We saw in https://econscius.wordpress.com/2011/09/03/stellar-texas-job-growth-in-above-average-wage-cities/ the majority (509,560, or 59%) of the 860,740 net new jobs created in Texas in 2001-10 occurred in three metropolitan areas, each of which has enjoys wages above national averages.
After we looked at metro Austin in detail,  today we drill into metro Houston (pardon the pun).
The Houston-Sugarland-Baytown MSA, which also includes Galveston and Brazoria Counties, had 5,946,800 residents in the 2010 Census, up 1,231,393 (26%) from 2000.  Metro Houston’s job growth of 274,510 in 2001-10 accounted for 32% of all Texas job growth.  The rest of the USA actually had negative job growth during the same time frame.
The Houston-Sugarland-Baytown MSA job growth was in the following US Bureau of Labor Statistics categories: Business & Financial (+26,870 jobs, average wage $71,190), Sales & Related (+42,080, average wage $38,680), Food Preparation (+50,270, average wage $19,900), Healthcare Practitioners (+37,070, average wage $72,330), Healthcare Support(+21,350, average wage $), Education & Training (+35,600, average wage $51,450), Production Occupations, which includes oil refining (+22,430, average wage $28,671) and all other groupings combined (+38,840 jobs).  This shows most of the job growth was in white-collar jobs.
The proverbial “burger flipper” jobs of the Food Preparation category accounted for only 18% of the total job growth, are often held by teenagers, and such growth is to be expected when the metro area had 26% population growth in the decade. As a proportion of job force, Houston’s Food Preparation category grew from 7% to 8% of the total, which shows the off the cuff claim that “all” the job growth is in “fast food” is incorrect. By comparison, BLS data shows the USA actually had 9%, a slightly higher percentage of jobs in the Food Preparation category, indicating Houston jobs are less fast-food dependent than jobs are nationally.
The Houston MSA vs. USA average wages graph below is quite interesting. It certainly discredits the claims Texas jobs are low wage. Houston had the greatest absolute job growth of any Texas metro area, accounting for almost a third of the entire Texas total. As you can see in the graph, Houston wages are competitive with USA averages in all categories.
One difference shows is how Houston’s skilled professions (management, architecture & engineering, computer and mathematical and healthcare professions are all above US averages, some by wide margins. The engineering category benefits from Houston’s concentration of well-paid engineers. The 10,350 petroleum engineers earn a remarkable average of $135,270. My speculation on why Managers are so well paid would be Houston’s disproportionately large concentration of corporate HQs, meaning the metro area has an unusually large proportion of highly compensated top corporate managers.
On the other hand, a few categories of workers at lower skill levels (Food Preparation, Protective Service and Healthcare Support) earn slightly less than US averages, despite the overall higher Houston wages. This may reflect the weakness of unions in Houston vis-a-vis the nation at large. Interestingly, we saw a very similar wage pattern in Austin with the highest skilled workers earning more than national averages and low skilled workers slightly below national averages.
Houston’s job distribution is quite similar to US averages. One difference is how the high-wage Architecture & Engineering category is 3.2% of Houston employment, compared to 1.8% nationally. Another anomaly is the US Healthcare Practitioners & Support categories total 8.9% of workers, but these categories account for 7.6% of Houston workers. The probable explanation is the younger average age of metro Houston residents meaning they are healthier and less needing of health care.
Houston has one university in the US News Top 100. Rice University is ranked #17 , which puts it ahead of acclaimed universities like California-Berkeley, Michigan, NYU and Notre Dame. Other major schools include the University of Houston and the University of Texas maintains a medical center in Houston. Texas A&M is ranked#58  and is located in College Station, TX, which is 95 miles northwest of downtown Houston.
The 29.7% of metro Houston residents with a college degree matches the US average and exceeds the Texas average of 25.5%. Interestingly, Houston’s college graduates are more likely to hold a degree in science, engineering and related fields, at 47.4% vs. 43.6% nationally. 
What drives the Houston economy? Energy, both oil and natural gas. We often hear Houston has grown the way it has “because of oil”. While oil is extremely important to the Houston story, Houston’s success comes from more than just drilling and refining. Oil is found in many other places, such as California, Alaska, Pennsylvania, Louisiana, and Oklahoma.
Today, Houston is the undisputed capital of the energy industry, but that was not always the case nor was it inevitable. “In 1960, Houston served as home for only one of the nation’s large energy firms, ranking well behind New York City, Los Angeles and even Tulsa. Today Houston has 16, which is more than all the other cities combined.” 
Many major energy and related services companies relocated to Houston. Oil services company Schlumberger relocated its U.S. corporate HQ from New York in 2006. The corporate HQ of Heartland Oil and Gas moved from Denver in 2007. CITGO Petroleum switched its HQ from Tulsa to Houston in 2004. Direct Energy, the Toronto-based electricity provider moved its U.S. head office from Stamford, CT in 2007. When Houston-based Conoco and Oklahoma-based Phillips Petroleum merged, the new company chose Houston for its HQ. All of these companies have research & development operations in the Houston area. Vestas Wind Systems chose Houston for a new US R&D center.  Oil services company FMC Technology relocated from Chicago in 2003. 
