“Never say never” is a line my mom often repeats, never failing to provide proper attribution: “That’s what my mother would always say.”
Actually, it’s only something I’ve noticed her quoting more frequently within the past year — a blurry and wildly unprecedented chunk of time for which the idiom seems tailor made. Like a cocktail of unequal parts Emily St. John Mandel, Lawrence Wright, Cormac McCarthy and Budd Schulberg come to life. It’s been so unprecedented, in fact, that it would be unfair to dig up predictions made about 2020 in the months before the coronavirus pandemic began — especially those related to the economy. But, that doesn’t mean I won’t. Never say never.
In late January of 2020, the Greater Houston Partnership’s Patrick Jankowski released his economic outlook for the coming year. It included five key takeaways, one of which was: “Houston is in no danger of entering a recession in 2020 or 2021.” We know, of course, what happened about a month and a half later. Or, at least we thought we did.
Recovery will take longer than expected
Last week, Jankowski delivered more bad news regarding the region’s recovery from a recession brought on by efforts to slow the spread of COVID-19 and worsened by an oil bust that slammed the energy sector, which had been hurting even before the pandemic. Turns out the already eye-popping number of jobs lost in March and April of last year was 11,200 short of the actual number, according to a Greater Houston Partnership (GHP) analysis of revised employment data from the Labor Department. In the Houston metropolitan area, 361,400 jobs disappeared in the first two months of the lockdown. That’s more than the combined losses from the ’80s oil bust (226,100) and the Great Recession (120,500), the Partnership reported.
The Texas Workforce Commission (TWC), which underestimated the number of jobs lost, also had been overly optimistic about the strength of the region’s economic recovery, According to the Partnership. There were 14,600 fewer jobs added back in May and June than the TWC initially reported. Job losses in July were the largest on record, with more than 39,000 lost in the first half of 2020, including many in energy, manufacturing, wholesale trade and engineering.
Through the first month of this year, there were 244,400 fewer jobs in the region than there were before the pandemic, and the 8.3% unemployment rate in January was more than twice that of a year earlier, when it was 3.8%. A full economic recovery is expected to take longer than originally projected, and is likely several years away.
“In no uncertain terms, these numbers are ugly,” Jankowski told the Houston Chronicle. “To put it bluntly, we are in a deep hole right now. It’s going to take everyone that has a shovel to dig us out.”
Already struggling, low-wage workers hit hard by pandemic
Four sectors — health care, other services, restaurants and bars, and retail — accounted for 207,400 of the jobs lost in the Houston metro area, more than half of the total losses. So far, roughly 138,000 of those have returned, according to the GHP report, as restrictions on businesses have been eased. However, that still leaves one-third of workers in those sectors, many of whom earn lower wages, out of work. The K-shaped economic recovery tracks with the disparities seen throughout the pandemic. The lowest-wage workers and the businesses paying the lowest average wages experienced the steepest drop in employment and remain the furthest from recovery, the Labor Department has reported.
Since 2000, wages have remained frozen for most American workers, and a large and increasing share of job growth has comprised low-wage jobs. Almost half of workers between the ages of 18 and 64 were considered low wage. That’s according to the Brookings Institution’s look at how family-sustaining jobs are needed to make recovery in the U.S.’s regional economies inclusive.
COVID-19’s disproportionate impact — particularly on women and people of color — is known to most Americans. But it takes on an even starker contrast when we consider that those who have suffered the most were already suffering before the pandemic recession. In 2019, about 14 million U.S. families with children — 44% — didn’t make enough to cover their expenses, according to the report released last month. And families headed by women (53%), Black (58%) and Latino (57%) individuals and individuals who didn’t graduate from high school (65%) are much more likely to struggle economically.
“Overall, about 45% of the Houston (metropolitan area’s) families with children do not earn high enough wages to make ends meet,” said Joseph Parilla, a fellow at Brooking’s Metropolitan Policy Program and co-author of the report. “That puts the region in the top third of large MSAs (over 1 million residents) in terms of ‘struggling family’ share.”
Houston’s large family-sustaining job deficit
Parilla and co-author Sifan Liu, a senior research analyst at the Metropolitan Policy Program, determined the “family-sustaining wage threshold” for metro areas across the U.S. That threshold is the wage level that would lift half of a region’s struggling families with children out of struggling status. For families with children, family-sustaining wage thresholds range from a low of about $16 an hour in the midsize metro of Ashland, Kentucky, to $37 an hour in San Jose.
They also estimated how many jobs paying “family-sustaining wages” would be needed to lift half of struggling families with children out of struggling status.
For example, to move half of the struggling families with children in the Houston metro area into self-sufficiency, the region needs 255,033 more jobs that pay a family-sustaining wage of $22.38 an hour. To lift half of all struggling households — those with and without children — out of struggling status, would require more than half a million more jobs paying a wage of $14.16 an hour.
