Houston / Texas

While Houston leads the country in job growth, low-wage jobs are growing at a faster pace than job growth as a whole. To increase upward economic mobility, Houston will have to connect people to the growth industries and improve the quality of existing jobs.

Houston / Texas

by Max Rose

The Place: a booming metro with an economy that’s growing faster than any other in the country, driven by the energy and knowledge sectors

The Challenge: preparing Houston’s young people to respond to employment opportunities—and doing it on a massive scale, in both geography and number

Elements of Opportunity Infrastructure: a history of savvy investment of private and federal dollars to innovate in education and employment

On its sprawling surface, Houston tells a story of how human ingenuity uninhibited by government regulation creates the American Dream.

“Houston is unstoppable,” says The Atlantic. “Best City in America,” asserts Business Insider. Other publications rank Houston in the top five cities for job growth, entrepreneurship, and manufacturing.

“[Houston] has become a city of opportunity, where we respect people from all backgrounds and allow them to use their full talents,” wrote former Mayor Bill White, upon leaving his position in 2010.

A low-income person in Houston is more likely to reach the top-20 percent of earners than in any other large Southern city. The Houston region has a diverse and growing economy, which looks less like the past—oil and its cousins—and more like the future’s knowledge-based industries. The region’s affordable housing and job growth drives a surging population, with a soon-to-be majority Latino population, and an aging, whiter workforce.

In Houston, the South’s booming cities can see their dynamic future. However, sooner than the South’s other boomtowns, Houston might face a collision between inequity, economic prosperity, and a fervent belief in small government. Latino and African-American young people, who will fill the jobs vacated by retiring whites, are far behind on every step between education and career. Those students depend on systems of public education that are dispersed and often strapped for resources. Houston’s infrastructure of opportunity challenge—namely, the human capital development, employment generation, and social and financial supports necessary to help young people succeed—is in connecting Latino and African-American populations to the booming economy, and doing so at tremendous scale.

“If Houston’s African-American and Latino young people are unable to succeed,” says Stephen Klineberg, director of the Kinder Institute at Rice University, “it is impossible to envision a prosperous future for the city as a whole.”

History and Context

Houston began as a trade and railroad economy, but in the 1800s lacked the easy connection to water to truly be a center of commerce. Buffalo Bayou, connecting Houston to Galveston Bay approximately 40 miles away, could only accommodate small ships. Business leaders knew that to take Houston from a commercial town to a larger hub, a strong port was essential. In the early 1900s, with a series of federal grants in response to the “Great Storm” that destroyed Galveston, local leaders dredged Buffalo Bayou, establishing a channel from the bay to the Port of Houston. The port became the second busiest in the United States. Federal support continued to play a critical role in Houston’s economic growth, including placement of the Lyndon B. Johnson Space Center and research grants to Houston’s Texas Medical Center, which became the largest medical complex in the country.

Through the mid-1900s, oil drove both growth in the population and the economy. By 1980, when the world’s price of oil reached a peak, 82 percent of the Houston region’s primary jobs were either in the oil industry or directly associated with it.

Klineberg has surveyed Houston’s population annually for 33 years, beginning right in the middle of a dramatic shift: a receding economy combined with a new wave of demographics. The decreased demand and increased non-OPEC oil supply of the early 1980s were a big hit to the region’s oil economy. The Houston region lost 220,000 jobs, nearly one in seven, during the oil bust. Housing prices fell by 30 percent, with more than 3,000 foreclosures per month.

The crash forced diversification, both within the energy sector and to health and technology, as well. Today, Houston’s economy is growing faster than any other major U.S. city. Not only was it the first major metropolitan area to regain all jobs lost by the recession, the Houston region has gained more than 2.5 jobs for every job lost.

Oil still plays a critical economic role. According to an analysis by the Greater Houston Partnership, Houston’s powerful Chamber of Commerce, about one in two jobs are affected by energy prices. At the same time, Houston has become a national leader in applied technology, construction, engineering, and health. That same analysis shows that non-energy related jobs have made up almost three in four new jobs over the last 30 years.

