing (Figure 2); and. Figure 1.1. Abilene Figure 1. Percentage Shares of Total Employment in Texas Accounted for by the State s Metropolitan Areas from 1990 to 2012 Figure. Amarillo Figure 1.3. Austin-Round Rock-San Marcos Figure 1.4. Beaumont-Port Arthur Figure 1.5. Brownsville-Harlingen Figure 1. Corpus Christi 1. 1 Figure 1. College Station-Bryan Figure 1.. Dallas-Fort Worth-Arlington Figure 1.9. El Paso Figure Houston-Sugar Land-Baytown Percent Figure Killeen-Temple-Fort Hood Figure Laredo.9. Figure Longview Figure Lubbock Figure McAllen-Edinburg-Mission 1 Figure Midland..5 Figure Odessa Figure 1.1. Sherman-Denison Figure San Angelo Figure 0. San Antonio-New Braunfels Figure 1. Texarkana.96 Figure 2. Tyler 0 Figure 3. Victoria Figure 4. Waco. Figure 5. Wichita Falls Sources: Texas Workforce Commission and Real Estate Center at Texas A&M University 0.9.5

4 2.50 Figure 2. Percentage Shares of Total Texas Employment by Texas Industries Figure 2.1. Mining and Logging Figure 2.2. Construction Figure 2.3. Manufacturing Percent Figure. Trade Figure 2.5. Transportation, Utilities, Warehousing Figure 2. Financial Activities Figure 2. Information Figure 2.. Professional and Business Services Figure 2.9. Education and Health Services Figure Leisure and Hospitality Figure Other Services Figure Government Sector Sources: Texas Workforce Commission and Real Estate Center at Texas A&M University the employment shares of the state s financial activities industry (Figure 2) and government sector (Figure 2.12) have been wavering around their long-term shares. The price of oil was the main reason behind the fall and rise of the state s mining industry employment share (Figure 3). Until 2000, prices of West Texas intermediate crude oil were Dollars Per Barrel Figure 3. Prices of West Texas Intermediate Crude Oil, 1990 to Source: Energy Information Administration fluctuating around $20 per barrel. Adjusting pre-2000 oil prices for inflation, oil prices were decreasing in real terms before Since 2000, an upward trend in oil prices resulted in the rise of the mining industry s share of Texas jobs (Figures 3 and 2.1). This in turn caused an upswing in the employment shares of Texas metropolitan areas with larger shares of the oil extraction and oil refining industries, notably Odessa, Midland, Houston-Sugar Land-Baytown and Longview. Since 2000, as the employment share of Houston-Sugar Land-Baytown has expanded, Dallas-Fort Worth-Arlington s share has fallen. Dr. Anari ([email protected]) is a research economist with the Real Estate Center at Texas A&M University. THE TAKEAWAY In 2012, 6.1 percent of Texas jobs were concentrated in the four large metros (Dallas-Fort Worth-Arlington, Houston-Sugar Land-Baytown, San Antonio-New Braunfels, and Austin-Round Rock-San Marcos). Higher oil prices gave the petroplexes of Odessa and Midland the highest employment growth rates in the state last year.

5 Texas A&M University 2115 TAMU College Station, TX MAYS BUSINESS SCHOOL Director, Gary W. Maler; Chief Economist, Dr. Mark G. Dotzour; Communications Director, David S. Jones; Managing Editor, Nancy McQuistion; Associate Editor, Bryan Pope; Assistant Editor, Kammy Baumann; Art Director, Robert P. Beals II; Graphic Designer, JP Beato III; Circulation Manager, Mark Baumann; Typography, Real Estate Center. Advisory Committee Mario A. Arriaga, Spring, chairman; Kimberly Shambley, Dallas, vice chairman; James Michael Boyd, Houston; Russell Cain, Fort Lavaca; Jacquelyn K. Hawkins, Austin; Ted Nelson, Houston; Doug Roberts, Austin; Ronald C. Wakefield, San Antonio; C. Clark Welder, San Antonio; and Avis Wukasch, Georgetown, ex-officio representing the Texas Real Estate Commission. Tierra Grande (ISSN ) is published quarterly by the Real Estate Center at Texas A&M University, College Station, Texas Subscriptions are free to Texas real estate licensees. Other subscribers, $20 per year. Views expressed are those of the authors and do not imply endorsement by the Real Estate Center, Mays Business School or Texas A&M University. The Texas A&M University System serves people of all ages, regardless of socioeconomic level, race, color, sex, religion, disability or national origin. Photography/Illustrations: Real Estate Center files, p. 1. About the Real Estate Center The Real Estate Center at Texas A&M University is the nation s largest publicly funded organization devoted to real estate research. The Center was created by the Texas Legislature in 1971 to conduct research on real estate topics to meet the needs of the real estate industry, instructors and the public. Most of the Center s funding comes from real estate license fees paid by more than 135,000 professionals. A nine-member advisory committee appointed by the governor provides research guidance and approves the budget and plan of work. Learn more at

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7 COMMUNICATION MATTERS You Need More Than Words To Win Hearts & Influence Minds In the Real Estate Centerʼs new free video series, John Krajicek, Mays Business School executive professor, reveals how important clear communication is in our business and personal lives. Itʼs all about succeeding. And speaking is just the beginning. In four 20-minute videos, you will learn to cultivate your listening skills, develop a powerful presence, lead by example, and make body language convey the same message your words do. Communication Matters Power of Presence Communicating as a Leader Open Up and Own the Room