“The region has a significant family-sustaining-jobs deficit,” Parilla said. Adding that, for households with children, the family-sustaining job deficit accounts for “roughly 10% of Houston’s employment base.”
Among metros with a population of 1 million or more, only Providence, Rhode Island (14.1%), and Riverside, California (13.6%), have family-sustaining job deficits that account for higher shares of all jobs in their respective regions than Houston.
Across the nation, the median wage in many metros isn’t enough to provide economic security to the median struggling family, especially in metros with populations of 500,000 or more. Out of more than 100 very large and large metro areas, the researchers found, the family-sustaining wage is higher than the regional median wage in all but six — Hartford, Conn., Sacramento, Calif., Madison, Wis., Spokane, Wash., Seattle, and Washington, D.C.
What can be done to make the recovery inclusive?
Going forward, Parilla said, Houston’s leaders can use these data to guide economic strategies that address economic insecurity in the wake of the pandemic.
“Industries vary considerably in the extent to which they offer family-sustaining wage jobs,” he said. “And thus, economic development and workforce development strategies should target those industries offering quality employment.”
The report includes a breakdown of the share of family-sustaining-wage jobs across different industry segments for 192 metro areas.
In the Houston region, the sectors with the highest concentration of family-sustaining jobs include oil and gas extraction (60%); pipeline transportation (55%); petroleum products manufacturing (54%); data processing, hosting and related services (53%); professional, scientific and technical services (52%); securities, commodity contracts and other financial investments and related activities (52%); and hospitals (51%).
Among those, pipeline transportation and petroleum products manufacturing have the highest share (more than 30%) of family-sustaining wage jobs that don’t require a four-year college degree.
However, as the Greater Houston Partnership’s latest snapshot of the Houston metro’s economy has shown, the region’s energy, manufacturing, and professional, scientific and technical services sectors — among those with large shares of family-sustaining jobs — were some of the hardest hit in the past year, and continue to struggle toward recovery.
Worldwide oil consumption fell 9% last year. Houston-area jobs in oil and gas extraction dropped almost 10.5% between January of this year and last, while manufacturing saw a 13% decline in jobs and has experienced a loss of 40,000 jobs since July 2019.
According to the Partnership report, before the pandemic, some 40% of the region’s manufacturing jobs were tied to oil and gas, so it’s not surprising the fortunes of that industry, which also had pre-COVID-19 struggles, have been similar to those of oil and gas. At least 35 Houston energy-related manufacturing firms announced significant layoffs or furloughs since the start of the pandemic, the GHP reported.
“The Houston region’s share of family-sustaining jobs in oil and gas extraction and petroleum manufacturing that are accessible to workers without a bachelor’s degree is striking,” Parilla said. “That is a major source of economic opportunity, but an industry that has lots of risks.”
Raising the wage floor
Parillan and Liu also make the argument for raising the wage floor — i.e., increasing the federal minimum wage — which could help “reduce poverty (a worthy goal unto itself), but it can also support individual and family self-sufficiency — the ability to cover living expenses without relying on public subsidies.” This is especially true for families without children and families living in small metros, micropolitan (those with populations of 10,000–49,999) and rural areas, where the cost of living is much lower compared to large cities.
As examples, they offer Madison, Wisconsin, Lansing, Michigan, and Pittsburgh, where a $15 hourly wage would allow more than two-thirds of struggling households to achieve self-sufficiency.
With a $15 minimum wage, 46% of the Houston area’s struggling families would achieve self-sufficiency, which is about the median level among large and very large metro areas.
“Raising the wage floor will still likely be necessary to address Houston’s significant family-sustaining jobs deficit,” Parilla said. “Growing more jobs or investing in skills is not going to be enough to close family-sustaining-wage job deficits without major efforts to upgrade existing jobs to pay livable wages.”
Earlier this month, President Biden’s $1.9 trillion coronavirus relief package was approved and signed into law, providing stimulus checks of up to $1,400 to millions of Americans, $350 billion to cities and states and $130 billion for education, among other things. One thing the final bill did not include was an increase in the federal minimum wage.
With Democrats seemingly unable to unite on how much to raise the minimum wage and Republicans fully opposed to an increase, it’s unclear if or when the wage floor will be raised at the national level.
As Parilla and Liu point out, local and state governments can use minimum wage laws, sectoral bargaining and wage boards to increase pay in lower-wage industries. In February, Rep. Martinez Fischer (D-San Antonio) filed a bill in the Texas Legislature that would incrementally raise the state minimum wage to $15 an hour by 2025. The proposed bill would increase the minimum wage to $10 an hour for 2022, $12.50 for 2023 and $14 for 2024, leading up to $15 in 2025.
Fischer’s bill currently is in committee, but it doesn’t have a snowball’s chance in hell of becoming law in Texas, right?? Probably not. But after the year we’ve had, well, never say never.