Oil bust worse on jobs than thought

New data show 81,000 were lost in Houston area

The oil slump hit Houston even harder than first thought, costing the region thousands more energy jobs and snuffing out overall employment growth during the first full year of the bust, according to new government data.

The data, released Wednesday as part of the U.S. Labor Department’s annual revisions of state and local employment statistics, showed that the Houston metropolitan area lost more than 81,000 oil and gas jobs in 2015 and 2016, nearly 14,000 more than initially reported. “It means that the recovery started less far in the past than we thought,” said Parker Harvey, senior regional economist with the Gulf Coast Workforce Board, a state-funded research and job training organization.

Every year, the Department of Labor goes back over its monthly employment estimates, which are based on surveys of businesses, and revises them based on more comprehensive data on payrolls and wages reported by employers during the year. The revisions can change recent economic history, sometimes substantially, though they’re usually minor.

In Houston’s case, the

revisions don’t change the story, but rather make a grim industry downturn — the worst in 30 years — even grimmer. Oil and gas and services companies still slashed jobs by thousands and tens of thousands.

As Houston seems to be emerging from its oil slump, new data shows that the downturn in 2015 and 2016 was even worse than it appeared in the middle of the bust. More than 100 of these companies went bankrupt in Texas, according to the law firm Haynes & Boone. Capital expenditures

in the industry have shrunk by more than half, and the rig count plunged by more than 80 percent in Texas between the end of 2014 and May 2016.

“It’s particularly difficult to measure any industry accurately that’s going through such growth and decline,” says Karr Ingham, an economist with the Texas Alliance of Energy Producers, an association of independent oil and gas companies. “Over time, generally, they get it right. But month to month, that can’t be reported with

any degree of confidence.”

Although Houston had kept adding jobs in health care and petrochemical refining during that time, they just barely offset the losses in oil and gas and related industries in 2015, the first full year of the oil bust. The revised data shows that the region added just 200 jobs in 2015, far weaker than the 15,200 reported earlier.

The beginning of 2016 was also worse for employment than initial estimates suggested. Oil prices hitting a 13-year low of just over $26 a barrel in February, and recovered slowly.

Energy industry executives generally say the business activity hit bottom in the summer; Houston area experienced year-overyear job losses in June, July, and August.

But as oil prices recovered towards the end of the year — and the U.S. economy picked up steam — hiring began to bounce back. The metropolitan area gained 18,700 in 2016, 3,900 more that than first estimated. Overall, jobs grew just 0.6 percent last year.

But considering the severity of the fall in drilling activity, it’s remarkable that Houston didn’t go into a recession, as it did in 1980s, economists said. In a recession, the metropolitan area would have lost at least 30,000 jobs, about 1 percent of the region’s employment base of about 3 million, said Bill Gilmer, director of the Institute for Regional Forecasting at the University of Houston.

Ultimately, a petrochemical construction boom and a robust national economy helped Houston avoid such a contraction. And the revisions didn’t change that.

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