Strong employment gains and a local economy hungry for workers failed to provide a noticeable boost to median household incomes in Houston and lift people out of poverty, new data from the U.S. Census Bureau shows.

The Houston region added more than 73,000 jobs in 2018, while the unemployment rate has steadily declined — 3.9 percent in August. But the Census’ most recent survey of households paint a picture of an economic expansion that isn’t helping middle and low-income families. Median household income, adjusted for inflation, was essentially flat last year compared to 2017, rising by only $34 to $65,394, according to the Census.

Meanwhile, the individual poverty rate in the Houston metro region ticked up in 2018 — about one in seven people live in poverty here — even as the national poverty rate fell.

The trends reflect fundamental change in both the national and local economies as workers struggle to increase their bargaining power and wages even when employers need them, analysts said. In Houston, those trends have been amplified by an economy that follows the fortunes of the oil industry, which has now begun to slow before it has fully recovered from the last energy downturn.

“It’s a structural issue in the entire economy,” said Bill Fulton, director of the Kinder Institute for Urban Research at Rice University. “Growth in wealth is considerable, but it is not necessarily translating into wage growth. And Houston is extremely tied to the energy sector. When energy starts to slow, there’s a ripple effect across the entire economy.”

More Houstonians in poverty

The share of individuals living in poverty in Greater Houston rose to 14.3 percent last year from 13.9 percent in 2017. A family of four, for example, is considered to be below the poverty threshold if the household’s income was below $25,465. The national individual poverty rate fell to 13.1 percent from 13.4 percent.

In 2018, the poverty rate varied widely in the Houston region according to race and ethnicity. Nearly 19 percent of black and African American individuals in Houston were living in poverty last year, more than double the share of white individuals (the white poverty rate was 7.2 percent). About 20 percent of Hispanics in the region were living in poverty in 2018, the highest rate of any group in the region.

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Still, the Houston area had a lower individual poverty rate than some other Texas metropolitan areas. The El Paso metro area’s individual poverty rate was 20.6 percent, but improved slightly from 2017, and the San Antonio metro area’s was 15.4 percent, a slight increase. Dallas-Fort Worth and Austin metro area had lower rates than Houston, both at 11.2 percent.

“There’s often big disparity as to what different groups are experiencing, and opportunity is not spread equally,” said Amy Knop-Narbutis, a senior research analyst, for the Center for Public Policy Priorities, an Austin policy research organization. “Just because we’re doing well with employment, doesn’t mean that people have a well-paying job with benefits.”

Income stalls, energy slows

Wages for low-income earners tend to be lower in the South than other regions of the country due to fewer worker protections, which may explain, in part, the higher poverty rate despite the long-running economic expansion that continues to yield more jobs in the Houston region, experts said.

Income growth was stagnant for Houston area households last year, according to the Census data. But while that can sometimes be explained by strong job gains in low-paying sectors, which drag down the average, the retail sector — one of the lowest-paying sectors in the region — lost about 5,800 jobs last year. Other, higher-paying sectors, such as construction, energy and manufacturing, added thousands of jobs over the year.

This suggests that growth in salaries and wages have slowed broadly throughout different sectors of the economy, analysts said.

On HoustonChronicle.com: Amid energy slowdown, Houston employers are still hiring. Mostly.

In Houston, that’s likely because wages and salaries tend to follow the energy sector. The last oil bust, which ended in approximately 2016, eliminated thousands of energy and energy-related jobs. Now, an emerging slowdown in the Texas energy sector, driven by a surplus in oil amid a slowing global economy that has driven down crude prices, is threatening the jobs of oil and gas employees who have yet to recoup earnings lost in last bust.

That means that energy workers’ households — which typically have high incomes — are likely to be spending cautiously, which affects other areas of the local economy such as retail, restaurants and personal services.

Patrick Jankowski, an economist at the Greater Houston Partnership, a business-financed economic group, said the loss of high-paying jobs may affect economic growth. Although employment in Houston is higher now than ever before, the region hasn’t replaced even half the higher-paying energy jobs lost in the industry downturn.

“Since the consumer is something that has supported economic growth in the region as oil and gas has struggled, it is a concern,” Jankowski said. “We would like to see consumers have more money in their pockets to spend in the community.”

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