Updated at 4:10 p.m.: Includes comment from Midland Mayor Jerry Morales.
To find the most dynamic economy in Texas, you'll need to hop in your truck and head west for about five hours.
Among the pump jacks and prairie land you'll pass along the way is Midland, oil capital of the prolific Permian Basin. It isn't only the Lone Star State's top local economy. It's also the nation's best.
Midland ranks No. 1 in the Walton Family Foundation's annual examination of cities with the most dynamic economies. The study considers income, job growth, wage growth, short-term and long-term GDP growth, and a measure the foundation calls young firm employment.
Midland is thriving on a boom in its shale oil exploration industry, the study found. The Permian Basin holds 16 percent of the nation's oil reserves and much of its natural gas.
Three Texas metros ranked in the top 30 overall, out of 379 small, medium and large metros. Dallas-Fort Worth-Arlington metro placed 27th overall, and sixth among metro areas with 1 million or more people. Austin-Round Rock ranked seventh overall and second in large metros.
The foundation, led by the children and grandchildren of Walmart founder Sam Walton and his wife, Helen, invests in everything from early childhood education to stimulating local economies.
Ross DeVol, the study’s lead researcher and a Walton foundation fellow, said Texas benefits from low regulations and taxes that contribute to a “very friendly” business regulatory environment, making it an attractive area for startups and corporations alike. Midland, D-FW and Austin also all have a high concentration of technical middle-class jobs that do not require four-year degrees.
“Texas’ economy overall is becoming much more technology-based and knowledge-based,” DeVol said.
The study said Midland is seeing “exceptional” growth, faster than any metropolitan or micropolitan area in the United States. It’s also more reliant on oil than any other U.S. metro area. In 2018, its labor force grew more than 8%, which DeVol said is “unprecedented.” Many oilfield workers are living in temporary “man-camps” as construction booms to catch up with the growth.
Midland Mayor Jerry Morales said keeping up with growth has been a challenge the metro has been "blessed" to have.
"For the last two-plus years, we have been aggressively planning and strategizing in every sector of our community, which is seeing tremendous growth," Morales said.
Small metros of up to 499,999 people dominated the ranking, claiming four of the five top spots. Midland's population is fewer than 200,000 people, according to the U.S. Census.
During a recovery from a recession, however, larger metros tend to thrive more, DeVol said.
The study said some Midland officials felt boom-and-bust cycles of the past could return, but new innovations in the oil industry could make it less susceptible. Average annual earnings for oil exploration jobs in Midland were $91,000 in 2017, double the non-energy wage for the area, according to the study.
DeVol said high pay in the oil and gas industry means benefits to other industries in the area. The study said the area is working on diversifying its economy, and ranching, agriculture, health care and transportation are already economic pillars.
“Higher demand for goods and services and hiring at software and a range of professional, scientific and business services generates more economic activity,” DeVol said. “This multiplier effect is extended to entrepreneurs that decide to start new businesses to fulfill this rise in demand. An extra three to four jobs (per high-paying oil job) can be created in sectors outside of oil and gas.”
A need for increased technical services is something that can be seen across metros, DeVol said, as even non-STEM based companies see increased need for engineers and programmers.
DeVol said the Dallas area sees many of the factors helping create strong long-term growth.
“Dallas is a really unique blend of many different structural factors,” DeVol said.
North Texas is home to a mix of industries, including tech, energy, financial services and entrepreneurial businesses. In 2018, the region added more jobs than any other U.S. city.
“The diversity reduces the volatility of the business cycle,” he said. “If one sector gets hit hard, Dallas is less susceptible to recessions.”
Austin also is seen as an area with potential for long-term growth. It boasts the 11th-highest concentration of high-tech industries in the nation, according to the study. Its job creation is driven by medical research, health care, travel and tourism, recreation, and arts and culture.
The University of Texas is credited for being a major talent contributor, and playing a critical role in the entrepreneur community, the study said.
"Research universities are increasingly critical to metropolitan performance as their fundamental output — knowledge — is central to an economy driven by innovative endeavors," the study said.
