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Why Texas is doing so much better economically than the rest of the nation
- cmars232 17y agoIf independence and economic autonomy work well at the state level, I wonder what it could do at the local level in resilient communities.
- kevinholesh 17y agoOr at the federal level.
- lotharbot 17y agoWhat the article doesn't explain is why Texas is able to sustain 700,000 jobs geared toward export manufacturing, or why Texas continues to attract engineering talent. At least part of it is Texas' business-friendly and employee-friendly tax climate.
- _delirium 17y agoTo most employees, Texas's much lower property values and more stable property market (as this article analyzes) have a lot bigger impact on the economics than the taxes, which are only marginally lower than California's when you add all the different taxes up (TX collects about $8k per resident in state&local, while CA collects about $9.5k). Employee-friendliness overall varies. I'd say the employment laws are generally worse for employee freedom than California's, mainly because TX courts are more willing to enforce noncompete clauses (though they aren't as willing to as some states).
- benhoyt 17y agoSpeaking of employment laws, I'm curious how common "at-will employment" is in the US? (http://en.wikipedia.org/wiki/At-will_employment http://en.wikipedia.org/wiki/At-will_employment) I've recently been hired by a US company on at-will terms, and I understand it's much more common in the US than in New Zealand where I'm from -- things are much softer on employees in NZ.
- gojomo 17y ago'At-will' employment is the norm in the US for non-unionized jobs. The Wikipedia article describes the exceptions fairly well.
- _delirium 17y agoOne additional wrinkle is that customary practices at large firms are a bit different. Because they're worried about unlawful-termination suits (even if they'd end up winning them), large companies rarely fire specific people, except for really egregious things (like embezzlement), even though in theory at-will employment means they could fire anyone for any reason. Instead they only get rid of people in general downsizing/layoff rounds, like closing a whole division, or doing a blanket 10% reduction in staff--- and even then they often offer severance packages for long-term staff, to make it a mutually agreed upon parting.
- roboneal 17y agoWhere are you getting your state & local tax numbers? The numbers I found show total state & local tax collected per capita for Texas is $3,580 vs. $5,028 for California. That's a 40% increase over Texas. Nothing to sneeze at. Texas: http://www.taxfoundation.org/taxdata/show/482.html http://www.taxfoundation.org/taxdata/show/482.html Cali: http://www.taxfoundation.org/taxdata/show/443.html http://www.taxfoundation.org/taxdata/show/443.html Even your numbers show a 20% penalty for living in Cali.
- _delirium 17y agoI was going by total state+local govt revenues divided by population, which ends up allocating as taxes things like vehicle registration fees, excise taxes, alcohol taxes, corporate taxes, etc., probably even lottery revenues. The Tax Foundation's method might be more meaningful, depending on what you're comparing. But either way it's not all that much of a difference in absolute terms, even if it is in percentage terms. I mean, $1500 on average. Even if you make a lot over the average, it still seems like Texas's biggest win will be the $300,000 difference in the price of a house, or $1000/mo difference in rent, not a few $k savings in taxes.
- roboneal 17y agoThat's $1500 PER CAPITA (every man, woman & child). All things being equal - $6K a year for a family of 4 is consequential.
- deleted 17y ago[deleted]
- maxharris 17y agoLower property prices are due to lower restrictions on building/zoning in Texas (compared to California). Building a new house in Texas is easy and cheap; in California it is nearly impossible, and very expensive.
- _delirium 17y agoSure, but that's pretty much what this whole article is about. (It also points out that another factor is Texas having more stringent mortgage regulation, which makes double-mortgage-fuelled property speculation harder.)
- 00joe 17y agoTexas's per capita income is 20% lower than California's
- gojomo 17y agoIt would be interesting to perform a purchasing-power-parity comparison here. Houses seem to be 1/2 to 1/4 the California price in similarly nice (but not as wealthy on an absolute scale) neighborhoods. When I stroll the aisles of a grocery store in the Austin area, many staples are 1/2 the cost of bay area supermarkets. Edit: upped low-end of house ratio to more realistic 1/4 from 1/6
- 00joe 17y agocost of living has nothing to do with attracting manufacturing jobs. The lower the labor costs the more jobs you get. Same reason China has more manufacturing that California
- teaspoon 17y agoLabor costs are a function of cost of living.
- eru 17y agoAre they? Any data to back up your claim? (As an equally plausible hypothesis I'd guess that outside of extreme regions like Antarctica, higher wages are a prime reason for real estate values, and thus contribute to higher costs of living.)
