The Houston-Pasadena-The Woodlands metro area has an overall grade of B- with a composite score ranking it at the 49.1th percentile out of 50 US metros. This city's economic character is most defined by its above-average labor demand, with a composite score of 5.06, and its highly affordable cost of living, ranked at the 92th percentile. The labor demand is driven by a 0.61% year-over-year employment growth rate and a -0.091% deviation in weekly hours from its own trend.
Labor Demand
The employment growth rate of 0.61% and the hours deviation of -0.091% signal a genuine demand expansion, as hours are running slightly below trend during a period of job growth. This combination indicates that the labor market is experiencing a moderate expansion, with employers adding jobs but not yet pushing workers to absorb significantly more hours. The labor demand composite score of 5.06 is above average, ranking at the 60th percentile.
Unemployment
The unemployment rate of 4.60% is below average, ranking at the 22nd percentile, indicating a relatively tight labor market with some slack. This means that businesses trying to hire in this city may face moderate competition for talent, and wage pressure may be present but not extreme. The tight market implies that employers may need to offer competitive wages to attract and retain workers.
Wage Growth
The year-over-year wage growth rate of 2.01% is below average, ranking at the 28th percentile, indicating stagnant to moderate wage growth. This slow wage growth means that employer labor costs are not rising rapidly, but worker purchasing power is also not increasing significantly. The moderate wage growth implies a relatively stable labor cost environment for businesses.
Cost of Living
The city's cost of living is highly affordable, with a percentile rank of 92, driven by a PSF of $172/sqft that is decreasing by 2.3% year-over-year, and an average hourly earnings of $36.50/hr, resulting in a ratio of 4.71. This affordability means that businesses can attract talent without needing to offer significant wage premiums, providing a competitive advantage in talent attraction.
Labor Force Growth
The civilian labor force is growing at a rate of 0.03% year-over-year, indicating a slow expansion of the workforce supply. This slow growth implies that hiring capacity may be limited, and businesses may face challenges in finding qualified workers, particularly in specialized fields.
Building Permits
The year-over-year change in building permits is -18.95%, indicating a sharp decline in housing supply expansion. This tightening of housing supply signals potential future affordability issues and workforce accommodation challenges, which may impact the city's ability to attract and retain talent.
Days on Market
The current median days on market is 50 days, with a year-over-year increase of 8.7%, indicating a slowing market. This means that workers relocating to this city may find a more accessible and less competitive housing market, with more time to find a suitable home.
Office Economy
The city has a deep professional talent pool, with an office economy percentile rank of 80, indicating a strong presence of professional and office sectors. This makes the city well-suited for businesses in tech, finance, consulting, and HQ decisions, but less suited for industrial or logistics-dominant economies.
The Houston-Pasadena-The Woodlands metro area offers businesses a unique combination of above-average labor demand and highly affordable cost of living, making it an attractive location for talent attraction and retention. However, the single biggest risk or constraint for decision-makers is the sharp decline in building permits, which may lead to future affordability issues and workforce accommodation challenges, potentially impacting the city's competitiveness in attracting and retaining talent.