Today, Houston’s economy is growing faster than any other major U.S. city. Not only was it the first major metropolitan area to regain all jobs lost by the recession, the Houston region has gained more than 2.5 jobs for every job lost.
“The source of wealth for cities like Houston in the 21st century is housed between the ears of the best and brightest people in America, who can live anywhere,” Klineberg said.

While Houston leads the country in job growth, low-wage jobs are growing at a faster pace than job growth as a whole, according to an analysis by Richard Florida in The Atlantic’s CityLab. To increase upward economic mobility, Houston will have to connect people to the growth industries and improve the quality of existing jobs.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8 HISD enrolls about 20 percent of the students in the seven-county educational region, which includes a total of 50 independent school districts.

The Challenge

As the Houston economy moved away from oil, growth in the Latino and African-American communities has reshaped the region’s demographics. In the 1960s, one in five Harris County residents was black, three in four were white, and one in 20 was Latino. That has changed, driven by low housing costs, high job growth, and a wave of immigration. According to Klineberg, “This biracial, Southern city dominated and controlled by white men has quite suddenly become the single most ethnically diverse large metropolitan region in the country.”

Now, more than 60 percent of the six million residents of the Houston region are non-white. The region has seen a bifurcated stream of immigrants, including high-skilled immigrants from Africa and Asia, and low-skilled immigrants from Mexico and Central America.

By 2050, the Houston region’s population is expected to grow to more than 10 million residents, primarily driven by Latinos. By that year, it’s projected that Latinos will make up more than half of all Houston area residents.

As whites age out of the workforce, making sure Latinos and African Americans are able to succeed will become even more important. Yet Latinos and African Americans lag behind their peers on every measure of economic and educational success. In the Houston Independent School District (HISD)8, 87 percent of the students are African American or Latino. At the same time, consider the portion of the HISD class of 2011 students who are college ready, according to scores on the SAT and ACT:

  • 8.1 percent of African Americans
  • 9.8 percent of Latinos
  • 60.2 percent of Whites
  • 62.3 percent of Asians

“The achievement gaps are huge, and that has enormous implications for our future,” says Ruth López Turley, who leads the Houston Education Research Consortium at Rice University.

“The achievement gaps are huge, and that has enormous implications for our future,” says Ruth López Turley, who leads the Houston Education Research Consortium at Rice University.
 

 

 

9 The Urban Institute defines Houston’s similar cities by high population growth and diversity, few seniors, above-average college education and labor force participation, average black-white segregation, and below–average poverty, inequality and wage growth

 

 

10 Greater Houston is defined as a seven-county region by All Kids Alliance

In 1987, Texas Southern University Professor Robert Bullard published Invisible Houston, which argued that black communities in Houston had not received the benefits of the city’s economic boom. Today, according to survey data compiled by Klineberg and to be published in an upcoming book updating Bullard’s Invisible Houston, African Americans still are living in a very different version of Houston. For example, two-thirds of African Americans say that African Americans still are a long way from “having the same chance in life as whites,” compared to about one-third of whites and Latinos.

Central to Bullard’s question is a worry that laudatory headlines like “America’s Opportunity City,” from a recent Wall Street Journal article, can take the focus away from populations who do not have access to opportunity. According to an analysis from the Urban Institute that compared Houston to Atlanta, Charlotte, Orlando, and other similar cities,9 Houston has worse inequality and a higher poverty rate.

“If you look at how well this city is doing, is it masking some challenging undercurrents to long-term success?” says George Grainger, a senior program officer of the Houston Endowment.

 

The Analysis and Strategy

The leaders of Houston know the size of their demographic and economic challenge, thanks in part to a range of regional research from Rice University, University of Houston, Texas Southern University, and organizations like the Partnership.

Students are leaving the education pipeline at many points between secondary education and quality employment. According to data from the All Kids Alliance, a cradle-to-career initiative, in 2000 there were 64,354 eighth graders in the Greater Houston area, 91 percent entered ninth grade, but only 69 percent completed high school four years later. Twenty percent completed college, but when disaggregated by income, only 10 percent of low-income students finished.10 There is a clear desire to change those trends. In a Kinder Institute survey, more than 90 percent of parents of school-age children said that they wanted their students at least to graduate from college.

