Houston Strategies

State of Houston's Inner City Economy

Michael Porter, a professor at Harvard Business School famous for his theories on competitive advantage and strategy, is also the Founder and Chairman of the Initiative for a Competitive Inner City. He recently released a presentation on the State of Inner City Economies, based on data from the 100 largest inner cities. They define inner cities as the census tracts with certain high thresholds of poverty. Lots of interesting statistics on employment, incomes, and industry classifications. Here are some Houston related facts-of-interest:

• We are not among the 25 worst inner cities, which includes such cities as Orlando, NY-Bronx, Miami, San Diego, LA, and Atlanta. The only Texas city in the worst 25 is El Paso at 21.
• It's interesting to note that, while Houston has a single inner city, they break DFW up into four separate inner cities: Dallas, Ft. Worth, Arlington, and Irving.
  
• Looking at job growth from 1995-2003, we averaged around 1% annually in the inner city and ~2.5% annually across our Metropolitan Statistical Area (MSA). This actually makes us the 19th fastest-growing inner city in the country, even with such a relatively low rate (almost half of inner cities lost jobs). Looking at the graph, I'd say we have roughly the same ranking for MSA job growth, which puts us solidly in the top 20% of cities with fastest job growth.
• Jersey City and Long Beach were the top two barn-burners of inner city growth at around 3.7%. I'm guessing it's the growth of their very large shipping ports because of increasing globalization, which I'm sure also helped Houston's inner city job growth.
  
• Only five cities had healthier inner city and MSA job growth than Houston: Seattle, Charlotte, Sacramento, San Bernadino, and Stockton, CA.
  
• Austin and Las Vegas are real outliers, with extremely high 5% annual MSA job growth, but -1% annual job loss in their inner cities. Surprisingly, this gives Austin the weakest inner city in Texas after Arlington. I think that might be related to the .com crash.
• Houston had higher than average inner city average wage and wage growth.
• It looks like our higher average inner city wage, and, to a lesser extent, our higher inner city wage growth rate, are driven by scoring high on "Traded Cluster Share of Inner City Employment" - which means that we have a lot of jobs that export products and services outside the city, rather than just serving local residents (particularly in energy, of course). Tourism is one obvious exception to this correlation, which is a traded cluster but has relatively low wages, with their examples of Anaheim, New Orleans, Orlando, and Las Vegas.
  

So the net is that Houston is doing pretty well all-around, in both the inner city and the metro area. Overall, the presentation is interesting for its data, but a little light on causes-and-effects and recommendations. I'll have to keep an eye on Porter and the ICIC to see if they tie this data to policy recommendations in the future.

posted by Tory Gattis @ 10:37 PM