Taking the "L"

Houston sees a decline in innovation jobs, according to a new report

According to a report, Houston lost over 3,000 innovation jobs between 2005 and 2017. Joe Daniel Price/Getty Images

You've heard of brain drain, the phenomenon of well-educated, highly skilled workers fleeing a geographic area for better opportunities elsewhere. It appears Houston is grappling with a different workforce affliction: innovation drain.

Houston is among several major business hubs in the U.S. — including Dallas-Fort Worth, Los Angeles, Philadelphia, and Washington, D.C. — where tech-dependent "innovation" jobs evaporated from 2005 to 2017, according to report released December 9 by the Brookings Institution think tank and the Information Technology & Innovation Foundation. At those cities' expense, innovation jobs have clustered in Boston, San Francisco, San Jose, Seattle, and San Diego. Those five metro areas accounted for more than 90 percent of job growth in the innovation sector from 2005 to 2017, researchers found.

Today, one-third of innovation jobs in the U.S. are located in just 16 counties, and more than half are concentrated in 41 counties, according to the report.

The report shows the Houston metro area lost 3,281 tech-oriented innovation jobs during that period. Dallas-Fort Worth lost even more (8,969), while the Austin metro area gained 1,200 and the San Antonio metro area picked up 1,472.

Houston's loss represents a slippage of 0.2 percent in the region's share of innovation jobs in the U.S., the report notes. On a percentage basis, DFW sustained an even greater loss (0.5 percent), while Austin's share declined 0.1 percent and San Antonio's didn't budge.

On the positive side, Houston ranked 14th for its sheer number of innovation jobs, with Dallas-Fort Worth at No. 7 and Austin at No. 16. They were among 20 "superstar" metro areas singled out in the report.

In the report, researchers classify innovation jobs as those in 13 R&D-heavy sectors, including aerospace, computer manufacturing, chemical production, and telecom. While the 13 innovation segments account for only 3 percent of U.S. jobs, they represent 6 percent of the country's economic output (GDP), one-fourth of exports, and two-thirds of corporate R&D expenditures, the report says.

Responding to the Brookings analysis, Susan Davenport, senior vice president of economic development at the Greater Houston Partnership, notes the Houston area employs about 150,000 tech workers, many of whom are employed outside the 13 innovation industries mentioned in the report. In fact, she adds, Houston boasts the highest share of tech workers at non-tech companies among the country's 20 largest metro areas.

"That said, we recognize the need to build Houston's digital tech presence, an area where we have traditionally lagged," Davenport tells InnovationMap.

Houston is making headway on that front, though. Davenport cites the expansion of Microsoft Corp.'s local operations, the recent opening of Bill.com's Houston office, and the rise of three Houston entrepreneurship initiatives — The Ion, TMC3, and The Cannon — as examples of this progress.

"Houston continues to gain recognition as a leading tech city," Davenport says. "The region cleared $500 million in venture capital funding this year, a new high for Houston, and tech-related employment continues to grow within the energy industry. We continue working with our partners to grow Houston's innovation ecosystem and are excited for the great momentum in this area."

Investor and entrepreneur Harvin Moore, president of Houston Exponential, a nonprofit that promotes startups and innovation, acknowledges the region's historical lack of focus on the innovation economy contributed to Amazon bypassing Houston as a finalist in 2018 for the e-commerce giant's second headquarters. Despite that harsh reality, Moore says the Brookings report fails to take into account innovation jobs embedded in sectors like Houston's massive energy industry.

"That data issue will always penalize a city with a large energy sector until it is corrected," Moore says. "And as we know, the energy sector is starting to innovate rapidly, as it must. And that innovation draws more employees to those companies and to Houston."

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Building Houston

 
 

5G could be taking over Texas — and Houston is leading the way. Photo via Getty Images

Based on one key measure, Houston sits at the forefront of a telecom revolution that could spark a regional economic impact of more than $30 billion.

Data published recently by the Texas Comptroller's Office points out that as of last November and December, Houston led all cities in Texas for the number of so-called "small cells." Small cells are a key component in the rollout of ultra-high-speed 5G wireless communication throughout the Houston area and the country.

As the Texas Comptroller's Office explains, small cells are low-powered antennas that communicate wirelessly via radio waves. They're usually installed on existing public infrastructure like street signs or utility poles, instead of the big communication towers that transmit 4G signals.

The comptroller's tally shows Houston had approved 5,455 small-cell sites as of the November-December timeframe. That dwarfs the total number of sites (1,948) for the state's second-ranked city, Dallas.

"Houston is in the vanguard of small cell permitting in Texas, and not just because it's the state's largest city; advocates have lauded its proactive approach to 5G. Other cities, particularly smaller ones, are lagging well behind," the Comptroller's Office notes.

According to CTIA, a trade group for the wireless communications industry, 5G holds the promise to deliver an economic impact of $30.3 billion in the Houston area and create 93,700 jobs. The group says industries such as health care, energy, transportation, e-commerce, and logistics stand to benefit from the emergence of 5G.

"Maintaining world-class communications infrastructure is a requirement for success in a rapidly changing global economy. Small cells and fiber technology are the key foundational components for network densification and robust 5G. Cities like Houston that have embraced the need for this infrastructure will see the benefits of 5G faster than others," Mandy Derr, government affairs director at Houston-based communications infrastructure REIT Crown Castle International Corp. and a member of the Texas 5G Alliance, tells InnovationMap.

Derr says leaders in Houston have embraced the importance of small-cell technology through "reasonable and effective" regulations and processes aimed at boosting 5G capabilities. Three major providers of wireless service — AT&T, T-Mobile, and Verizon — offer 5G to customers in the Houston area.

"More small cells and fiber provide greater and faster access for the masses, enabling the connectivity that is essential to our businesses today — whether it's accepting payments on a mobile card reader, completing a sale on the go, or reliably reaching consumers where they are," Derr says.

In a blog post, Netrality Data Centers, which operates a data center in Houston, proclaims that Houston is shaping up to be a hub of 5G innovation.

"Houston has always been on the frontline," Mayor Sylvester Turner said during a 5G roundtable discussion in 2019. "It is who we are. It is in our DNA. We are a leading city. We didn't wait for somebody else to go to the moon. Or to be the energy capital of the world. Or the largest medical center in the world. But you don't stay at the front if you don't continue to lead."

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