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Pocket of Strength: Texas Ranked Best for Business (Again)

June 6, 2012

Texas Industry: Manufacturing, Biotech, Technology and Wind EnergyFor the eighth consecutive year, CEOs named Texas the best place to do business, according to the latest Chief Executive magazine. Its annual survey received feedback from 650 business leaders from all over the country on topics relating to tax and regulation, quality of workforce and living environment.

The state has been home to the U.S. Global Investors headquarters for more than 40 years and it’s been my home for over two decades. I recently talked about the Lone Star State’s pocket of strength, as nine Texas cities made Milken Institute’s 2011 Top 25 Best-Performing Cities list. San Antonio was the top best-performing city, along with El Paso, Austin area, Killeen-Temple-Fort Hood, Houston area, McAllen-Edinburg-Mission, Dallas area, Fort Worth-Arlington and Lubbock.

During the time I’ve been a business leader in the state, I’ve been amazed at the incredible growth across multiple industries—not only the petroleum sector, but also manufacturing, technology and alternative energy. In fact, Texas is now the leading state in wind energy production, according to the Energy Information Administration.

Texas is a right-to-work state, as are many of the top 20 in the Chief Executive survey. This doesn’t surprise the magazine, which says that “labor force flexibility is highly sought after when a business seeks a location.” Economists have found that right-to-work areas “grow faster than other states, have higher employment and attract more inward migration,” says Chief Executive.

There’s been quite a boom in job creation in Texas: From June 2009 through July 2011, the number of jobs in Texas grew by 328,000—this is nearly half of all the jobs added in the entire U.S.

And jobs attract people outside of Texas who have migrated from all over, moving approximately $17.5 billion net adjusted gross income into the state. Of the 808,000 people who have moved here from 2000 to 2010, about 225,000 came from California, bringing with them a net adjusted gross income of about $4.5 billion, according to the Tax Foundation’s new State to State Migration Data Tool. More than 100,000 people from Louisiana have moved to their neighboring state, followed by residents from Illinois, New York and Michigan.

Most People Leaving California for Texas
Migration To Texas From 2000 to 2010
  Net Taxpayers
Gained
Net AGI Into Texas
(in thousands)
CA California 225,111 $4.5 billion
LA Louisiana 107,360 $2.6 billion
IL Illinois 56,822 $1.5 billion
NY New York 40,663 $1.1 billion
MI Michigan 39,167 $1.0 billion
Source: Tax Foundation

It’s not surprising that Californians are moving east, as CEOs rank the state as the worst in which to do business. The Golden State is not so golden these days, as it has nearly the highest unemployment and, in 2011 alone, about 250 companies have moved some or all of their work out of California, says Chief Executive. The state is losing companies due to “the high cost of doing business due to excessive state taxes and stringent regulations,” says Chief Executive.

I believe this pocket of strength in Texas can be replicated across any of the 50 states. While regulatory policies are important and workforce and living environment differ, the magazine says states also need to have a “cooperative attitude and a willingness to work with the private sector.”

See how many people are coming into or leaving your state at Tax Foundation’s Migration Tool.

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Net Asset Value
as of 07/24/2014

Global Resources Fund PSPFX $10.25 -0.01 Gold and Precious Metals Fund USERX $7.54 -0.15 World Precious Minerals Fund UNWPX $7.14 -0.11 China Region Fund USCOX $8.29 0.02 Emerging Europe Fund EUROX $8.34 0.05 All American Equity Fund GBTFX $33.27 0.06 Holmes Macro Trends Fund MEGAX $24.18 0.10 Near-Term Tax Free Fund NEARX $2.26 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change