By Dr. Vance Ginn & Kiara Pillay
What is Texas the best at nationally?
One could argue that Texas is the best in many areas. They would be correct. According to a recent report published by the Federal Reserve Bank of Dallas, one area that Texas has been a leader in is job creation, especially in the technology sector as more companies move to the Lone Star State.
With Texas’ economy increasing at three and a half times the U.S. rate from 2006 to 2014, this contributed to average annual job creation of 1.9 percent that’s substantially higher than the nation’s 0.4 percent rate during that period.
The mining industry, which is dominated by oil and gas activity and comprises 15 percent of the state’s real private economy, has contributed much to the state’s remarkable growth. Texas is the nation’s production leader in crude oil with 37 percent of the U.S. total and in natural gas with 28 percent. Meanwhile, the technology sector, which includes IT and telecom, continues expanding. Employment in this sector increased by 10 percent from 2006 to 2014 and now comprises 5 percent of the workforce.
With major companies such as Google and Facebook, as well as other technology companies, having large campuses in Austin, technology is an increasingly important part of the state’s economy. This technology boom statewide has helped to offset the oil and gas production slowdown from lower energy prices.
Much of this is benefited by Texas’ low taxes, low cost of living, and sensible business regulations compared with states like California. According to theDallas Morning News, 1,510 companies left California from 2008 to 2014 with about 15 percent of those companies settling in the Lone Star State. Chart 1 shows that this has contributed to a conservative estimate of 37,553 new jobs and $6.5 billion in new investment in Texas.
Chart 1: Texas Rapidly Steals Businesses From California
Source: The Dallas Morning News
This Dallas Fed report provides more evidence that while the Texas economy has a large base of oil and gas activity, economic diversification, especially with the expansion of the technology sector, continues to help Texas weather economic headwinds. The pro-growth fiscal policies of low taxes, sensible regulations, and others that contribute to a low cost of living and prosperous business climate must be continued for Texans to have the greatest opportunity to achieve their hopes and dreams.
Ph.D. Economist at the Texas Public Policy Foundation. Blog posts are publications by the author.