October 18, 2013 Brian Kelsey

Texas Economy: Miracle or Myth?

Economist Tyler Cowen offers 10 reasons why Texas is our future in the latest edition of Time. Governor Perry calls it the Texas Miracle. The DNC calls it the miracle that never was. Who’s right? And, more important, does it matter?

As with most things in life and politics, the truth is somewhere in the middle. Nonetheless, the debate matters very much, especially for economic development, but not for the reasons you may think.

As I argued yesterday at the Texas Economic Development Council conference in San Antonio, an objective view of the evidence provides fodder for both sides of the debate. Texas is very much at the forefront of the economic recovery. Using traditional measures of growth in GDP, employment, and population, Texas performs very well compared to other states and the US as a whole.

Yet, many communities around the state are still waiting for the “miracle” to appear. Forty counties in Texas have higher unemployment rates than the US, and 15 of those counties have unemployment rates of 10 percent or higher. Texas also gets mixed marks on wealth creation. The state ranks 28th in per capita income adjusted for purchasing power parity.

You can access the rest of my presentation here:

Miracle or Myth: The Real Story of Job Creation & Economic Recovery in Texas

The miracle or myth debate is a red herring–a media-friendly smokescreen that obfuscates the true threat to the state’s future economic competitiveness: the growing contingent of people who appear to believe that economic development is possible without public investment.

Take education, for example. Nearly one-third of total US population growth in the ≤ 25 age cohort occurred in Texas between 2001 and 2013. That’s a demographic advantage in terms of workforce availability that many states would kill for. The question is, of course, are we serious about investing in people at the level that’s required to ensure that most residents of the state will be able to participate in the “miracle” (slide 24)?

Are we serious about experimenting and investing in new models of career and technical education that get away from the false dichotomy that’s plagued debates about higher education in Texas recently? Economic developers are critical for making these connections clear to politicians and the people who elect them.

As the Texas boosters like to say, people vote with their feet. Hopefully they’ll find opportunities to make enough money to buy boots when they get here.

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Comment (1)

  1. Stuart

    I enjoyed reading your presentation. (Here’s where I weigh in…)

    I think your presentation would have been stronger if you had looked at workforce participation rates, rather than unemployment percentage. It’s a cleaner measure. It excludes those who are not looking for work. You chose 40 of Texas’ 254 counties (17%) to compare to other states, rather than improvement in those 40 counties over time. There are an estimated 10.1 million Latinos and those of heritage in Texas. Some of the counties you mention have large Latino populations by percentage; many live in poverty, as they did in their countries of origin. You should have addressed the need for Latinos to finish high school (40% dropout rate vs. 8% for gen pop) and to pursue higher education…something not always emphasized in first and second generation Latino families. A recent study by the Pew Foundation shows the lifelong cost in career earnings to Millennials, including Latinos, who forego college.

    For the Texas economy in general, a balanced review of the past 5 years (a timeframe aligned with the policies of the current presidential administration) clearly demonstrates a stronger economy, lower unemployment, and greater prosperity for most people living in Texas. Texas recently bypassed California as the leader state in high tech exports. High tech is a low percent of all employment, but other sectors such as construction are taking off.

    By contrast, look at what California has done to itself by embracing Washington’s fiscal federalism…especially on healthcare. California has been spending beyond its means, and is on the brink of insolvency. Now, there is a petition in California to divide itself in to six states to exert greater influence in the US Senate. How desperate have they become?

    You raise some good points. There is room for improvement. But I respectfully question the basis and time frame of your assertions.

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