City Journal: The Texas Growth Machine

A great data-driven piece from City Journal digs into the details of how Texas economically outperforms everywhere else in the United States:

The first thing to point out is that Texan job creation has far outpaced the national average. The number of jobs in Texas has grown by a truly impressive 31.5 percent since 1995, compared with just 12 percent nationwide, according to Bureau of Labor Statistics data (see Figure One). Texas has also lapped California, an important economic rival and the only state with a larger population. The Texas employment situation after the financial crisis was far less spectacular, of course, with the number of jobs growing just 2.4 percent from 2009 through 2011. But that was still six times the anemic 0.4 percent growth rate of the overall American economy.

...

[M]any of the new Texas jobs paid well. Indeed, Texas did comparatively better than the rest of the United States from 2002 through 2011. For industries paying over 150 percent of the average American wage, Texas could claim 216,000 extra jobs; the rest of the country added 495,000. In other words, the Lone Star State, with 8 percent of the U.S. population, created nearly a third of the country’s highest-paying positions. Texas also added 49,000 positions paying 125 percent to 150 percent of the U.S. average; the rest of the country lost 174,000 jobs in that category. As Figure Four shows, two sectors in which Texas employment did particularly well during the same period were natural-resource extraction (in fact, the state gained 80 percent of all new jobs in the country in that field) and professional, scientific, and technical positions. Both job categories boast average wages far higher than the national overall average. As happens whenever an economy grows, Texas also added hundreds of thousands of positions in food services, health care, and other lower-paid fields, in addition to the more lucrative jobs.

...

Part of the explanation for the high living-environment score is doubtless Texas’s low cost of living. In 2011, the U.S. Bureau of Economic Analysis put Texas’s “regional price parity,” a measurement of the price level of goods in an area, at 97.1, a bit lower than the national level of 100 and far lower than the California level of 114.8. Adjusted for cost of living, Texas’s per-capita income is higher than California’s and nearly as high as New York’s. Factor in state and local taxes, and Texas pulls ahead of New York.

Texas has created 'an environment where entrepreneurs can risk their capital and achieve a decent rate of return.'  California, by contrast, has stopped teaching algebra.  The results speak for themselves.