Metro Houston has had nearly 400,000 unemployment claims filed since early March, brought on by the dual challenge of falling oil prices and COVID-19. 

Patrick Jankowski, the Partnership’s Senior Vice President of Research, provided his latest economic analysis on April 28. 

Unemployment Claims Continue Rising

"We have lost a significant number of jobs in Houston since the beginning of March," said Jankowski. 

The Partnership estimates there were more than 87,000 unemployment claims for metro Houston for the week ending April 25. That's in stark contrast to the 3,142 claims filed during the same period last year. In total, metro Houston is looking at close to 400,000 initial claims for unemployment insurance filed since the beginning of March. 

“I can definitely see Houston’s unemployment rate somewhere in the mid teens," said Jankowski. "I can definitely see this unemployment rate being the highest its ever been on record."

At the state level, nearly a million people have filed for unemployment in Texas in the last month. The sectors with the greatest number of layoffs statewide (from March 7 - April 11) are:

• Hotels, restaurants and bars (204,282)
• Retail trade (123,456)
• Health care (113,868)

Jankowski said to expect to see an elevated level of unemployment claims over the next couple of weeks.

How Houston's Current Downturn Compares to '80s Bust, '08 Recession

For a glimpse at how Houston's current economic climate compares to previous challenges, Jankowski presented data on job losses in the '80s and '08. 

In March '82, Houston lost 13% of jobs, or about 1 in every 7 jobs. During the Great Recession of '08, Houston lost about 4.5% of all jobs, or roughly 1 in every 22 jobs. 

Today, said Jankowski, "it is definitely a worse downturn than the Great Recession. I have no doubt about that. We are approaching the level of layoffs that we had during the energy bust and that’s a concern.”

According to economist Ray Perryman, Houston's GDP is projected to experience a $50 billion hit this year, a 10% reduction. Mining is projected to see the biggest losses (- 36%, or $31 billion), followed by manufacturing. (- 8.8%)

Dropping Oil Prices Hit Houston Energy Jobs

Jankowski said about a third of Houston's economy is tied directly to oil and gas.

Data from Q2/'19 of Houston's energy industry shows just how significant the oil and gas sector is for the Bayou City. Energy accounts for 1 in every 10 jobs in the region. Jobs in the energy industry pay, on average, twice as much as what other jobs in Houston pay. These energy jobs account for about one-fifth of total wages paid in Houston. 

"What this doesn't show," said Jankowski, "is the accounting firms, the law firms...and all of the other agencies and organizations tied to the oil and gas industry."

Houston-area energy layoffs in recent weeks have included losses at Baker Hughes, Halliburton, Schlumberger and Weatherford. 

Jankowski explained most of the companies experiencing layoffs are either oil field service companies or equipment suppliers. "This is the way the cycle tends to fall in the oil industry," said Jankowski. He said the first people to lose their jobs are those in the fields, the blue collar workers. The next wave of layoffs will probably occur in the manufacturing sector, then the white collar layoffs.

“I think we’re going to have some significant layoffs in the industry.”

Light at the End of the Tunnel

Jankowski said the upside is that the Texas economy is starting to reopen. Governor Greg Abbott announced April 27 that some businesses will start up again as early as May 1. 

Jankowski presented some of the highlights from the Partnership's recent Reopen Houston Safely survey of 850 local businesses to learn how the pandemic is affecting operations as well as their greatest needs to safely reopen. 

He said some indicators that the Houston economy is improving includes a downward trend of unemployment claims, as well as an increase in sales tax collections. 

Visit the Partnership's COVID-19 Resource page for updates, guidance for employers and more information. And sign up for daily email alerts from the Partnership as the situation develops.