There are three areas in which Houston is placing particularly ambitious bets on the education-to-career pathway: alternative educational options, community partnerships, and connecting with Houstonians where they live and work.

 

 

 

 

 

 

11 MDC calculation from Texas Educational Agency data

Advocating for Educational Choice

The Houston region has many good schools, both charter and traditional public schools. The Houston Independent School District twice won the Broad Prize for Urban Education, given annually to a large public school district that made the greatest improvement in student achievement. The Aldine Independent School District, less than 20 miles north of downtown Houston, also has received the award. Two of the three winners of the similar prize for charter schools began in Houston, and both of those charter systems have a large and growing presence.

Houston is at the forefront of a nationwide education reform movement, which suggests that school choice, through charter schools and vouchers, can improve outcomes for low-income students. The birthplace of the KIPP and YES Prep Schools, the winners of the Broad Prize, more than 50,000 students in Harris County alone attend charter schools.11

However, the charter schools still represent only a fraction of students who need education for successful careers. In Harris County and six surrounding counties that make up a regional education district, there are more than one million students, 50 public school districts, and only one charter school for every 10 traditional public schools.

Further, according to Turley, charter schools often are not reaching the most disadvantaged students.
The Houston public school system is trying to learn from the most successful of those charter schools. Through Apollo 20, the Houston Independent School District, working with Roland Fryer of EdLabs at Harvard University, implemented five promising practices from stand-out charters in 20 of their lowest-performing schools.

Education-to-Employment Partnerships

Between 2012 and 2017, due to an aging workforce and growing economy, Houston expects about 75,000 annual openings for middle-skill jobs.

For leaders in the business community, filling those jobs will be critical to continued economic development. For leaders of training and community organizations, those jobs represent opportunities to help Houston’s low-income people find family-supporting careers. In response, the Greater Houston Partnership, working with a wide range of partners, has launched UpSkill Houston, focused on closing the skills gap in key industries such as construction, health care, and manufacturing. UpSkill is focused on four primary areas: increasing awareness of middle-skills jobs, improving the pool of applicants for those jobs, coordinating the education, business, and social services sectors, and collecting better data on talent and job demand.

The Partnership released an action plan in April 2014, so the results are still to come. However, organizers are confident that the initiative can begin to reframe success, making clear to young people and their families the value of technical skills and credentials and bringing together leaders within business, government, education, and the community, which is essential to addressing cross-sector challenges. Houston’s business community is influential in setting public policy, and UpSkill has helped business leaders see the importance of the success of the education and training system.

 

 

 

 

 

 

12 Kotkin reiterates his analysis in 2014, in the Wall Street Journal article referenced earlier

 

 

13 Dallas and Los Angeles are occasional exceptions here. Interestingly, and worthy of further exploration, is the way in which Texas’ commuting zones outperformed the rest of the South on most measures of mobility, according to Equality of Opportunity Project data. Houston had the best mobility rate from lowest to highest quintile among the South’s places that are among the 100 largest commuting zones. However, both Brownsville and El Paso have higher rates of absolute mobility (how much more someone who is born at the 25 percent line will make as an adult) and relative mobility (difference in outcomes between the richest and poorest children). When you include all of the country’s commuting zones, accounting for small and mid-sized places, 39 of the Texas commuting zones outperformed Houston. That includes places such as Tyler and Corpus Christi, with significant populations but much lower levels of economic growth. Commuting zones in West Virginia (9), Virginia (4), Kentucky (3) and Louisiana (5) also outperformed Houston

 

 

14 There is a notable disconnect between this view of Houston, and the diverse attitudes of Houston’s people. In the 33rd Kinder Institute Houston Area Survey, 62 percent of respondents agreed that “government should take action to reduce income difference between rich and poor in America.”

Outreach to Low-Income People in Place

At a recent town hall meeting, Claudia Aguirre-Vasquez, chief program officer at Neighborhood Centers, Inc., asked the 300 people in the room whether they knew what it would take to get certain middle-skill jobs. Three people raised their hands.

