Texas has long topped most lists that rank states based on their business-friendly climate, but could politics change that?
It’s not a crazy question. The New York Times put it down last weekand CNBC’s 2022 ranking of business-friendly states found that while Texas didn’t fall into the top 5 this year, it came very close to doing so, largely due to its second-place finish in a underclass—it is, as CNBC declares, one of the 10 worst states in which to live.
Texas is still third in the nation for net migration according to U.S. Census figures. But CNBC’s discussion of the worst states live in the following points about people moving in the state:”[T]They find limited child care options, a stressed health care system with the highest rate of uninsured people, new restrictions on voting rights and few protections against discrimination.
Texas has never been out of the top 5 on the CNBC Top State for Business ranking, which no other state on the list has. In fact, from 2007 to 2019, we were either first or second (with one exception in 2017 when he was fourth). But its most recent first-place finish was in 2018, and this year it came very close to sixth, narrowly beating Tennessee.
In its analysis of the Texas resultswriter Scott Cohn notes that while the state’s rapid growth and other business-friendly assets still attract businesses and people, “when they arrive, however, they find a growing set of problems”.
Cohn points to a recent George Mason University study that found Texas’ “increasingly bloated regulatory regime” is hurting the state, as are its limited childcare and healthcare resources. , and its lack of any sort of anti-discrimination law for able-bodied residents.
“While multiple measures targeting transgender youth and their parents have either died in the Legislature or stalled in court, the deeply controversial election law that went into effect this year has made Texas one of the harder to vote for, according to researchers at Northern Illinois University,” Cohn wrote.
Texas ended up finishing 49th in the category that considers quality of life.
Right now, though, people are coming to Texas. While the state ranked nearly last for quality of life, it was second in another subcategory: states with the best workforce.
“Texas is in the top ten for labor productivity, with $139,549 in economic output per job last year,” says the classification. “With unemployment still above the national average, employers have many industrious workers to choose from.”
(The state’s median household income was $63,826 in 2021, according to the U.S. Census Bureau.)
Renea Eze, press secretary to Governor Greg Abbott, pointed out that Caterpillar’s recent relocation to Texas has made the state home to 54 Fortune 500 companies. That’s more than any other state; New York is second with 51.
“Texas remains #1 because of the unmatched competitive advantages we offer: no corporate or personal income taxes, a predictable regulatory climate, and a young, growing, skilled workforce” , eze said the Dallas Morning News.
The New York Times examined whether conservative states like Georgia and Texas would be able to continue to attract business after restricting or outright banning abortion. No major companies have announced imminent departures, but many have said they will take steps to help employees who may need access to abortion but cannot get it in their home country. origin.
“In states like Texas and Georgia, Republican lawmakers are effectively betting that the local business environment will remain attractive enough to overcome concerns about women’s rights,” the story says. “And for some conservative politicians, the risk of alienating corporate investment is a price to pay for eradicating abortion.”
US Secretary of Commerce Gina Raimondo told the Time that states imposing punitive abortion laws and bans would suffer long-term economic consequences, especially as talent pools dry up in certain industries. (A July Pew Research survey found that more than 3 in 5 people with college degrees believed the Supreme Court’s decision was wrong, and 70% of people 30 and under disapproved of the ruling.)
“I’ve spoken to CEOs who are rethinking these states,” she said. “I think the cumulative effect will, over time, become quite significant.”
Neither CNBC nor the Time take into account possible future punitive actions and their effect on the activities of the State. Last week, a caucus of conservative Texas lawmakers threatened Dallas law firm Sidley Austin with a veritable slew of bills that would make it illegal for a company to help employees who must travel for abortions. (These lawmakers are expected to rally many of their colleagues to pass the law.)
Abortion isn’t the only political hot potato already impacting business in the state. In the last legislative session, Texas lawmakers passed a law prohibiting banks from doing business with cities, counties, and school districts in Texas unless they can certify to Texas Attorney General Ken Paxton , that they do not discriminate against the firearms industry.
In the first eight months of this law, local governments trying to finance construction projects through bonds have already paid between $300 million and $500 million more in increased interest payments, according to a study by the professor of University of Pennsylvania Daniel Garrett and Federal Reserve economist Ivan Ivanov. .
“There is a cost to making this political statement,” Garrett told the Houston Chronicle.
Senate Bill 19 was designed to address a rise in the number of banks choosing to rethink their investments in the gun industry after the Parkland shootings, forcing financial institutions to choose between their desire to be “socially responsible” and their business interests. What happened, the the Chronicle reported Wednesday, was that several of the biggest banks exited Texas’ $50 billion municipal bond market, which is second only to California.
When those big banks left, so did the competition to secure those bonds. “The more you depended on those banks, the more you paid on subsequent deals after those banks left,” Ivanov said.
And it’s not just the increased costs for municipalities. The same article points out that banks face two dichotomous demands for doing bond business in Texas. Banks must not only file documents with Paxton’s office guaranteeing that they do not discriminate against the gun industry. They must also file regular statements with the Securities and Exchange Commission that include socially responsible business policies.
“The SEC is cracking down on enforcement of these documents, launching an investigation to review them and determine whether they amount to making false financial statements,” the article said. At the same time, Paxton’s office is looking to see if their certification letters are accurate.
None of this means that companies are fleeing the state. Nor does it mean that (so far) the benefits of moving to Texas still don’t outweigh the thorny political climate their workforce faces.
But could the state see itself losing business in the long run? This is definitely something worth keeping a close eye on, especially as state policies come with higher costs.
Bethany Erickson is the Senior Digital Editor of Magazine D. She has written about real estate, education policy, the stock market, and crime throughout her career, and sometimes all at the same time. She hates lima beans and 5 a.m. and takes SAT practice tests for fun.