The Texas Triangle As Megalopolis
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HoustonBusiness A Perspective on the Houston Economy FEDERAL RESERVE BANK OF DALLAS • HOUSTON BRANCH • APRIL 2004 them to seek out roles that The Texas Triangle complemented economic strengths developing elsewhere as Megalopolis in the Triangle.1 Where one city was strong, the others would be weak, so the cities’ mature industrial structures could fit together neatly, like pieces of The January issue of Hous- a puzzle, with little overlap. If the Triangle cities ton Business proposed that the A comparison of the cities’ are really a megalopolis, Texas Triangle metro areas of strengths indicated such indus- Austin, Dallas/Fort Worth, trial complementarity exists, divided into four parts Houston and San Antonio exist and statistical tests strongly by geography and as distinct cities largely because confirmed the apparent com- of Texas geography. With a plementarity is no illusion. history, their long, navigable river reaching This article looks at the the heart of the state or a deep same puzzle, but from a differ- complementarity saltwater bay or other inlet ent angle. If the Triangle cities implies we can add making Waco or Temple a sea- are really a megalopolis, divided port, many of the roles played into four parts by geography the four together and by the Triangle cities could and history, their complemen- have been combined at a single tarity implies we can add the approximate what location. Combining Houston’s four together and approximate would have developed port, Dallas’ inland distribution what would have developed in function, San Antonio’s reach that other reality with a long in that other reality into deep South Texas and river or saltwater bay. If our northern Mexico, and even the hypothesis is reasonable, we with a long river or state’s political capital into one should be able to compare the saltwater bay. place could have produced a industrial structure of the com- Third Coast megalopolis to bined Triangle cities to New rival New York, Los Angeles York, Los Angeles and the other and Chicago. top U.S. metro areas, and its The previous article also place in the hierarchy of U.S suggested that the Triangle cities should be comparable. cities did not develop inde- When we’re finished, we would pendently, as proximity forced know whether the combined Table 1 Economic Characteristics of Texas Triangle and Major U.S. Metro Areas, 2001 Population Personal income Per capita income Cost of living Millions Rank Billions of dollars Rank (dollars) (U.S. = 100) New York 21.3 1 872.7 1 40,949 n/a Los Angeles 16.7 2 508.2 2 30,360 140.9 Texas Triangle 13.2 3 433.4 3 32,897 96.7 Chicago 9.3 4 331.3 4 35,751 n/a Washington 7.8 5 302.7 6 38,915 112.3 San Francisco 7.1 6 326.8 5 45,778 183.0 Philadelphia 6.2 7 216.2 7 34,750 121.1 NOTE: All metro area population and income figures are based on the consolidated metro area definition. This includes the Texas Triangle definition, except for Austin and San Antonio, for which an MSA definition is used. The cost-of-living figures use the best possible fit, using primary metro area data, for example, for Los Angeles and Philadelphia. SOURCES: Bureau of Economic Analysis; American Chamber of Commerce Research Association. Texas Triangle cities would role in elevating local income those that cross international constitute a megalopolis. levels. Even aside from the borders.) cost-of-living figures, however, Table 2 lists all location Comparisons we see that per capita income quotients greater than 1.15 for Table 1 lists the nation’s six in the Texas Triangle is not that the Texas Triangle and the six largest metropolitan areas, much different from Philadel- largest U.S. metro areas, indi- ranked by population and total phia, Chicago and Los Angeles. cating industries that are 15 personal income in 2001: New To look at the industrial percent or more overrepre- York, Los Angeles, Chicago, structure of the nation’s largest sented in the metro area com- Washington, San Francisco and metro areas, we turn to the pared with a typical place in 2 Philadelphia. The combined location quotient (LQij ), defined the United States. The list is Texas Triangle metro areas rank as as it was in the January article. based on wages, salaries and No. 3 when inserted into the employer-paid benefits in 2000, list, with 13.2 million people, percent share of income earned using the Standard Industrial in industry i in city j behind Los Angeles (16.7 mil- LQ = Classification system, in use ij percent share of income earned lion) and ahead of Chicago (9.3 in industry i in the United States until last year. About 60 indus- million). The top cities are the tries were available in the Texas 5 same whether ranked by popu- If LQij is greater than 1, it indi- Triangle, for example. The list lation or personal income, cates a larger than normal con- gives us a good idea of these although Washington and San centration of activity in the city cities’ exports, important in Francisco switch places, with (with “normal” based on a typi- defining the local economy Washington one place ahead cal place in the United States) because exports generate the based on population and San and that industry i is a likely income to pay for imports and Francisco ahead on personal source of exports. If LQij is less support local activity. income.3 than 1, the industry is not well Table 1 shows wide dispar- represented in the city, and the Major Metro Profiles ity in per capita income for the goods or services the industry Export industries in the metro areas. San Francisco and produces are probably imported. Texas Triangle include oil (oil New York stand at the top of For goods and services that are extraction, oil refining, com- the list, and the Texas Triangle inherently local—dry cleaners modity chemicals), sophisti- and Los Angeles are at the bot- and grocery stores, for exam- cated corporate services (engi- tom. Where reasonable com- ple—the location quotient is neering and management parisons could be found, cost- typically close to 1, as the services, business services), of-living indexes are shown.4 goods or services are neither transportation (air transporta- They strongly suggest that high exported nor imported. (Exports tion, water transportation, trans- per capita income and a high and imports are defined as goods portation services), communi- cost of living are related, and and services that leave or enter cations and wholesale trade. high living costs may play a the metro area, not necessarily Financial strength is limited to 2 Table 2 Export Sectors in Major U.S. Metro Areas, as Indicated by Location Quotients Texas Triangle. Oil and gas extraction (7.49); heavy construction (1.73); electronic and other electric equipment (1.54); chemicals and allied products (1.21); petroleum and coal products (2.22); water transportation (1.32); transportation by air (1.71); transportation services (2.52); communications (1.41); electric, gas, and sanitary services (2.15); wholesale trade (1.31); real estate (1.31); holding and other investment companies (1.54); business services (1.17); miscellaneous repair (1.19); engineering and management services (1.20). New York. Other forestry and fishing (4.19); apparel and other textiles (1.63); printing and publishing (1.70); chemicals and allied products (1.76); local and interurban transportation (1.98); communications (1.37); apparel and accessory stores (1.42); depository and nondeposi- tory institutions (1.47); security and commodity brokers (4.95); insurance carriers (1.28); insurance agents, brokers and services (1.20); real estate (1.15); holding and other investment offices (2.74); private households (1.33); motion pictures (1.58); legal services (1.62); educational services (1.33); social services (1.29); museums, botanical and zoological gardens (1.62); engineering and management services (1.18). Los Angeles. Furniture and fixtures (1.43); other transportation equipment (1.95); instruments and related products (1.84); miscellaneous manufacturing industries (1.42); apparel and other textiles (2.71); petroleum and coal products (1.37); water transportation (1.87); transportation services (1.63); food stores (1.61); apparel and accessories (1.25); home furniture and furnishings stores (1.24); real estate (1.48); private households (1.90); auto repair and services (1.17); miscellaneous repair services (1.21); amusement and recreation services (1.90); motion pictures (8.91); legal services (1.25); engineering and management services (1.70); local government (1.19). Chicago. Primary metal industries (2.10); fabricated metal products (1.53); electronic and other electrical equipment (1.37); miscellaneous manufacturing industries (1.22); food and kindred products (1.29); printing and publishing (1.41); chemicals and allied products (1.17); petroleum and coal (1.30); rubber and miscellaneous plastics (1.37); transportation by air (1.48); transportation services (1.49); wholesale trade (1.28); depository and nondepository institutions (1.28); security and commodity dealers (1.16); insurance carriers (1.30); holding and other investment companies (1.18); business services (1.17); legal services (1.53); museums, botanical and zoological gardens (1.82); membership organizations (1.19); engineering and management services (1.41). Washington. Other forestry and fishing (13.1); business services (1.55); legal services (1.77); educational services (1.40); social services (1.17); membership organizations (2.19); engineering and management services (1.94); federal civilian government (4.78); military (1.99). San Francisco. Industrial machinery (3.52); electronic and other electric equipment (3.36); instruments and related products (3.34); petroleum and coal products (2.20); water transportation (1.21); apparel and accessories (1.58); home furniture and furnishings stores (1.39); security and commodity brokers (1.50); business services (2.20); engineering and management services (1.36).