Since January 2009, Texas has added 288,000 net new jobs. By contrast, total employment nationwide is down about 357,000. How has Texas managed to...
Since January 2009, Texas has added 288,000 net new jobs. By contrast, total employment nationwide is down about 357,000. How has Texas managed to prosper while most of the country has remained in the economic doldrums? Clearly, the energy boom of recent years has contributed to the state’s good fortune. Texas has added almost 30,000 energy workers since 2009, representing a 12.8% job gain in an important sector of the state economy where wages average $2,000 per week. Like the rest of the country, sizeable job gains have also been recorded in health services and hospitality, though these sectors, for the most part, pay much lower salaries and wages. We must look beyond the “shale” revolution to understand the dynamism of the Texas economy. For decades, Texas has been the most robust jobs engine in the country. Local politicians often cite low taxes and Texas’ “right-to-work” law as important components of the state’s favorable business climate. Having learned a hard lesson during the savings-and-loan crisis of the 1980s, Texas requires its banks to maintain larger capital reserves and to apply stricter lending guidelines. Consequently, Texas’s homeowners and its financial institutions were largely insulated from the recent national housing debacle. Texas has enacted major tort reforms in recent years that have made the state more attractive for business investment. And a recent study by the Federal Reserve Bank of St. Louis attributes some of Texas’s stronger job growth to its comparatively small public sector. To be sure, the Texas economy is not without problems. At 7.2%, the state’s unemployment rate remains high by historic standards. Construction employment is down 61,000 since 2009, the percent of the population without health insurance is highest in the nation, and Texas records the second-highest poverty rate among the ten largest states. Still, it is clear that the state’s limits on taxes, regulations and lawsuits — combined with a modest taste for publicly-provided goods and services — are sustaining the Texas jobs machine. Other states, as well as Washington, should take note.
