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The Galveston Economy:
an Overview

by David Stanowski
01 October 2007


It would be very convenient, and informative, if someone computed an annual GDP, for the City of Galveston, with details on each of the major sectors, but I have been unable to discover such a comprehensive study. Since I don't expect anyone to put up the $30,000 to $300,000, that local economic studies always seem to cost, I will just plod ahead, and see what I can discover, about the Galveston Economy, from generally available public sources. It won't be an exhaustive, in-depth study, but, hopefully, I'll unearth some interesting information!

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Galveston's initial financial success was built on one thing; the Port. This mighty economic engine created the prosperous 19th-Century city, that built  downtown Galveston, and many grand residential neighborhoods. Unfortunately, the opening of the Houston Ship Channel, in 1914, was the beginning of the Port's long steep decline! Houston, and the other Texas ports, began the process of undermining Galveston's original monopoly on ocean-going shipping, in the state. Galveston has gone from the dominant port in the Western Gulf, to merely the eighth biggest port in the State of Texas, as measured by tonnage.

Manufacturing never really gained much of a  foothold on The Island, with the exception of cotton compresses, and other small operations. Investors were concerned, from the beginning, about large investments in manufacturing facilities in a location so vulnerable to damage from hurricanes. There were plans to build Texas City, on Virginia Point, where it could serve as Galveston's manufacturing site. However, after the 1900 Storm, the proposed site for Texas City was relocated much further away, where it developed independently from the Galveston economy. 


Today, the dominant sector of the Galveston economy is most likely government services, since 6 out of the top 10 employers are government  entities. The robust entrepreneurial economy of the 19th and early 20th Century, that once made Galveston "the Hong-Kong of the Gulf", has largely been replaced by an economic sector that generally lags all others in efficiency, innovation, and productivity, due to its insulation from the forces of the free market. Having government entities based in your town is rarely a major benefit, unless there is a net transfer of taxes from another location, to your city. Government is usually a net drain on the economy, due to its taxation, and regulation of the private-sector. 

Much of the balance of the modern Galveston economy is centered in the real estate, tourism, and retail sectors. Tourism and retail are notorious for their potential to reward the better business owners, but they do not provide much depth, to the local economy, in the form of many high-paying jobs. Those working in real estate, and other financial sectors, do somewhat better, although I suspect most of the large construction projects are awarded to companies from the Mainland.

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When the Port was the driving force, in the local economy, there were years, in the 1870's, when Galveston had a higher per capita income than most other cities in the entire world! In more modern times, with government, real estate, tourism, and retail, dominating the economy, Galveston's 2005 Median Household Income was $30,500, compared to $42,139 for the State of Texas, and $46,242 for the entire country! Even though it is very fortunate that circumstances did not allow oil refineries, or other heavy industry, to be built on The Island, it must be acknowledged that the Median Household Income, for Texas City, was $37,900, in 2005; 24% higher than Galveston's! Therefore, it is clear that, in recent times, without a significant manufacturing sector, Galveston has not been blessed with a robust economy!



Galveston's Economic Sectors

Government:
  • UTMB
  • GISD
  • Galveston County
  • City of Galveston
  • Texas A&M
  • Army Corps of Engineers
  • Galveston College
  • Coast Guard
  • The Park Board
Tourism:
  • Moody Gardens
  • Schlitterbahn
  • Hotels/Motels/Short-term Rentals
  • Restaurants
  • Bars/Clubs
  • Cruises
Retail:
  • Walmart
  • Target
  • Home Depot
  • Small shops
Financial Services:
  • Insurance (American National)
  • Realtors
  • Stock Brokers
  • Banks
  • Title Companies
Construction:
  • Residential
  • Commercial
  • Rehabilitation Services/Re-modelers
Port of Galveston:
  • Cargo
  • Cruises

For more information on the Galveston Economy:
 
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