NCPA - National Center for Policy Analysis

Texas and the Recipe for Growth

February 21, 2013

State governments around the country could learn a thing or two from the Lone Star State. Despite the 2008 financial meltdown and the Great Recession, labor data shows that Texas has created jobs at an accelerated pace throughout the past few years and could be a model for spawning growth, says Wendell Cox, an adjunct scholar with the National Center for Policy Analysis.

  • Bureau of Labor Statistics data indicates that the number of jobs in Texas has risen by 31.5 percent since 1995 compared with the national average of just 12 percent.
  • Following the financial crisis, when the overall job growth rate was 0.4 percent, Texas' job market grew by 2.4 percent.
  • From 2002 to 2011, Texas created nearly 33 percent of the country's highest paying positions despite having only 8 percent of the country's population.

One factor driving such incredible growth is a population explosion driven by interstate migration. Droves of people, particularly from the Midwest and Northeast, have flocked to Texas' biggest cities. In 2011, Houston, with 6.1 million people, surpassed Philadelphia as the country's fifth largest metropolitan region and joins Dallas-Fort Worth, with 6.5 million people, in making Texas the first state to have two metro regions in the top five. Additionally, the city of Austin was the fastest growing metropolitan region from 2010 to 2011.

  • Cox attributes much of Texas' success to its pro-business climate, which provides low taxes and sensible regulations, a high-quality workforce and a pleasant living environment.
  • Texas also has a low cost of living, which according to the U.S. Bureau of Economic Analysis ranks at 97.1 in regional price parity compared the national level of 100.
  • When adjusted for cost of living, Texas' per capita income is higher than California's and nearly as high as New York's.
  • Most of the cost-of-living difference is explained by housing costs.
  • More than 1 million people have moved to Texas from other states than have left the state.

Given these favorable trends and the pro-business policies that Texas has in place, Cox says that Texas is poised for further growth. He notes that Texas may stand to gain from an expansion of the Panama Canal set to be completed in 2014, which could bring Asian commerce to Texas ports.

Source: Wendell Cox, "The Texas Growth Medicine," City Journal, Winter 2013.


Browse more articles on Economic Issues