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Opinion

Fort Worth’s economic challenge: How to keep up with Dallas-Plano-Irving? 

High-paid business professionals are flocking to the eastern side of the region, but new homes are much cheaper on the Fort Worth side.

For decades, the economies of Dallas and Fort Worth moved in tandem, usually rising and falling together and growing at similar rates.

But their paths have diverged, primarily because the eastern side of the region, known as Dallas-Plano-Irving, has grown much faster than the western side, Fort Worth-Arlington.

Compounding the effect, Dallas has created many more high-paying jobs in professional and business services. As a result, one side of the metro is lapping the other, at least by some key economic measures.

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The two metro divisions started on separate paths in mid-2013, and Dallas kept pulling away until late 2017. By late 2018, Dallas-Plano-Irving picked up the pace again and has continued to separate itself.

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"Even after slowing this year, Fort Worth is still growing at about its average pace — it's just not going gangbusters like Dallas," said Laila Assanie, senior business economist at the Federal Reserve Bank of Dallas. "The divergence is happening because job growth in Dallas consistently outperformed Fort Worth by a wide margin."

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Dallas-Plano-Irving includes Dallas, Collin, Denton and four other counties, and had a population of 4.9 million in 2017, according to the Census Reporter. Fort Worth-Arlington, which includes Tarrant, Johnson, Parker and three more counties, had almost 2.5 million people.

The Dallas side has 72% of the regional workforce, another indicator of its economic clout.

The Dallas Fed compiles a business-cycle index that tracks growth in four areas: jobs, real wages, retail sales and the unemployment rate.

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For Fort Worth-Arlington, the business-cycle index rose 2.6% for the 12 months ended in June, which was slightly lower than its average for the past 20 years. The index for Dallas-Plano-Irving increased 5.4% — twice as much as Fort Worth's and 2 points higher than Dallas' historical average.

The difference in growth isn’t just about bragging rights. For Fort Worth-Arlington, it’s about getting more of the business bounty coming to North Texas, especially in corporate work. That would lead to higher-paying jobs, more valuable homes and a higher tax base.

Two years ago, Fort Worth released a report on economic development concluding that it had fallen behind the competition. While Fort Worth had two Fortune 1000 companies, Dallas had 17 such headquarters, Irving had nine, Plano had six and Richardson had two, the report found.

Some of the difference stems from their legacy industries. Fort Worth-Arlington has long been a manufacturing hub (think of factories for General Motors and Lockheed) while the Dallas side has been stronger in finance and banking.

What’s driving Dallas’ recent growth is the boom in professional and business services, a sector that includes accountants, architects, management analysts, computer system designers and lawyers.

The sector is still surging on the eastern side, and last week, Uber moved closer to bringing 3,000 jobs to downtown Dallas. City leaders approved about $9.3 million in incentives for jobs that would pay a minimum average salary of $100,000 a year.

“Growth begets growth,” said economist Bud Weinstein, who’s followed the North Texas market for 45 years.

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For the 12 months ended in June, Dallas-Plano-Irving added 33,000 jobs in professional and business services, a one-year gain of 6.6%. Over the same period, Fort Worth-Arlington lost 1,800 jobs in the category, according to data from the U.S. Bureau of Labor Statistics.

Fort Worth has always worried about keeping up with Dallas, Weinstein said, but the western side of the region is growing nicely. It’s just not close to matching its big neighbor next door.

"I'm not sure Fort Worth is doing anything wrong," said Weinstein, an economist at the Cox School of Business at Southern Methodist University. "But when you have this critical mass on the Dallas half, growth just feeds on growth."

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In the Dallas division, 19.5% of jobs are in professional and business services, compared with 10.6% on the Fort Worth side. Downtown Dallas and large swaths of Irving, Plano and Frisco have a growing share of high-paying corporate jobs.

So when companies consider expanding or relocating here, they tend to gravitate to those areas.

“In tech, finance and real estate, it’s hard for Fort Worth to compete because most of the networks are on the Dallas side,” Weinstein said.

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But Fort Worth is getting more aggressive in promoting the city and bidding for employers. That’s part of the economic development plan adopted in late 2017, and an August review praised a sharp increase in population and “steady progress in high-wage job growth.”

But average wages didn't increase as hoped, and that "further emphasizes the need to focus on high earners," the August report said.

Since May, Fort Worth has announced three corporate moves, including plans for a Stanley Black & Decker plant with 500 jobs. Yet nothing has been comparable to Dallas' potential win with Uber.

"We've had some initial gains, but turning the tide is a long-term strategy — and it's not gonna change overnight," said Brandom Gengelbach, who leads economic development for the Fort Worth Chamber of Commerce. "For a lot of people, the word is Dallas and we have to fight to say, 'Fort Worth.'"

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In 2018, Fort Worth was the top local city in issuing single-family housing permits, the report found. But it ranked last in the average value of those permits, at about $173,000.

In Richardson, Irving, Plano and Carrollton, the average value was at least twice as high. Is that a strength or a weakness?

“That’s an opportunity,” Gengelbach said. “We want to talk about being low-cost, especially in the Dallas-Fort Worth market.”

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