7 Reasons Texas Is The Nation’s Leader In Business AND Population Growth

Texas business successBoth the population and the economy of the state of Texas have been growing much faster than the US economy in general. In fact, in recent years, Texas has been the nation’s leader in business and population growth. Is this a coincidence? Hardly! There are at least seven reasons why this is true.

And there could be lessons in those reasons for the rest of the country.

Texas is like a slice of 19th Century America

Texas still retains a large measure of the mindset of the old West. People with a lot of energy and natural curiosity live in, or move to, the state in search of opportunity. They see Texas as an endless treasure trove of that opportunity. While many other states in the US have become preoccupied with maintaining the status quo, Texas continues to blaze a path into an unknown but exciting future.

That seems to be something of a common belief set in Texas. As a result, the state is not only gaining population – from other states and from other countries – but it’s also growing its businesses at a rapid rate. In so many ways, it is similar to America in general in the 19th century. We were once a nation of incurable optimists, being joined by a steady flow of immigrants from other countries, blazing new trails into the wilderness, building new cities, and creating brand new industries.

That’s what Texas continues to do today, and what sets it apart from much of the rest of the country – it’s what we used to be.

Lots of land and natural resources

Texas does have a major advantage in that it has both abundant land and a disproportionate share of the nation’s natural resources. At 268,000 square miles, it is the second largest state in the US, and larger than the entire nation of France. That gives Texans a lot of room to spread out, and plenty for agriculture.

But the state also has considerable natural resources below ground. It produces about a quarter each of America’s domestically produced oil and natural gas. The energy refining industry has been built upon that production, and is one of the largest industries and employers in the state. This not only provides revenue and jobs in the state, but also a ready supply of energy for Texas industry. That is a built-in advantage that is not available in most other states.

Low cost of living

The large land area also affords Texas a low cost of living. For example, based on a
cost of living index (US = 100), Dallas comes in at 91.9 and Houston at 92.2. For comparison sake, Chicago comes in at 116.9, Los Angeles at 136.4, and New York (Manhattan) at 216.7. This lower cost of living in Texas – in combination with a fast growing economy – makes it a more attractive place to live than other places in the US.

Young population

Texas is attracting large numbers of immigrants (largely from Latin America) and throngs of young people from across America. Young people from around the world are coming to Texas to take advantage of its it’s low cost of living, it’s vibrant economy, and the large concentration of quality universities.

It is also providing the state with a large number of both low-wage and well educated workers, creating yet another beneficial advantage for business and industry.

A pro-business attitude

In general, Texas tends to maintain a pro-business attitude, the antithesis of Detroit’s. At the state and local government level, there is an emphasis on fiscal conservatism. The state encourages the growth of both small and large businesses, thus maintaining a healthy level of economic growth and rising employment.

Unlike many of the older areas of the country, employment in Texas is not dominated by unions. The state and its municipalities have not experienced the pension troubles of many of their counterparts in California, the Midwest and the Northeast.

Favorable tax policies

Texas has no state income tax, which is an instant attraction to people in other states that do – particularly those like California and New York that have particularly high state income tax rates.

The median annual property tax rate is $2,275 which compares favorably to most of the rest of the US. Property taxes are even more reasonable by the fact that property values in Texas are considerably lower than what they are in higher cost states.

For retirees, Texas can be attractive because neither Social Security nor other retirement income are taxed – again, there is no state income tax. This can draw wealthier retirees to the state, who are looking to flee high tax states. Those retirees bring their buying power to the Lone Star State, further energizing the state’s economy.

Heavy federal spending

Texas is traditionally one of the biggest recipients of federal government spending. In 2012, the state received more than $277 billion in federal outlays – compared to less than $220 billion in federal revenues collected there. This is more in federal outlays than any other state except Florida, and even ahead of much more populous California.

Part of the reason that Texas receives a disproportionately large share of federal outlays is the military and the military-industrial complex. There are a large number of military bases throughout Texas. And the state is one of the leading recipients of federal funds for the production of military hardware. For example, the F-16 fighter jet – the most widely used combat jet in the US military – was largely produced in Texas. It’s successor, the F 35, will also be built largely in Texas.

This large concentration of military production in the state provides both revenue for business and industry, as well as jobs for hundreds of thousands of workers.

Texas is succeeding today, largely because it is doing what all of America used to do. It is maintaining an infrastructure that is encouraging to business, while demonstrating an overall attitude of confidence, optimism and a never-say-die mindset.

Can America ever get back to that point?  In Texas, they’re proving that it can be done.

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8 Comments

  1. Kathy says:

    I’ve read articles that the native Texans are fearful that some of the people who are moving into the state are the same ones who created the problems present in other states like California and who now don’t like the outcome so they are moving to Texas. However, they are trying to bring their same behaviors to Texas which will end up ruining that state as well.

    • Jim says:

      I think about that very same thing, I know it’s happening in Austin for starters. Would sure hate for those folks to start winning elections there, if that be the case, freedom as we know it is over! Texas has been a Red State since the beginning of time, if it ever goes purple or blue, we are done for!

    • Hi Kathy – Living in Georgia – which is not unlike Texas in so many ways, I can see that concern. There’s no question that widespread policitcal persuasions influence long term trends. For example, many states that lean heavily democratic, and have for decades, and believe in large scale government solustions to any problems. As a result of creating departments and hiring tens of thousands of public workers, those same states are now dealing with a full blown pension crisis. I’m not aware of such problems in Texas, Georgia or similar states.

      If the productive people are leaving the declining states to pursue greater opportunity, then states like Texas stand to benefit from their arrival and contributions. But you do have to worry about retirees and other groups who may be bringing in the mindsets or their former locations. I think that Florida, with it’s flood of retirees, is an example.

      So much of what defines the success or failure of an area is rooted in the predominant collective thinking of the region.

  2. You got me at “low cost of living”. For most of our married lives my husband, daughter and I lived in low cost of living areas. That may have been the best financial decision (other than automating our investing) we ever made!

    • Hi Barb – Aren’t you in the San Francisco area? I never associated that with low cost! Anyway, housing costs are fundamental – the higher it is, the higher all of your other costs are. In a real way, it’s a controlling expense.

  3. I have seen a lot of House Hunters episodes that take place in Texas and I’m always impressed by their low real estate prices. It really does look like a great place to live.

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