City unemployment dive to level off
July 11, 2020
Baytown, always subject to the ups and downs of the oil and gas industry, got a double whammy when weakness in that sector was magnified by the worldwide COVID-19 pandemic, which lowered demand for fuel and dropped oil prices to record low levels.
When the Texas Workforce Commission released statistics for May recently, they showed that most of the Houston area began a jobs rebound from April’s historic job losses.
Of the 15 cities in the region that TWC provides more detailed statistics for, only two continued a rise in unemployment, with Baytown faring worst with a 0.2% rise in reported unemployment to 23.7%, nearly 10 points higher than the regional average of 13.9%.
Parker Harvey, principal economist for the Gulf Coast Workforce Solutions, said Baytown’s position having the highest unemployment in the area is not unusual.
Over the last 30 years, he said, Baytown’s unemployment rate has been the highest in the region in 83% of the monthly reports. There’s no clear reason for that, he said, though the large number of industrial contract workers who frequently cycle in and out of jobs is a likely contributor.
B.J. Simon, associate executive director of the Baytown West Chambers County Economic Development Foundation, agreed.
He said there were 2,994 unemployment claims filed by Baytown residents in the May 1-June 2 reporting period.
About a quarter of those, 24.8%, were in the Construction and Extraction job group, with another 9.5% in Production and 8.6% in Installation, Maintenance and Repair.
The June 9-July 9 reporting period told a similar story, with 2,261 new claims; 25% in Construction and Extraction, 9% in Installation, Maintenance and Repair and 7% in Production.
Other top sectors for unemployment claims were Food Preparation and Serving with about 10% of each period’s total and Sales and Related with about 7% of each.
Neither Harvey nor Simon suggested the energy sector will rebound to what it was quickly, but both pointed to hopeful signs. For midstream and downstream petrochemical, Simon said, “Best estimates are that recovery in these sectors remain two-three years out.
“Nevertheless, the Baytown/West Chambers County economy can be characterized as stable and poised for recovery and growth. There continues to be significant project development in varying stages of due diligence in the Baytown/West Chambers County region,” he said.
Harvey said the economy has definitely turned a corner. The Baytown area has started showing growth in retail and health care jobs, as well as transportation and warehousing, and administrative support.
Arts and entertainment, education and management are still soft, he said.
The area’s logistics sector, which includes transportation and warehousing, is stable, according to Simon. “The fundamentals that make this area attractive (e.g., available land, infrastructure, proximity to Port Houston, labor shed, etc.) remain. There is [about] 2.4 million square feet of warehouse space currently under development in the region, poised to be leased or sold in recovery.”
Simon also noted that unemployment is considered a lagging indicator of the economy—it reflects established patterns and trends.
Retail sales, on the other hand, are leading indicators, and are resilient in this economy, he said.
One of the metrics the Economic Development Foundation follows tracks visitors to places of business using mobile phone GPS locations. It shows overall retail traffic in Baytown January through mid-March was even with or slightly below the same period last year.
Traffic dropped substantially from mid-March through early May, when it returned to a level even with or slightly below a year earlier.
Three categories—grocery stores, general merchandise stores and building material and supply stores—have had more traffic than last year with the gap increasing with the onset of the pandemic.
Traveler accommodations started the year even or slightly up from last year then dropped sharply in March. From the beginning of May, though, they have seen traffic that is consistently below last year, but not greatly below.