The Greater Houston area will see slow but steady job creation in 2017 as the local economy recovers from the energy sector downturn over the past two years, said Patrick Jankowski, senior vice president for the Greater Houston Partnership.
In the 12 months leading up to November 2016, the Greater Houston area created 16,100 new jobs. However, the region only created 3,200 jobs in the 12 months before May 2016, he said.
“The weakest part of the economy was in the second quarter of last year,” Jankowski said. “The good thing is that the Houston region never sank into a recession.”
Conroe and Montgomery County, however, have been resilient during the downturn, according to local officials like Danielle Scheiner, deputy director of the Greater Conroe Economic Development Council.
Officials said the local economy has been successful in part because of local tax abatement programs that attract new companies and jobs to the region. As of November, the county has a 4.6 percent unemployment rate, compared to 4.9 percent throughout the Greater Houston area, according to the U.S. Department of Labor Statistics.
“We never saw a blip in the unemployment rate—it stayed pretty steady throughout this entire downturn,” Scheiner said. “So the only thing we can figure is that there were people that just left the job market altogether, or they found jobs in other professions.”
Conroe and Montgomery County use tax abatements to attract new companies to the county. Receiving a tax abatement means a new company is only required to pay a percentage of its property taxes over a period of several years, after which the company will pay the entirety of its tax obligations.
Since 2012, Conroe has granted tax abatements to Galdisa USA, Icotex, ProDirectional Drilling, Ball Corporation, Newpark Drilling Fluids and Gearn Offshore—creating 264 new jobs combined in the Conroe Park North industrial park. The Galdisa and Icotex abatements were approved by the city in 2016, and the companies will begin construction this year, according to the GCEDC.
While the six companies qualify for about $115.2 million in abatements combined, GCEDC Executive Director Fred Welch said the abatements help increase the property values of otherwise vacant lots—which do not yield tax revenue. He said without the program it is likely the companies would consider alternate locations for their businesses.
“I like to use the term ‘phase in’ instead of abatement because really what you are trying to do is allow a company to invest a lot of money up-front,” Welch said. “The incentives are pretty far down the list with companies. [If] they are looking at four other locations; that is when it gets into the cost of doing business.”
County Judge Craig Doyal said the county would have to increase its property tax rate by 14 cents to generate the same revenue it does today if it took businesses that have been granted abatements off of its tax rolls. According to county records, more than 7,400 jobs have been created since 2006 by companies that received tax abatements from Montgomery County.
“The fact that our taxes are 14 cents lower than where they would have to be to generate that revenue is huge,” Doyal said.
Since 2009, Montgomery County has seen the fastest job growth in the education and health services, trade, transportation and utilities, professional services, leisure and hospitality, and construction industries, according to Texas Workforce Solutions.
Those industries created a combined 35,361 new jobs in Montgomery County in that time frame and are expected to create more than 610,000 new jobs in the Greater Houston area by 2024. Jankowski said those trends are expected to continue in 2017.
“We are going to see growth in sectors tied to logistics, transportation and health care,” Jankowski said. “We are going to see growth in manufacturing, but the growth won’t be related to oil and gas equipment.”
The opening of Houston Methodist The Woodlands Hospital on July 1 in south Conroe will create about 500 new health care and ancillary jobs in 2017. In April, Texas Children’s Hospital The Woodlands will also begin offering inpatient services at its new hospital in The Woodlands, creating about 550 new health care-related jobs in Montgomery County this year, according to the respective hospitals.
Additionally, Conroe ISD—the county’s largest employer—will create about 150 new positions this year. With two new schools opening in 2017, Montgomery ISD will create about 30 new teaching positions this year, according to the respective school districts.
Despite job growth in certain industries, Jankowski said many of the jobs created over the past year do not pay a salary as high as the jobs that were lost during the oil and gas downturn.
“Unfortunately, the jobs that we have created have not paid as well as the jobs we have lost,” he said. “The average compensation in the oil and gas industry is about $150,000 per year. The average compensation in the Houston area as a whole in all industries is about $50,000 per year.”
However, Doyal said the diversity in industries throughout the region has helped Montgomery County grow during the energy sector’s struggles.
“That is one of the great things is the diversity,” Doyal said. “The more diverse you are the less susceptible you are to a recession.”