- btilly 17y agoChicken meet egg. Egg meet chicken. Labor costs and the cost of living both affect the other. Arguing which came first is pointless since neither exists in a vacuum.
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- adamc 17y agoGeneral cost of living is lower in Texas, too. Some of that may be location, some of that to relatively abundant land for housing.
- bengebre 17y agoTexas really did behave entirely differently during the recession (employment-wise) than the rest of the country. Not only did the state start adding jobs in the middle of last year, there are now more jobs today than before the recession: http://www.deptofnumbers.com/unemployment/texas/#employment http://www.deptofnumbers.com/unemployment/texas/#employment (Note: link is to a site I maintain)
- jeromec 17y agoUnlike many of its neighbors, Texas has state laws that prohibited consumers from using home-equity lines of credit to increase borrowing to more than 80 percent of the value of their homes This certainly would fight inflationary/bubbly pressures. Forced financial responsibility. Nice. I wonder how many other states follow this model.
- gojomo 17y agoFor a long time, Texas prohibited second mortgages against a residence -- so even this allowance was a liberalization. I've also seen mentioned elsewhere that state banking regulation and monitoring was tightened after the S&L crisis of the 80's, which helped discourage the fast-and-loose real-estate loanmaking that drove the latest bubble elsewhere.
- ams6110 17y agoEven where states don't have such laws, responsible lending standards used to serve the same purpose. The traditional debt/equity ratio and payment/income ratios that were part of a mortgage loan qualification were relaxed or nearly eliminated in recent years, allowing many people to take on debt that in the past would have been seen as too risky.
- trevelyan 17y agoOil at $80+ a barrel?
- pxlpshr 17y agoWhy does that surprise you? Your $1-2k laptop was built and shipped from China thanks to it. The world depends on oil and gas, sorry to disappoint but won't be moving away from our dependance anytime soon -- not in my lifetime.
- eru 17y agoThere can be gradual shifts in either direction. Complete independence from oil won't come anytime soon, though.
- gojomo 17y agoAnother point that could have been mentioned: the Texas legislature is part-time, and only meets every other year(!). They're not the professional busybodies of California's legislature, thinking up new "juice bills" year-round.
- guelo 17y agoTexas 2009: "The governor signed 1,656 bills and resolutions, vetoed 38 and allowed 12 to become law without his signature " http://www.txddc.state.tx.us/public_policy/txlegis.asp http://www.txddc.state.tx.us/public_policy/txlegis.asp California 2009: 675 signed, 257 vetoes http://gov.ca.gov/bills/#all http://gov.ca.gov/bills/#all
- nathanieljones 17y agoThat's like saying Amy's software project is better because it has fewer files than Bob's. Bob may just be better at keeping code in separate, logical units than Amy, who just crams everything into several large bills... I mean, files. Anybody want to run a diff on the California and Texas legislation?
- evanrmurphy 17y agoTried but files were corrupted.
- arch_hunter 17y agoCalifornia's or Texas's?
- jfornear 17y agoThis isn't a good metric for measuring government "productivity" at all. More information is needed like the size and scope of these particular bills, for just one example.
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- credo 17y agoSee http://www.nytimes.com/2010/04/12/opinion/12krugman.html http://www.nytimes.com/2010/04/12/opinion/12krugman.html where Krugman compares Georgia and Texas. The two states have a lot in common, but Texas has strong consumer-protection regulation, Georgia lacked these government regulations. Krugman points out that the absence of these regulations landed Georgia in their current disastrous situation. For many people, comparing Georgia and Texas and highlighting the strong consumer-protection regulations in Texas may not be as much fun as bashing California, but this is worth a read
- brown9-2 17y agoAgreed. It seems too simplistic to chalk thus up to just the energy sector alone. A good quote from the Krugman piece: Why didn’t the same thing happen in Texas? The most likely answer, surprisingly, is that Texas had strong consumer-protection regulation. In particular, Texas law made it difficult for homeowners to treat their homes as piggybanks, extracting cash by increasing the size of their mortgages. Georgia lacked any similar protections (and the Bush administration blocked the state’s efforts to restrict subprime lending directly). And Georgia suffered from the difference.
