METRO AREA: Brownsville-Harlingen MSA | Corpus Christi MSA | Laredo MSA | McAllen-Edinburg-Mission MSA | San Antonio-New Braunfels MSA
COUNTY: Aransas | Atascosa | Bee | Bexar | Brooks | Calhoun | Cameron | DeWitt | Dimmit | Duval | Frio | Goliad | Gonzales | Guadalupe | Hidalgo | Jackson | Jim Hogg | Jim Wells | Karnes | Kenedy | Kinney | Kleberg | La Salle | Lavaca | Live Oak | Matagorda | Maverick | McMullen | Medina | Nueces | Refugio | San Patricio | Starr | Uvalde | Victoria | Webb | Wharton | Willacy | Wilson | Zapata | Zavala
Texas is big. So is South Texas. How big is it economically? The total economic output of this 41-county region, or Gross Regional Product, was about $190 billion in 2016. By this measure, South Texas is larger than the entire state of Oklahoma. Yet this regional economy's sheer size alone tells little about its economic health.
The South Texas region as a whole experienced falling unemployment during the shale oil boom between 2010 and 2014. In the wake of remarkably low oil prices, its overall unemployment rate surged by nearly 2 percentage points within the past two years. Because a large part of this region is particularly dependent on oil and gas production, employment growth slowed down dramatically between 2014 and 2015, before returning to the historical norm around 1 percent in 2016.
Following several years of strong gains, sales activity and thus sales tax collections at the regional level have scaled back since early 2015 as employment and household incomes have leveled off. Now the regional shale oil and gas industry has stabilized from the recent downturn, and sales tax collections are showing early signs of revival.
The housing markets in this region have remained relatively solid. Residential construction was as active in 2016 as five years ago. Following a short setback in the latter half of 2015, home values across the region appreciated throughout much of 2016 at an average annual rate around 5 percent.
For the majority of communities in South Texas, the government is the sector with the most employees. The various units of the government sector collectively account for nearly one in five jobs across the region. Military bases are also the largest employers of some communities, such as the cities of Corpus Christi and Kingsville. Health care is the second largest sector in the South Texas region by employment, followed by retail trade.
Some 30,000 people work in the region's mining sector, mostly in oil and gas extraction. Although oil and gas extraction accounts for only 1.5 percent of the regional workforce, its Location Quotient exceeding 3 underscores the role of this industry in the regional economy relative to the rest of the nation. Other than the sheer sizes, the government and health care sectors are also relatively large by national standards.
Rapid growth of the health care sector in South Texas is the collective outcome of three factors: growth of health care services nationwide; overall improvement of the national economy; and factors unique to this region, such as the influx of retirees. Other than health care, these three types of factors have helped to expand the sectors of tourism (hotels and motels, food services and recreation), transportation, and educational and administrative services in the past decade.
In South Texas, the average annual earnings per employee have historically stayed around 85 percent of the Texas state average. This income gap narrowed somewhat during the shale oil boom between 2010 and 2014, when increased oil and gas drilling benefitted most local economies in this region.
The region's income gaps with the state and national averages are associated with its workforce's relatively lower levels of educational attainment. Slightly more than 20 percent of the adult population in the region holds a Bachelor's degree or higher, compared to nearly 30 percent nationwide.
Disparities in educational attainment explain about 15 percent of income variations across all counties in Texas. Another 20 percent of income variations among counties are correlated with the relative sizes of local employment in oil and gas drilling.
Spurred by employment growth in oil and gas extraction, migration of people from other parts of the nation and thus population growth surged in 2011. As the oil boom came to an end in late 2014, increasingly more people left the region and so population growth slowed down.
This region consists of a relatively large number of rural communities with relatively fewer businesses than those in urban areas. During the past decade, there were about 19 business establishments per 1000 people in the region, compared to more than 23 statewide. Relatively fewer business startups each year contributed to less job creation and relatively lower employment growth over time.
As you will see, the local economies of South Texas are diverse. To better understand the future direction of this broad region, we must look closely into its individual communities.