Major international energy companies like Shell Oil Company (HQ of the US subsidiary) and BP America moved to Houston. Pennzoil, now owned by Shell, started in California and had relocated to Houston in the 1970s.  BP America relocated its headquarters and some 3,000 employees from metro Chicago in 2008.  BP again centralized more R&D and even moved jobs from its British HQ in 2010.  BP’s North American operations came from British Petroleum’s purchase of California-based ARCO, Chicago-based AMOCO and Cleveland-based Standard Oil of Ohio.
Why Houston? It is not just oil – presumably, other factors must have made Texas favorable for energy companies. These factors most likely include low costs of doing business, low taxes, infrastructure, and an educated workforce for the various R&D and corporate HQ staffs. Eventually Houston attracted enough energy companies to enjoy the benefits of industry concentration.
Metro Houston has 10,380 petroleum engineers (37% of the entire USA total) with an average wage of $135,270 (higher than the US average $127,970). There are 9,730 oil and gas derrick, rotary drill & service unit operators (13% of USA total) and they work at slightly above average US wages. Sixteen percent of the nation’s petroleum pump operators work in Houston at an average wage of $58,540.  If you were a new entrant into the energy business today, your company would probably be very attracted to Houston because the concentration of other energy companies there means a deep talent pool of industry workers. Houston’s economy includes upstream energy processing such as refineries and chemical companies.
This concentration effect has occurred in other places, such as Detroit with the emerging automotive industry in the 1910s and more recently, Silicon Valley for technology start-ups. The energy concentration is both an advantage and potential disadvantage for Houston. Houston has developed some major non-energy businesses, including large computer maker Compaq, which was acquired by HP but still employs 9,000 in Houston (see chart below). Waste Management relocated from Chicago in 1998 but Houston lost the Continental HQ to Chicago when the airline was acquired by United Airlines in 2011.
How much of the Houston economy is related to energy? The answer is about half. The non-energy proportion of the Houston economy decreased from 52.2% in 2001 to 50.3% in 2010 as oil prices surged and companies like BP and CITGO relocated to Houston. Both figures are better than 1996’s 44.5%. 
The Houston MSA area is 38% Latino, 16% Black and 7% Asian , compared to the US average of 16% Latino, 13% Black, and 5% Asian.  Thus, non-Hispanic whites are a minority in metro Houston and the city has a much larger minority population than the US average. Given the lower average educational and income attainment of racial minority groups, it is quite impressive metro Houston is above the US average in income and at the US average for percentage of residents with a college degree.
|Metro Houston Employers With More Than 1,000 Employees|
|1||Houston Independent School District||25,514|
|2||City of Houston||21,588|
|3||Memorial Hermann Healthcare System||19,500|
|4||University of Texas M.D. Anderson Cancer Center||18,599|
|5||United Continental Holdings||16,000|
|7||The Methodist Hospital System||13,000|
|9||Shell Oil Company||13,000|
|11||National Oilwell Varco||10,000|
|12||The Methodist Hospital*||9,991|
|14||Baylor College of Medicine||9,232|
|16||Cypress-Fairbanks Independent School District||8,917|
|18||Houston Community College||8,098|
|23||BP America, Inc.||7,387|
|30||Fort Bend ISD||6,319|
|32||St. Luke’s Episcopal Health System||6,000|
|33||Texas Childrens Hospital||6,000|
|36||University of Houston||5,542|
|41||Spring Branch Independent School District||4,842|
|44||Bank of America||3,100|
|45||Comcast Cable Communications, Inc.||2,700|
|50||El Paso Corporation||2,200|
|53||The Boeing Company||1,500|
|54||CITGO Petroleum Corporation||1,367|
|55||Service Corporation International||1,300|
|57||BMC Software, Inc.||1,100|
|58||City of Pasadena||1,088|
|60||San Jacinto College District||1,026|
|61||Oceaneering International, Inc.||1,005|
|62||Ernst & Young LLP||1,000|
Chart by author, sources: http://www.houston.org/greater-houston-partnership/employers/ and http://hereishouston.com/?q=node/40 and http://www.texastribune.org/library/data/government-employee-salaries/. This list may not be fully exhaustive, especially of non-public companies.
 http://en.wikipedia.org/wiki/List_of_United_States_metropolitan_areas, retrieved 9/29/11.
 Houston-Sugarland-Baytown, Brazoria, Galveston-Texas City MSA/PMSA employment and mean wage data retrieved for Total and Occupational categories in 2001 and 2010 from BLS data (2010) http://www.bls.gov/oes/current/oes_26420.htm#00-0000 and (2001) http://www.bls.gov/oes/2001/oes_3360.htm.
 http://en.wikipedia.org/wiki/Pennzoil, retrieved 9/29/11..
 http://www.bizjournals.com/houston/stories/2007/10/15/daily58.html?t=printable and http://www.katyhomefinder.com/blogs/team_dimuria/archive/2008/02/23/bp-relocating-4000-from-chicago-to-houston-3200-request-katy.aspx
 http://en.wikipedia.org/wiki/Demographics_of_the_United_States, retrieved 9/10/11.
Additional background data on Houston comes from http://www.dallasfed.org/research/houston/2005/hb0503.html
Pictures from Wikipedia Commons.