- gojomo 17y agoIt wasn't just Bush people weakening the traditional "20% equity" threshold. Lots of political and government efforts, including the government-sponsored mortgage subsidizers Fannie and Freddie (deeply linked with Dem party leadership), were bending longstanding practice to promote home ownership by all and loans to previously "underserved" borrowers. Like Texas, Canada also held fast to the traditional 20% homeowner equity requirement and was similarly spared the same extreme housing bubble and crash. (Now, if some buckaroo lenders want to make risky no-money-down loans, that'd be OK -- as long as public policy wasn't cheering them on, fraud on both sides of the table was vigorously prosecuted, and the public treasury wasn't insuring the transactions. When government and big business are all pulling in the same feel-good, don't-ask-uncomfortable-questions direction, there's danger.)
- anguslong 17y agoJust celebrated my 1-year anniversary here in Austin, Texas. Took 8 years to convince wife to make the move. Been fantastic so far. Article is right-on in many regards: Business/startup/tech climate is strong. (btw: norm is mucho less of the douche than SXSW crowd) Housing: we moved from Seattle. Home prices roughly half (in 'burbs, near exceptional schools). Taxes are roughly double -- a big reason for low home prices, besides all the cheap land. Lifestyle: Austin's very similar in people-climate to Seattle. Active, outdoor-loving, low-key, friendly folks. Climate: summer unbelievably hot, rest of the year, pretty fantastic (for a Seattle boy). While I've seen a bit of the Red-State stereotype, personal freedom and a live and let live attitude (personally, in government, and business) is much more the norm -- and perhaps much of the reason for riding the recession a bit smoother.
- pjhyett 17y agoThe first time I flew into Austin, I hopped into a cab at the airport. On the way to the hotel, the cabbie asked if I had ever been to Austin before, to which I responded that I had never been to Texas. He turned around, looked directly at me, and said "Austin ain't Texas son."
- procrastitron 17y agoI've lived in Texas for most of my life, imoving between Dallas and Austin, and I can attest to the spirit of what the cab driver told you; Austin is radically different from the rest of the state. Austin is a staunchly liberal college town while the rest of the state is extremely right-wing.
- r0s 17y agoI love it, the heat keeps it real. Less clothes is the solution.
- aresant 17y agoSummary: Energy is driving Texas economy. Suprisingly not from oil, but from natural gas and wind power. Texas has has its own electricity grid which has allowed it to embrace alternative energy technology with minimal hurdles. In addition, exports are rising - almost 25% in Q1 vs 2009.
- RyanMcGreal 17y agotl;dr: oil is trading at $80 a barrel.
- cma 17y agoAre undocumented workers even counted in the unemployment rate? What percentage of Texas' workers are undocumented?
- popschedule 17y agoJust moved my web development business to Texas from Los Angeles, no regrets.
- 00joe 17y agoOne reason Texas avoided the housing bubble is the property taxes are very high here. The tax rate is 4.5-5% of value. In California its 1%. Also, interest rates are lower in California, a foreclosure can happen in as little as 120 days which reduces the lenders risk and your interest rate. The result is a lot of carrying costs for investing in residential real estate.
- anamax 17y ago> The tax rate is 4.5-5% of value. In California its 1%. Oh really? Then Santa Clara county owes me a bunch of money. (And no, this isn't a "my house lost value" issue. My property taxes went up last year, just like they did the year before, and the year before that.) CA does have "non recourse" purchase mortgages. That means that the bank that loaned you the money that you use to buy a house can't come after you after foreclosure if they can't recover what you owe. Note that I wrote "the money that you use to buy" - if you refinance, that bank can come after you for any money that they can't recover in foreclosure.
- 00joe 17y agoyes really, its set by a 1979 amendment.
- anamax 17y agoI'm looking at a "County of Santa Clara (CA) Secured Property Tax Bill." (I'm putting it away with other 2009 records.) Right under the line that says "1% Maximum Tax Levy" in the "Taxing Agency Tax Rate" table, tha bill lists the percentages for several additional levies. The subtotal labelled "Tot Assessed Val Rate" is more than 1% and there are additional percentages below that, which aren't included in said "Tot". And then there are several other "Special Assessments" which are listed by dollar figure, not percentage. In the "Tax Rate Per $100" column, it has both the >1% "Tot Assessed Val Rate" figure and the total of the percentages listed below it in the "Agency/Rate" table mentioned above. Both numbers are multiplied by corresponding numbers in the "Assessed Value" column. The total of the special assessments in dollars is added to those products. I'm paying more than 1%. They may not call the amounts over 1% "property tax", but Santa Clara County is collecting them on the "Secured Property Tax Bill", just like the amount that they call property tax. In the section