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Immigration and the Texas Boom

January 7, 2014 7 minute Read by Ike Brannon

While I write for the George W. Bush Institute, which is based on the SMU campus in Dallas, I live and work in Washington DC, a few thousand miles away as the crow flies and light-years removed from the attitudes and sensibilities that permeate Texas.  As an example, I was recently approached at the local farmers’ market to sign a petition for the Socialist Worker’s party; when I politely declined, explaining that I believed in the private ownership of property, the person informed me that I must be the only person who lives in the neighborhood who feels that way. I can almost believe it.

But I’m returning to the state on Thursday to participate in a Texas Public Policy Foundation conference on the role of immigrants in the economy. It’s a rare topic where there is wide agreement between the denizens of my adopted hometown as well as the state of my publisher.

The populace of both states have largely positive views of the role of immigrants in the economy, and I suspect it’s for the same reason: both DC and Texas happen to have a disproportionate number of immigrants, and are a reason both economies happen to be doing well.

It is easy to observe the dynamism that immigrants can bring to an economy--especially for those who have lived in other places without a healthy immigrant population.  I grew up in Peoria, a community largely comprised of German-Americans. However, those who could recall the old country and speak the language had largely died out by the time I was a teenager, when the snippets of conversation in German that I would overhear at weddings or funerals had ceased. My grandparents were a part of that cohort, having grown up speaking German with their parents, but by the time I came around they had largely forgotten the language. While my grandparents went through some difficult times I did not see them as immigrants and they certainly did not see themselves as such.

But Peoria got a small but regular influx of immigrants during my salad days, thanks to a Catholic charity in town that regularly took in Polish emigres into the community. Among their ranks included John Shalikashvili--who later became head of the Joint Chiefs of Staff for the U.S. military--and the Nogajs, a family who escaped Poland in 1980 by walking over the German border under the cover of darkness. Their son Robert began attending my high school shortly after arriving in town and we became fast friends.

From the time I knew him Robert held multiple jobs; one summer he managed to get paid for every single hour of our school break.  After high school he took an engineering degree and then an MBA and by the time he was in his thirties he was a senior executive for a manufacturing company--Martin Engineering--near our hometown. In a decade he helped to triple the company’s revenue and profits, as well as employees.

While it’s tempting to read Robert’s career simply as a heartwarming story of an immigrant becoming fully assimilated into his community, I see it as slightly more than that: By pure luck (from a Peorian’s perspective) a budding immigrant entrepreneur landed in Peoria and chose to remain there, even when he could have gone almost anywhere else in the world to make his fortune.

Peoria stumbles across a few such people, usually by accident or marriage, and it will likely stay that way for a while: Despite the recent reform bill, the state’s public pension system faces bankruptcy and there’s another income tax increase in the offing, on top of the business tax hike in 2011, and the state regularly finishes near the bottom in most business climate indices. With such a desultory economic climate few jobs are being created. What’s more, the populace doesn’t seem all that keen on immigrants, seeing them as contributing to the high unemployment problem rather than as a potential solution.

But many more people of Robert’s ilk choose to move to Texas and try to make their fortune here, whether in energy, IT, manufacturing, or in any one of literally dozens of other areas.  Why do they choose Texas? Undoubtedly its friendly tax climate and light regulatory touch has something to do with it, but it’s more than that--California gets more than its share of immigrants as well despite its high-tax, regulation-laden economic environment.

Texas is friendly to business and workers. Housing is inexpensive, the tax burden on households is low, and there are good public schools to be had.  This matters not only to entrepreneurs but also the workers it needs to employ.

But more importantly is that it’s a culture that largely knows and appreciates what immigrants bring to an economy. There’s no large, organized political entity clamoring to put brakes on immigration because it’s obvious to those paying attention that the state benefits greatly from it. In Illinois, where the economy is weak and immigrants play a much smaller role, it can be more difficult to perceive what they add to an economy, or what would be missed by not having more of them. As a result, residents on average have a less favorable view of them, which makes it even harder to attract them.

And while Texas is a brand known around the world, mocked by the intelligentsia but envied by businessmen, Illinois’ reputation around the world--to the extent it has one--isn’t exactly stellar: A friend from Delhi with family in Peoria told me they refer to it as a village even by Indian standards.

Texas has added a million jobs in the last two years, an enviable pace unmatched anywhere in the country. There are lessons in its economic renaissance for other states, and the most important but least appreciated is that attracting immigrants does wonders for an economy.


Image by Ray Bodden


Author

Ike Brannon
Ike Brannon

Ike Brannon served as an Economic Growth Fellow of the George W. Bush Institute from 2012 to 2015. He has a Ph.D. in economics from Indiana University and a B.A. in math, Spanish, and economics from Augustana College. View his full bio

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