Texas is booming. Over the last decade, Texas led the nation in population growth, growing by approximately 3.1 million people, according to the US Census. Most of the growth is happening in the large metropolitan areas. Between 2014 and 2015, the four big Texas metros: Austin, Dallas/Fort Worth, Houston, and San Antonio saw an increase of over 400,000 people, and if those four cities were their own state, they would have been the second fastest growing state in the country, second only to Texas as a whole.
People are being born in Texas, people are migrating from other states into Texas, and people are immigrating to Texas. Houston recently became the most diverse city in the United States. Texas recently tied New York in the size of its immigrant population, and although Texas has a large population of unskilled immigrants, most likely due to unauthorized immigration, Texas has a relatively large amount of highly skilled immigrants, as well.
Jobs are growing in Texas. Texas has the 2nd most corporate headquarters in the United States. New York has 55 corporate headquarters, Texas has 54, and California has 53. Texas created nearly 1/3rd of the highest income jobs in the United States between 2002 to 2011, according to this Time Magazine article, which claims that: “Texas is our Future”.
So what is going on in Texas? What is making it such an economic powerhouse? How do we explain the growth of the state in simple terms?
I think the easiest explanation for Texas’ recent growth is that both high-skilled immigrants and migrants and low-skilled immigrants and migrants are attracted to the state due to its low cost of living, and its job offerings. Companies are interested in the state due to the fact that they can pay lower wages, while still giving their employees access to a high quality of life. When a software engineer from India has the choice between two jobs, one that pays more but will offer a lower-middle class lifestyle in California, and one that pays less but will offer an upper middle-class to upper-class lifestyle in Texas, the choice seems pretty simple. Not only does the software engineer win, the company wins as well. Paying $15,000 less per year per employee, while still allowing them to have an incredible lifestyle, adds up, especially when you are talking about thousands of employees. The same rings true for a lower-skilled employee.
The energy industry provided strong economic growth that allowed the state to diversify its economy, and then the state’s abundance of land, favorable business climate, and investments in world-class research universities, created an environment to attract and grow human capital. The Dallas Fed says that there are three factors contributing to the decline of the middle-class. The middle class has struggled because wages have not kept up with the rapid rise in housing costs, healthcare, and higher education. Healthcare is expensive all across the country, but Texas has low housing costs and relatively affordable institutions of higher education. This provides opportunities, since you can come to Texas with low-skills and low-income, attend an affordable university, and then be high skilled when you enter the job market. The rungs on Texas’ ladder are closer together than they might be in other parts of the country.
Texas still has a lot of work to do. Managing the fine line between being business friendly, while also providing necessary services is a difficult task. That being said, the state has an incredibly bright future ahead. Texas is rising.
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David Morin (co-founder)