Texas Jobs Look Strong—But Government Growth Threatens Prosperity

Originally published on Substack. 

At first glance, Texas appears to be an economic powerhouse. In July 2025, the Lone Star State reached 14.3 million nonfarm jobs, adding 232,500 over the year—a growth rate of 1.6 percent, faster than the national average. Texas also expanded its labor force by nearly 196,000 workers. That’s a testament to our competitive advantages: no personal income tax, relatively lower spending and taxes per person than most states, and a still-strong pro-growth reputation.

But headline job growth masks a troubling shift. Too many of the new jobs in Texas are government jobs—not the private-sector positions that create lasting prosperity.

Where Texas Shines

Private employers added nearly 199,000 jobs over the year, with notable gains in construction (+27,000), leisure and hospitality (+33,900), and healthcare (+46,300), which are primarily funded by government programs. Texas also retains significant structural advantages: compared to states like California and New York, our tax burden is lower, we don’t penalize work with an income tax, and our relatively lean state budget has helped attract millions of people and businesses.

Where Texas Lags

But the numbers show a different side of the story. Government employment grew by 33,600 jobs in the past year—about 15 percent of all net new positions. That means government payrolls are expanding almost as quickly as those in the private sector. Every one of those jobs is funded by taxpayers, either through current taxes or future debt.

At the same time, manufacturing jobs fell by 2,200, mining barely grew, and construction contracts are down nearly 30 percent this year as tariffs, inflation, and high interest rates take their toll. Regulations and permitting delays remain among the worst in the country. And Texans still shoulder one of the highest property tax burdens in the nation, despite repeated efforts at relief.

The bigger pictureEven Texas can’t escape national headwinds. The U.S. added only 73,000 jobs in July, with downward revisions erasing another quarter-million. Inflation is ticking up again as tariffs filter through supply chains, eroding household paychecks. Immigration restrictions are tightening labor supply, leaving businesses struggling to fill roles. The Dallas Fed now forecasts Texas job growth of just 1.7 percent in 2025, which is below the long-run average.

Meanwhile, women’s workforce participation is slipping. That can be a positive if it reflects families choosing to keep one parent at home. But if women are leaving because inflation outpaces wages or opportunities are shrinking, then households are being squeezed.

Which path will Texas choose?

Florida is showing how to pair growth with spending discipline. By contrast, California and New York rely on bloated government and high taxes, pushing residents out. Texas stands at a crossroads: either continue to lean into our strengths or let government bloat undermine them.

What lawmakers must do

• Eliminate property taxes over time. Tie spending to population plus inflation and dedicate surpluses to buy down school M&O property taxes until they hit zero.
• Ban taxpayer-funded lobbying. Texans shouldn’t have to pay for local governments to lobby in Austin for higher taxes.
• Impose firm spending limits. At every level of government, put hard caps on growth so government doesn’t outpace taxpayers’ ability to pay.
• Cut regulations and unleash markets. Stop subsidizing industries and let free enterprise determine who the winners and losers are.
• Support families through freedom. Free markets, not government dictates, give Texans the flexibility to choose how to balance work and home.

​Final thoughts

Texas remains America’s jobs engine—but the warning lights are flashing. When government payrolls grow almost as fast as private-sector ones, when property taxes remain crushing, and when regulations choke energy and manufacturing, we risk losing our edge.

The lesson is simple: spending is the problem, not revenue. If lawmakers want Texas to stay a beacon of prosperity, they must rein in government and double down on the free-market principles that made our state strong in the first place.