When global oil prices collapsed in the mid-2010s, leading to massive layoffs and cutbacks across Houston’s energy industry, the jolt coursed through much more than the region’s signature sector.
The shock caused a dramatic reduction in economic mobility — including lower wages, fewer jobs and less opportunity for growth — across industries and communities, with the effects still being felt more than a decade later.
A new, comprehensive analysis by the Kinder Institute’s Center for Economic Mobility reveals for the first time how the damaging oil crash affected millions of local residents’ pocketbooks and set back the regional economy, which has endured weaker job creation and earnings relative to other metro areas less dependent on oil.
The impact totaled more than $300 billion in lost income for Houstonians — about $53,500 per resident in 2025 dollars — and hundreds of thousands fewer available jobs in the first five years after the crash, according to Kinder Institute estimates. As of 2024, private employment remained 6.5% lower than expected relative to metro areas less dependent on oil.
The analysis offers a more complete account of Houston’s economic trajectory than raw measures of jobs, wages and gross domestic product, which have generally portrayed the region as a growing, thriving hub of activity. While Houston has steadily expanded since the oil collapse, the analysis shows the local economy has fallen behind its pre-shock standing when compared with other regions.
“The No. 1 thing I want Houston to understand from this research is we can’t really address economic mobility by looking at aggregate data,” said Flávio Cunha, director of the Center for Economic Mobility. “When you look at what’s happened in other locations, we’re losing ground. Our economy is growing, but it’s no longer growing at the rate it used to.”
To conduct the analysis, Kinder Institute researchers used several economic measures from 2009 to 2024 to map the growth trajectory of Greater Houston relative to 54 other large U.S. metro areas with minimal dependence on the oil and gas industries. The research provided a clear view of how the oil shock impacted Houston in the second half of the 2010s, though the picture became more muddled in the 2020s due to the dramatic economic effects of the COVID-19 pandemic.
While the analysis looks back at a critical time in Houston’s recent past, the effects of the crash offer important lessons for local leaders looking toward the future, Cunha said.
The shock illustrates how global economic conditions outside of local control can profoundly affect opportunities for Houstonians. That makes it essential to understand the region’s vulnerabilities and rigorously evaluate the impact of initiatives designed to improve economic mobility, Cunha said.
“We may invest in people and get individuals the right credentials to occupy new, higher-paying jobs, but what I’m worried about is that we may not see any improvement in economic mobility if we have a similar shock in the oil price or the energy industry changes dramatically,” Cunha said.
Measuring the shock
The nation’s biggest oil crash in nearly 30 years arrived with little warning. A spike in domestic oil production, stubbornly high international supply and weakened demand unexpectedly collided in 2014, creating a glut that sent prices tumbling over a nearly two-year period.
The collapse bruised Houston’s oil and gas workforce, with about 81,000 jobs lost in 2015 and 2016 per federal estimates, though the broader region appeared to survive the crash. Greater Houston added 187,800 jobs from 2015 to 2019 despite the large energy layoffs, powered by growth in healthcare, petrochemical and numerous other industries.
The employment numbers, however, didn’t capture the full effect of the shock on Houston’s economy.
When Kinder Institute researchers compared Houston’s trajectory with the trends seen across 54 other metro areas, which were aggregated using a method known as synthetic difference-in-differences, the Bayou City’s economic fate looked gloomier:
- Relative to the other metro areas, Houston’s income per resident came in 13% lower between 2015 and 2019, totaling an average of $76 billion per year and $10,500 per person.
- Private employment clocked in 7% lower during that stretch relative to the comparison group, the equivalent of missing out on 186,000 jobs annually, as employers reduced their headcount while keeping their businesses running. The reductions left 50,000 more people unemployed than expected relative to the comparison group, while fewer Houstonians jumped to new jobs.
- Nearly all demographic groups felt the brunt of the effects, with men taking a worse hit than women. Goods-producing industries, including manufacturing and construction, saw larger effects than service industries.
Multiple income and labor measures suggest Houston remained behind the comparable metro groups through 2024, though researchers said it’s difficult to separate oil shock effects from the pandemic. Notably, the rates of poverty, educational attainment, labor force participation and earnings equality did not significantly shift throughout the periods analyzed.
Snejana Nihtianova, associate director of the Center for Economic Mobility, said the data illustrate how the oil crash’s effects permeated the region despite perceptions of prosperity outside of the energy industry.
“We see that oil industry trends are not only affecting oil-dependent companies, but the whole economy for the Houston area,” Nihtianova said.
Preparing for change
The findings bring fresh perspective to one of the region’s most important and longest-debated questions: Is Houston too reliant on the energy industry?
While Houston undoubtedly benefits from the sector, which accounted for $28.7 billion in gross domestic product in 2024, or nearly 4% of the metro area’s GDP, the oil shock laid bare the region’s exposure to industry trends. In addition to oil price swings, Houston could face serious consequences if renewable energy sources gain greater market share or corporations shift more operations outside Southeast Texas.
Cunha warned that the positive effects of local investments in workers — such as workforce-related education programs, job training and community programs — could be diminished by those fluctuations.
“To me, it’s really important for people to understand that our measures of economic mobility are very sensitive to how one particular industry out of many, many industries is doing,” Cunha said.
“If it’s doing really well, we can actually experience tremendous economic mobility without doing much. But on the other hand, if it’s not doing so well, then we can actually see economic mobility outcomes do worse even though what we’re doing to get people into higher-paying jobs might be working.”
Kinder Institute researchers plan to release a proposal next week highlighting key data points that local leaders could use to guide their work on improving economic mobility. A coalition of Houston-area organizations and officials, led by several of the region’s most prominent nonprofits, is crafting plans for increasing economic opportunity across the region.
“If the energy industry changes dramatically to where Houston no longer has the location advantage, we need to be prepared for that,” Cunha said. “Otherwise, we’re going to experience way worse than what we’ve seen.”
