Why Money and Jobs Are Coming to Texas
July 12, 2013
The Texas economy has been a remarkable success story in recent years. Compared with other states, the recession largely bypassed it, say John C. Goodman, president and CEO of the National Center for Policy Analysis, and Travis H. Brown, author of How Money Walks.
- Between 2001 and 2011, while many other states were hemorrhaging jobs, Texas increased private-sector employment by 732,800.
- These aren't low-paying jobs -- the average wage in Texas is in the middle of the pack nationwide; and since the beginning of the recession, wage growth in Texas has been the sixth-fastest in the nation.
Why has Texas been so successful at job creation? It's a very labor-friendly state. The Mercatus Center at George Mason University ranks Texas No. 1 in "labor market freedom."
Texas has been attracting capital as well as labor.
- In his new book, How Money Walks, Brown uses data from the Internal Revenue Service and the U.S. Census Bureau to show that a great deal of money has been crossing state borders.
- From 1992 to 2010, Texas gained $24.9 billion in net adjusted gross income.
- That's nearly $1.5 billion greater than the current market value of Dell and almost $6 billion more than the value of Whole Foods.
- During the same period, Arkansas gained $2.99 billion -- about a 10th of the Texas gain.
- At $1.68 billion, New Mexico gained less than 7 percent of what Texas did.
- Oklahoma and Louisiana lost $971.92 million and $6.55 billion, respectively.
The most important difference between Texas and its bordering states? Taxes. Its zero-percent income tax is the equivalent of an "open for business" sign, welcoming potential employers. Wealth moves where it is treated best.
- Between 1992 and 2010, Texas gained $6.02 billion from California, $2.12 billion from Illinois, $1.66 billion from New York and $1.31 billion from Michigan.
- The wealth transfer from California to Texas is likely influenced by California's punishingly high tax rates.
- The top personal income tax rate there is now a whopping 13.3 percent.
While all that money was moving, more than 40 million Americans voted with their feet -- relocating to find a higher rung on the economic ladder. Texas was one of the beneficiaries of that movement because the more you work, the more you can earn, save and invest -- relative to less-friendly places.
Source: John C. Goodman and Travis H. Brown, "Why Money and Jobs Are Coming to Texas," Dallas Morning News, July 11, 2013.
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