Center for Community and Business Research

Texas A&M; International University SBDC

The SBDC business advisors provide training and consulting to small business owners at The Laredo Development Foundation.

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Laredo is North America’s gateway to Mexico. Laredo is one of the fastest growing regions in the the United States. This city houses the number one inland port for trade between the United States and Mexico. According to the Laredo Development Foundation (LDF), the Laredo Customs District handles more trade than the ports of Southern California, Arizona, New Mexico and West Texas combined.

Laredo has been touched by the historical developments of Spain and Mexico, and then Texas and the United States. Tourists puzzle over whether Laredo is American or Mexican. During the 1840s, Laredoans reflected both sides and tried to create the Republic of the Rio Grande, incidentally giving Laredo a seventh flag, over and the above the six flags claimed by Texas. In 1851, Laredo became the first official port of entry on the U.S. - Mexico Border.

Known locally as Los Laredos, Laredo and Nuevo Laredo are actually one city divided by the Rio Grande. For the past several years, Mexico’s economic reforms have increased U.S. - Mexico trade and cross border production and growth of the Laredo economy.

The Laredo SBDC is responsible for serving the small business and rural communities of Webb, Zapata and Jim Hogg Counties. Our staff works closely with small business owners to achieve long-term growth and profitability. The Laredo SBDC has been successful in promoting and supporting business and economic development in these communities.

This Center has been instrumental in assisting entrepreneurs by creating new jobs, helping to lower the unemployment rate. In addition, a “Colonia Initiative Program” was introduced to assist small business owners in very poor communities along the border. These efforts have put in place a sustainable framework to expand local business and create jobs. The impact of the initiative has gained the broad approval of both local elected officials and the private sector.

Labor Market Highlights

Laredo just grows and grows. Continuing its trend, the Laredo field center area experienced steady growth in jobs from the beginning of 2004 to the beginning of 2006, from approximately 91,000 to over 97,000 jobs.

Jobless claims declined substantially over the same period, from over 6,800 claims to only 4,800 at the end of 2005. Correspondingly, the unemployment rate fell from 7.5 percent to 5.0 percent during that time.

The Field Center Area Jobs chart shows both the number of jobs in field center counties and the concentration of the industry relative to the rest of the state at the end of the first quarter of 2005. Webb County (Laredo) exerts a very strong influence on the field center numbers since it accounts for 94 percent of the jobs.

The “field center ratio” shows the proportion of industry jobs compared to all jobs in the area. Even more prominent than other southwest Texas field center areas, 60 percent of the jobs in the Laredo field center area are in two industries: education and health services (0.299); and trade, transportation, and utilities (0.317).

The question of whether these industry ratios are high or low can be determined by comparing them with the proportions that the industry represents in the rest of the state. For example, the field center area reports 4,371 professional and business service jobs, which is just over 5 percent of all jobs in the area. To reflect the state average, the proportion needs to be nearly 12 percent of jobs in this industry. Dividing 0.052 (the field center ratio) by 0.119 (the state ratio) yields a quotient of 0.44. This number is referred to as a “location quotient.” When the location quotient is less than 1.0, the area industry is under-represented relative to the state. When the location quotient is greater than 1.0, the area industry is over-represented relative to the state. So, a quotient of 0.44 indicates that the professional and business service industry is under-represented in the Laredo field center area. Laredo could double the number of jobs in this industry and still lag the state average for professional and business service jobs.

What industries have a particular foothold in the Laredo Field Center? Three are particularly prominent. Consistent with other field center areas in southwest Texas, and due partially to its border patrol demands, Laredo has an over-representation of workers in the public administration industry. Nearly 4,800 workers in this industry account for nearly 6 percent of area jobs, whereas the state average is little more than 4 percent.

Laredo’s two largest industries are also over-represented relative to the state. Whereas trade, transportation and utilities accounts for 32 percent of jobs in the labor force, the state proportion is only 22 percent.

Similarly, the 30 percent of jobs accounted for by education and health services is far greater than the 23 percent portion at the state level. These two industries are very heavily represented in the state, but they are even more heavily represented in the Laredo field center area.