Texas and its Potential – Podcast
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Hello. This is Scott McDonald and welcome to the perfect place to put a practice podcast. Having worked in demographic analysis for so many years, it is interesting to review my recommendations for years gone by and to see why one area seems to be thriving while another has fallen apart. If we can clearly see how the trends in behavior are caused, we can begin to predict them or at least to understand what we are seeing.
In our last session, I discussed ten locations that I thought had significant potential but I intentionally put off talking about Texas. My reason for this was an acknowledgment that Texas is a special case. The state is geographically huge and extremely populous. But it can also be stated that in the last seven years of economic uncertainty, Texas accounted for a huge percentage of the nation’s job growth.
I get calls almost every week asking about Texas and what the likelihood of success of placing a practice in this state might be. Let’s start with some facts. Over the past year, Texas added jobs in 9 of the 11 major industries, including professional and business services, trade, transportation and utilities, leisure and hospitality, education and health services, construction, government, financial activities, information, and other services. Pre-recession Texas employment peaked at 10,639,900 in August 2008, a level that was surpassed in November 2011, and by November 2015 Texas added an additional 1,242,700 jobs. In calendar 2014, Texas real gross domestic product grew by 5.2 percent, compared with 2.39 percent for the U.S. And all of this happened while other states were losing population and declining in job creation and in labor participation.
So, why have states like Texas (and there ARE other states like Texas) grown while others have flagged?
Texas managed to keep growing last year despite oil prices crashing. A barrel of crude oil plummeted from over $100 last summer to about $50 by the end of the year. Yet, Texas’ GDP — the main measure of economic growth — jumped up significantly from 3.7% in 2013.
The concern is whether Texas would stay strong in 2015. There was fear that with the decline in the energy market, the state would go into recession. Well, in 2015, Texas did just fine.
Still, three of the top five fastest growing U.S. cities — Houston, Austin and San Antonio– are in Texas.
The Texas growth story is deeper than just oil and mining. Many Americans are gravitating to the nation’s second-largest state because it offers cheap housing in close proximity to cities as well as ample job opportunities.
Jobs is the No. 1 reason for population moves, with affordable housing a close second. Five Texas cities — Austin, Houston, San Antonio, Dallas and Fort Worth — were among the top 20 fastest growing large metro areas.
Some smaller Texas metro areas grew even faster. In oil-rich Odessa, the population grew 3.3% and nearby Midland recorded a 3% gain.
Just as important, many jobs there are well paid: The median income of more than $75,000 is nearly 20% higher than the national median. The median home price is $243,000, higher than the U.S. norm, but a price level that income can support.
Could tax rates matter? Texas is one of seven states that do not collect a personal income tax. However, revenue lost to Texas by not having a personal income tax may be made up through other state-level taxes, such as the Texas sales tax and the Texas property tax.
Texas has never had a personal income tax, and restrictions in Article 8 of the the Texas State Constitution place severe limitations on any potential state income tax collected in the future. An income tax can only be enacted by public vote, and any income tax proceeds must be used to reduce the Texas property tax.
As of 2007, Texas generates supplemental tax revenue through a corporate gross receipts tax. Texas is not really in the top ten tax-saving’s friendly states but it is close. It is also on many lists as one of the six most business friendly states. The cost of living and the cost of doing business continue to put Texas toward the top of the list alongside Utah and Colorado.
Who is moving to Texas?
The three largest immigrant receiving states in 2013, California, Texas, and Florida, had very different patterns of immigrant origins. California’s immigration was predominantly Asian while Florida’s immigrants were mainly from Latin America. Texas had roughly equal numbers of Latin American and Asian immigrants. These patterns indicate a certain degree of selectivity in immigrant destinations. · Among the top ten receiving states, Florida had the highest percent of Latin American immigrants, at 61.3 percent, but also had the lowest percent of Asian immigrants at 14.5 percent. Michigan had the largest percentage share of Asians, at 70.8 percent, and the smallest percentage of Latin American immigrants at 7.4 percent. · The general immigration pattern for Texas mirrors that for the U.S. as a whole where Asians and Latin Americans account for the majority of recent immigrants. For Texas, 83.2 percent of its recent immigrants were born in either Latin America or Asia.
Since 2005, Texas has outpaced all other states in annual population growth. Almost half of this growth occurred because of people moving to Texas. Close to one in six of these movers immigrated to Texas from another country. To make the obvious conclusion, five out of six immigrants to Texas came from other states. Texas, with the nation’s second largest population, attracted the second highest number of immigrants between 2005 and 2013. Although immigration to Texas experienced a strong decline during the 2007-2009 recession, it has been on the rise since 2010. This rebound occurred even as Mexican immigration to Texas fell sharply. The recent decline in Mexican immigration has been partially offset by an increase in the number of non-Latin American immigrants, particularly those of Asian-origin. As a consequence, total immigration to Texas in 2013 reached 126,230, the second highest level during the 2005-2013 time period. Given the state’s high rate of natural increase which consists of a high birthrate, second only to Utah, a continuation of recent immigration trends will ensure strong population growth into the foreseeable future. Additionally, persistence of recent immigration trends will lead to greater population diversity in Texas. In short, recent patterns suggest that 21st century immigration to Texas will increase both the size and the heterogeneity of the state’s population. This latter point is almost entirely lost on East Coast Media sources. In short, they just don’t get it.
At DoctorDemographics.com, we offer a State Briefing on many but not all states. This includes Texas. You can order these briefings from our web site for $49 per state. In it, you will see data on all of the counties and all of the cities in the state along with a narrative tour of the major population centers. We also include some data for gross comparison of dental practice competition rates per County. Admittedly, when counties have very large populations, this competition information is going to have limited utility but, well, I thought if might be of interest. To get really helpful competition ratios, you have to break the numbers down into Zip Codes and there are just too many to include here. A Community Overview Report is really what you will want.
I update these figures every year. From this, you can see age, income, population, and other demographic facts about the states in order to get some insights into what is going on. These reports are offered in the State Briefings section of our web site at DoctorDemographics.com. This is Scott McDonald of Doctor Demographics.com. And thanks so much for listening.