Texas, known for its robust economy and business-friendly environment, has long been a focal point of economic growth in the United States. Over the years, the Lone Star State has attracted companies, talent, and investment, becoming a symbol of American success. However, recent shifts in various factors have gradually transformed Texas from a business leader to a contender facing new challenges.
Historically, Texas has demonstrated remarkable economic resilience. It consistently ranked among the top states for business in CNBC’s annual study, showcasing its prowess in areas like job creation, access to capital, and workforce quality. This reputation, buoyed by a strong economy, led to significant corporate relocations and expansion. For example, Texas secured over 280 new corporate headquarters between 2015 and 2023, positioning itself as a hub for innovation and growth.
Since its declaration of independence in 1836, Texas has evolved from a land of rugged individualists into an economic powerhouse that rivals even the largest economies. The state’s trailblazing spirit saw it create an environment where companies thrived, leading to a litany of firsts: the birth of the modern oil industry in Spindletop, Houston becoming a hub for the burgeoning space race, and Austin’s emergence as a tech titan. These milestones were propelled by a hands-off approach to business regulation and taxation, and for decades, this formula worked wonders, attracting corporations and entrepreneurs in droves.
However, the shift from a business leader to a challenger began to emerge over the past decade, as Texas confronted a series of complex issues that exposed cracks in its once-impervious facade. In a year, a colossal 542,500 jobs joined the state’s workforce, powering a remarkable 4% yearly growth—surging beyond the nation’s 2.5%. The narrative extended into Q1 2023, as the GDP surged 3%, for the fourth consecutive quarter of distinction. However, there are some factors that demand attention.
Infrastructure, once a point of pride, is now a vulnerability. As of 2023, Texas sits at 24th place in infrastructure, hampered by a power grid that stumbled under pressure during extreme weather events. In the face of rapid population growth, the state’s water utilities grapple with a $61 billion repair bill over the next two decades, rivaling only California in its dire need for improvement. Sustainability concerns loom as well, with nearly one-fifth of properties at risk of flooding in the next 30 years. Such infrastructure woes not only impede business operations but also endanger quality of life.
Similarly, education struggles to keep pace. The state’s ranking dropped to 35th in education, highlighting lagging K-12 test scores and per-pupil spending among the lowest in the nation. With the workforce becoming increasingly reliant on knowledge-based industries, this educational gap could threaten the state’s ability to remain competitive.
The erosion of Texas’ position as a champion of life, health, and inclusion raises alarms. Its ranking plummeted from 49th to dead last in this category, underscored by abysmal healthcare access and a concerning rise in violent crime. While business-friendly policies are critical, a state’s appeal also hinges on the well-being and safety of its residents, a facet Texas must address to sustain its attractiveness to workers and investors.