Because of both geographic size and population growth, information and resources critical in helping people access education and employment opportunities often can fail to reach distant corners of the city. Several organizations, including Neighborhood Centers, are thinking about how to connect with low-income people where they live.

Neighborhood Centers works to bring information, support, and resources to underserved neighborhoods at 73 locations across the region, building on existing institutions such as workforce development centers.

In multiple publications, the Urban Institute has lauded Neighborhood Centers for its scale and commitment to place, calling the organization an “orchestra conductor,” critical in a fast-growing region. Neighborhood Centers emphasizes the unique assets of communities throughout the region in building “launch pads” for low-income residents.

“Houston and the region are large, but it’s manageable if you start to work neighborhood by neighborhood, community by community,” Aguirre-Vasquez says.

 

Questions and Next Steps

What should be replicated and what should be a cautionary tale from the South’s most mobile, big city? Joel Kotkin proposes an answer in Opportunity Urbanism: an Emerging Paradigm for the 21st Century. In the report, underwritten by the Greater Houston Partnership and released in 2007,12 Kotkin defines “opportunity cities,” including Houston, Atlanta, Dallas, Charlotte, and Phoenix, by their “openness to outsiders, a diverse and highly entrepreneurial economy, a friendly business climate, a commitment to continued infrastructure development (particularly mobility), and a basically positive attitude toward growth.” He contrasts opportunity cities with superstar cities, including New York City, Boston, and San Francisco, which are defined by a focus on attracting elites, rising housing prices, and low net migration. He suggests that Houston and its peers should be models for how a city can create economic mobility.

However, Kotkin’s analysis has a serious flaw: besides Houston, using the newly released data, his opportunity cities show lower economic mobility, using almost any measure, than his superstar cities.13 Several of Kotkin’s Southern opportunity cities, including Charlotte, Raleigh, and Atlanta, are among the 15 worst large places for economic mobility. Additionally, as the Urban Institute points out in its analysis, Houston itself “lagged behind the largest coastal metropolitan areas” such as San Francisco and New York. While Kotkin’s opportunity cities might present chances for some, they lack that same opportunity for people outside the pull of this dynamism.

Houston’s pro-growth, small government stance might play a role in economic mobility, but it is insufficient as an explanation for all that is happening in the city.14 Further, that ideology will pose a challenge as Houston attempts to promote opportunity for millions of new people. The community leadership often supports private enterprise solutions at the expense of government intervention, leading to lower spending on essential scaling infrastructure. According to an analysis from the Partnership, while enrollment in the Houston region’s school districts grew by 35,000 over the last several years, the number of teachers fell by 4,000. Texas ranks 40th among states in per-pupil spending on education, and Houston area school districts generally spend even less than the state.

Houston’s immense private philanthropic resources, working with partners such as Neighborhood Centers and the Greater Houston Partnership, has developed and tested a range of ideas for making sure all Houstonians succeed. But how will Houston scale its promising and ambitious ideas to reach the African-American and Latino students who will make up an increasing majority of young people, while under-investing in society’s most proven scaling tool: public infrastructure and supports?

At the same time, Houston has lessons to teach the rest of the Southern United States. In partnerships, Houston has brought many sectors to bear on the issues of economic mobility. Through applied research, the universities are playing an important role in shaping the community agenda. Through the Greater Houston Partnership and UpSkill Houston, the business community is helping to define the skills needed for tomorrow’s jobs. Various philanthropies, including the Houston Endowment and the United Way of Greater Houston, are investing funds in education and vigorously evaluating what works and what does not. Houston’s economic mobility in the middle of demographic shifts cannot be easily explained by any of these factors, but they’re worth watching.

“How Houston navigates this transition will have enormous significance not just for Houston’s future, but for America’s future,” says Klineberg.

“Building an Infrastructure of Opportunity for the Next Generation” takes a deep look at prospects and challenges for the region’s 15- to -24-year-olds. Southern communities need to create an “infrastructure of opportunity” for youth and young adults that is as seamless as the electric grid or the water system—and just as essential. That infrastructure consists of a clear and deliberate set of pathways and supports that connect youth and young adults to educational credentials and economic opportunity.

Read more of the report.