Erin Douglas – Houston Chronicle: Texas’ energy sector is slowing down. Energy companies’ profits profits plunged last quarter, prices for crude are stuck in the $50-$60 per barrel range, petrochemical prices have been falling since 2018 and the Permian rig count keeps declining.
As concerns about slowing global demand for oil keep crude prices suppressed, and Wall Street demands more efficient spending by producers, Texas’ energy slowdown is beginning to show up in hiring numbers.
That’s a problem for Houston energy employees, who have still yet to fully recover from the last oil bust, which ended in 2016 and cost the region tens of thousands of jobs. Houston’s oil and gas extraction sector used to employ around 56,000 people in 2014. Now it employs around 38,800 — a decline of about 30 percent.
Of course, to some extent, oil and gas employment is unlikely to ever return to the level it maintained at the height of the last boom in 2014, when oil prices topped $100 a barrel. But, even with the latest fracking boom, Houston workers keep getting left out.
Wages and salaries in Houston are rising at just half the national rate while significantly lagging the increases in other metropolitan areas, and economists say the culprit is the local energy sector. Too many people were laid off in 2016, and not enough firms in Houston are hiring, which means employers don’t have to pay much to find workers. The health of Houston’s energy sector trickles out to the rest of Houston, and well, wages and salaries increased just 1.5 percent in the region over the past year, compared to 3 percent nationally, according to the Labor Department.
It appears that the burst of hiring and increases in pay brought to West Texas by the fracking boom never quite made its way to the Houston headquarters. Companies added staff throughout the Permian Basin instead, Midland now enjoys the lowest unemployment rate in the U.S. and workers are paid the highest average wage of any metro area in the state. After all this employment growth, the boom is now beginning to subside, and employment throughout most of Texas’ mining sector, dominated by oil and gas, has recently declined.
Meanwhile, Houston’s oil and gas extraction sector just began adding jobs, year-over-year, earlier this year after nearly five years of monthly losses. Houston has added around 2,700 extraction jobs in the first half of 2019 — a far cry from where we were, and nowhere near enough pressure for employers to begin competing for employees with wage increases. As Pia Orrenius, an economist at the Federal Reserve Bank of Dallas, told me for a recent article, the labor market slack in Houston didn’t get cleaned up until this year.
So, we’re late. The question is, did Houston’s energy workers already miss their shot at reaping the benefits of the oil recovery?
If economic forecasts are correct, if a global economic slowdown (some dare say recession) is on the horizon, if that negatively affects the demand for oil, if that pushes energy further into a hiring slump, then that probably means two things for Houston’s energy workers: (1) If you’re still looking for a job in energy post 2016, you may never find one, and (2) If you were hoping for a raise, you may never get one.