Underestimate Texas at your own peril.
You might be inclined to think that the Lone Star state is bad at creating good jobs. It is, after all, second only to Idaho in the proportion of its population earning the federal minimum wage or less, according to the Labor Department. And it has the ninth-highest Gini coefficient, a measure of income inequality. So it’s only natural to assume that the state is bad at adding good jobs, right? Wrong.
Texas experienced stronger job growth than the rest of the nation from 2000 to 2013, according to the Federal Reserve Bank of Dallas. Not only that, a pair of researchers note in a Thursday research publication, but Texas leads the nation in creation of jobs at all pay levels, too.
“Texas has also created more ‘good’ than ‘bad’ jobs,” they write. “Jobs in the top half of the wage distribution experienced disproportionate growth. The two upper wage quartiles were responsible for 55 percent of net new jobs. A similar pie chart cannot be made for the rest of the U.S., which lost jobs in the lower-middle quartile over the period.”
We’ve written plenty about how the income gap has continued to grow in recent years and decades, and the same is true with jobs. Nationally, all the jobs created since 2000 were concentrated at the highest- or lowest-paying quartiles. In Texas, however, job creation was more broad-based.
As we noted above, Texas does have a larger share of its population earning the federal minimum wage or less than any state but Idaho, but it helps that things are cheap.
“A low minimum wage and plenty of low-skilled workers ensure that Texas will have a high share of minimum wage jobs,” the researchers write. “On the other hand, a relatively low cost of living in Texas ensures that workers’ earnings here will go further than in other large states.”
Plus, as in the rest of the nation, those earning the least tend to be young, suggesting that their wages will only rise as their costs of living do.
Most sectors in the state contributed to the growth of so-called “good jobs,” they found, though education and health services were the runaway leaders for high-wage job creation (see chart below).
“Texas has produced hundreds of thousands of well-paying jobs across most industries since 2000, making Texas the top destination for domestic migrants since 2006,” the researchers note. But broad trends, such as globalization, technological change and slowing educational attainment threaten its success. If the state wants to maintain the economic climate that enabled such (relatively) equitable job growth, it would be wise to institute policies now, such as investing in higher education, that boost economic opportunities, the authors argue.