Dave Sather's Money Matters: Creating Texas-sized jobs
Last week, CNBC presented its survey results regarding the best states for business. Since the survey's inception in 2007, Texas and Virginia have traded off the No. 1 slot.
This year, Virginia received 1,660 out of 2,500 total survey points; Texas scored 1,578.
Although 51 of the Fortune 500 call Texas home, it is more than just big companies. In fact, 237,000, or 48 percent, of the net jobs created in the U.S. since the 2009 recovery have been in Texas, according to the Federal Reserve Bank of Dallas.
Another study by the U.S. Bureau of Labor Statistics concluded that Texas added 732,000 private sector jobs in the last 10 years, while no other state added more than 100,000. Sadly, only 19 states added any jobs at all. At the same time, California and Michigan lost 623,700 and 619,200 jobs, respectively.
Whether over short-time periods or longer ones, the job creation has been large.
What has made the Lone Star State so successful? Is it just because everything is bigger in Texas? Maybe it's the great fishing along the coast or possibly the barbecue? While those are undeniable benefits of our big, diverse state, more than likely it is a combination of the following:
1. Texas continues to be only one of nine states with no state income tax. All things being equal, lower taxation is generally stimulative. The per capita tax burden in Texas is almost a quarter less than the national average.
2. Texas is a right-to-work state. This limits the role of unions and their financial impact on companies. Tort reform has also lowered litigation costs and risks.
3. The general cost of living is cheap. A $100,000 salary in San Antonio requires $171,338 in San Francisco to afford similar levels of groceries, housing, utilities, transportation and healthcare, according to Money Magazine. Housing alone in San Francisco costs 195 percent more than San Antonio.
Manhattan is even worse. You'd need $226,359 in income in New York to have the same spending ability as in San Antonio. Housing costs 305 percent more for the folks in Manhattan. Give me the Riverwalk any day.
4. Texas has a strong university system. Although it is widely reported that the manufacturing base in the US has greatly eroded, jobs in the high tech sector are growing. Texas has a very strong information tech sector and these jobs require deep educational foundations and pay above average wages.
5. Texas never chased after the sub-prime financing boom. As such, real estate values here never ballooned as they did in places such as California, Florida or Arizona. So when the bottom fell out of real estate, Texas was not nearly as susceptible to imploding values.
6. The state has immense natural resources, which benefit greatly from rising energy prices and breakthroughs in natural gas production. According to Pia Orrenius, a senior economist at the Dallas Fed, exports are exploding. Petrochemical exports surged 633 percent since 2002. Exports to China grew an average of 24 percent a year since 2000. While most may think of Texas mainly for its energy, exports of cotton and other agriculture products have been strong, too.
Many businesses figured out Texas is a great place to run a company and employ smart, hardworking folks. Hopefully the trend will continue with even more employers taking advantage of the friendly environment in the Lone Star State.
Better yet, maybe some of our leaders at the national level will take note and follow our lead, too.
Dave Sather is a Victoria Certified Financial Planner and owner of Sather Financial Group. His column, Money Matters, publishes every other Wednesday.