12.29.23 – The Oklahoman
By the numbers, Oklahoma City’s economy is thriving.
Wages are up, jobs are plentiful, sales taxes indicate retail is on the rebound and housing costs, while on the rise, are still affordable compared to most of the country.
Oklahoma City is also among the fastest-growing populations in the country.
But questions persist, especially when it comes to a growing list of locally owned restaurants going dark and the presence of homeless camps throughout the city.
Mayor David Holt hears the concerns but also believes the numbers provide a better picture of the city’s overall health. The numbers, Holt argues, also say this isn’t another 1980s oil boom that will go bust.
At that time, energy, banking and real estate fueled a boom that went bust for the remainder of the decade. This time around, Oklahoma City’s economy is far more diverse with an added mix of biotech, aviation, defense contractors, health care, film, tourism, business services, transportation and logistics.
“As mayor, it’s my impression of the data points I follow that the Oklahoma City economy is as strong as it’s ever been,” Holt said. “I make that statement with the understanding it may have been hotter at other times but I’m not sure they were times of strength. They were booms that you could see were going to bust.”
Eric Long, an economist with the Greater Oklahoma City Chamber, said the city’s unemployment rate, 3% as of October, is well below the bar that typically defines full employment. The average earned annual wage in Oklahoma City is over $57,000 and average wages increased by 5.8% over the past year compared to a 4.4% growth nationwide.
“We want to see wages increase,” Long said. “That is a sign of a healthy and growing economy.”
Restaurants are failing, but the numbers tell a story that doesn’t match perceptions
Sales taxes, meanwhile, point to residents shopping and dining at a healthy clip. Year-to-date sales taxes are up 2.9% over the same period last year. That growth is higher than collections reported by Midwest City, Moore, Edmond and Norman. Yukon is the only major suburb with a higher sales tax growth rate.
When collections were broken into categories, the October sales tax report shows a 47% increase in year-to-date over the prior year for retail, 17% for restaurants and hotels, 10% for services, 16% for manufacturing and wholesale, and 10% for utilities.
Costar, which tracks real estate, reports retail rent rates in Oklahoma City are up 1.3% over the past year.
The numbers, Long said, paint a picture of the restaurant industry that doesn’t quite match perspectives fueled by a string of well-known eateries closing in Midtown and elsewhere in the city.
“According to the Bureau of Labor Statistics, the total number of restaurants and eating places (in Oklahoma City) has grown each of the last 10 years,” Long said. “Even with COVID-19, it’s been fascinating to see the number of eating places has increased in the metro.”
Even in the best of times, the rule of thumb for the restaurant industry is that 60% of start-ups fail the first year and 80% fail within five years of opening, Long said.
That’s not to say 2023 hasn’t been turbulent for independent, locally owned restaurants. Rising food costs and a labor shortage have been blamed for some of the recent restaurant closings, while those still open are dealing with shrinking profit margins to prevent losing customers due to high prices.
Owners of Cajun Corner notified customers via Instagram last week they are trying to contain costs. A copy of a receipt showed how five people could dine at the restaurant for less than $75.
Jim Glover, co-owner of the Ground Floor Cafe at Leadership Square, said the food cost spikes are the highest he has seen in his quarter century of running restaurants downtown. Coke syrup, he said, jumped from $28 to $110 per box.
“Ten years ago we were probably averaging $2,300 to $2,500 a day,” Glover said. “Now our prices are 50% higher and we’re averaging less than $2,000 a day. What we used to charge for a sandwich might have been $4.50 and now we’re charging $7.50 and not making as much as we used to make.”
Inflation is down from highs experienced in 2022, but the Oklahoma Department of Commerce reports recent rates hovering at 3% are still above the level the Federal Reserve considers “acceptable.”
The Household Pulse Survey by the U.S. Census Bureau indicates inflation remains a concern among Oklahomans, with 52.6% reporting they are feeling “very stressed” about price increases, 22.2% saying they are struggling to cover their expenses, and 62.5% concerned about future price increases.
Long said inflation is a factor in some of the recent restaurant closures, but it’s not the only cause.
“Failure and closure — those words should not be used interchangeably,” Long said. “A closing restaurant is not necessarily a failing one. A restaurant could be doing well, but the owners want to retire. Or owners want to do something else.”
Affordable housing, homeless camps portray economic and societal challenges
Oklahoma City residents may be seeing construction cranes rising over the skyline, but they also are seeing homeless camps that weren’t seen a decade ago.
Dan Straughan, director of the Homeless Alliance, blames Oklahoma’s landlord-tenant laws for keeping the state in the top 20 in the country for evictions.
“The law is tilted for landlords,” Straughan said. “We’ve also failed as a state to invest in mental health treatment and addiction. That is driving homeless numbers more than the unemployment rate.”
A spike in housing prices coming out of the pandemic exacerbated the challenge, Straughan said. A growing scarcity of affordable housing, he added, is also to blame both in Oklahoma City and nationwide.
“Our numbers of people experiencing homelessness are up,” Straughan said. “They’re not up as much as some people think.”
Straughan said he expects the fallout from higher housing prices to continue in 2024, but also sees relief on the way as the city’s MAPS 4 funding for affordable housing, totaling $57 million, comes online.
One of the programs launched by the city, the Key to Home Partnership, is set up to rehouse 500 people experiencing unsheltered homelessness by 2025. The city announced last week the program was able to remove a homeless camp at Interstate 44 and Pennsylvania Avenue by providing the 17 people living under the bridge with furnished housing and case managers.
A rising population is listed by Long as another positive economic indicator for Oklahoma City, but it is also a factor in the perception that the homeless population is growing and represents economic turbulence.
Holt said he believes the unhoused population in Oklahoma City is not as pervasive as it is in other cities across the country.
“What we have seen is a static number of people experiencing homelessness the last 15 years,” Holt said. “If you stack that up against the rising population, you have a decline in per capita homelessness. When we had national consultants spend a whole day here during a council workshop, they said, ‘You don’t have high numbers of homelessness we’re seeing elsewhere.”
Maybe, compared to Oklahoma City in the 1980s, residents are seeing more people living on the streets, Holt said. “But if you compare Oklahoma City to other cities now, there is no question that Oklahoma City is doing well.”
Oklahoma City retains low cost of living reputation
Oklahoma City’s low cost of living reputation, long a bragging point at the Greater Oklahoma City Chamber, remains intact with the Council for Community and Economic Research rating it as the 23rd lowest among 269 surveyed cities. Oklahoma City’s median home price of $227,300 is well below the national price of $416,300.
Recent studies, meanwhile, suggest that the low cost of living, combined with ongoing investments made by taxpayers in quality of life, is helping retain and attract a younger workforce. A recent chamber presentation reported the median age in Oklahoma City is 35.7 years.
Forbes Advisor recently named Oklahoma City as the second-best place to buy a home, after comparing the 100 biggest cities based on four categories: employment and pay, housing affordability, lifestyle and cost of living.
The latest U.S. Census surveys show that Oklahoma City, which joined the country’s 20 largest cities in 2021, retains that position and from 2020 to 2022 was the sixth fastest-growing top 20 city from 2020 to 2021.
“Population follows jobs,” Long said. “Over the past few years, our metro is consistently adding 15,000 to 20,000 people a year. People who want a job are able to get a job.”
The numbers all add up to a mix of healthy growth and stability, Holt said.
“You can see things are going to go well for quite some time into the future,” Holt said. “We’re not in a boom, we’re just in a sustained period of growth.”
