According to a recent report, pro-business Texas is becoming much less so due to GOP policies that are running employers and employees away.
Even with the Lone Star State’s decades of over-the-top voter suppression tactics, years of Texas Governor Greg Abbott and his GOP cadre enacting policies to underfund public education while over-populating the state with guns and ensuring that Texans are the least insured lot in the nation, Texas has amazingly remained ranked one of the best states for business.
Being pro-business has been the Republican Party’s calling card for decades, even though their pro-business policies have not been pro-workers, and even though national statistics show better business outcomes under Democratic administrations.
That said, the state’s job growth, business access to capital and support for small businesses have served as magnets for individuals across the nation to seriously consider and/or actually relocate to Texas.
But a recent CNBC study shows that may be changing.
CNBC’s America’s Top States for Business study, launched in 2007, ranking all 50 states in terms of how good they are for business recently reported that in 2023, for the first time in the study’s 16-year history, Texas fell out of the top five.
Texas, which has finished atop the CNBC study multiple years (2008, 2010, 2012 and 2018), took a dive in rankings that some believe will continue due to GOP policies that hurt Texans.
Crumbling Infrastructure
Infrastructure, the basic physical and organizational structures and facilities (e.g. buildings, roads, power supplies) needed for the operation of a society or enterprise, has been a hot-button issue for years. The need for re-investment in national and statewide infrastructure improvements is made apparent with each bridge or highway collapse nationally. Economists of all political spectrums have identified Texas as being one of the main states refusing to make necessary improvements in this area. The CNBC report highlighted the fact thatboth U.S. Senators John Cornyn and Ted Cruz and every Texas House Republican voted against the Bipartisan Infrastructure Law.
Shaky electric grid
Winter Storm Uri (aka The Great Texas Freeze of 2021) revealed to the world the massive fault lines in the state’s electric grid. Residents and elected officials, as well as business owners, have literally testified to sweating bullets each summer and winter since—the two seasons that place the most drastic demands on the troubled grid. In 2023, another legislative session passed without an overhaul of Texas’ inadequate electric grid system.
Attacks on Diversity
According to a University of North Carolina at Pembroke article, “Gartner research reveals that ‘differences of age, ethnicity, gender and other dimensions foster high performance.’ Through 2022, 75% of organizations with frontline decision-making teams reflecting a diverse and inclusive culture will exceed their financial targets, according to recent studies. World Economic Forum research shows that companies with above-average diversity scores drive 45% average revenue from innovation, while companies with below-average diversity scores drive only 26%.”
Thus, it’s no shock that Abbott’s move outlawing DEI (diversity, equity and inclusion) offices at state-funded colleges and universities, has already had negative effects. For example, the Texas A&M fiasco of failing to hire nationally revered Dr. Kathleen McElroy to revive the school’s journalism program because conservative (GOP) groups took issue with her previous employment at The New York Times and her work in diversifying newsrooms has become a PR nightmare that doesn’t seem to be going away anytime soon.
There have been three resignations from TAMU thus far, with talented and experienced academics leaving what is being portrayed as an environment hostile towards anyone outside the heterosexual, white male demographic.
The national move making Affirmative Action for Blacks unconstitutional, only exacerbates the Texas DEI ban.
The CNBC article and study also highlight Texas’ incessant attacks on women and LGBTQ+ residents as a reason for its falling out of the top states for business – through actions like its draconian abortion ban and laws undermining rights for LGBTQ+ Texans.
Making matters worse for workers in Texas, home to the most diverse city in the nation (Houston), Texas is one of only five states with no anti discrimination laws protecting non-disabled people, according to the National Conference of State Legislatures.
“We needed to leave Texas because it was not a safe place for us,” said Camille Rey, regarding a lack of protection for her transgender son, Leon. “It was not a place where Leon could be himself.”
High cost of living
Much was said of the tech exodus from California to lower-tax Texas during the COVID-19 pandemic. However, a new report shows many who made the move having “buyer’s remorse” because Texas levies a higher tax burden on low- and middle-income residents than California.
High Cost of Doing Business (Capitalism)
Though no state income or corporate tax offers businesses savings that make Texas attractive, it is far from the least expensive place to live, or do business in. Relatively high worker wages (a positive for workers, but viewed as a negative by CEOs… ah capitalism) and rising rents pushed Texas from No. 12 (2022) to No. 16 (2023) in Cost of Doing Business. Higher housing also hurt Texas in this area, dropping the state to No. 22 for Cost of Living, compared to No. 14 in 2022.
Underfunded Public Education
If a state’s business environment is only as good as its workforce pipeline, Texas is is huge trouble. This legislative session gave essentially nothing to the state’s public education system, which has become something of a Texas tradition, while Republican leadership made an all-out push to defund public schools in favor of private school vouchers.
The CNBC report intimated that businesses nationally and globally thinking about relocating to Texas, often have second thoughts, especially as Texas dropped to No. 35 for Education in 2023, from No. 21 in 2022. The Lone Star State’s per-pupil spending is among the nation’s lowest, according to the National Education Association. And U.S. Department of Education data K-12 shows test scores are lagging, especially in math.
Additionally, Texas is the poster child for the nation’s penchant for continually underfunding HBCUs compared to their PWI counterparts. This inequity exacerbates the stain on Texas’ reputation as good for business because Texas Southern University, a Houston-based HBCU, has been one of the state’s and nation’s largest producers of Black professionals in various fields (i.e. law, pharmacy, etc.) and has been touted by researchers and the main force behind the development of Houston’s and the state’s Black middle class.
Healthcare Apartheid (Quality of life)
The CNBC article reports something that is old news to Texas residents: that “Health care in Texas is poor, according to the United Health Foundation. The state ranks No. 50 for clinical care, and No. 47 for access to primary care physicians. Texas also has the greatest percentage of uninsured residents.
Healthcare equity advocates point to Abbott’s continued refusal to expand Medicaid as a huge driver of this reality, leaving countless Texans without healthcare, andrural Texas hospitals closing en masse.
Quality of Life
Texas also finished last nationally in Life, Health & Inclusion, a metric that includes healthcare but extends to general quality of life.
Also impacting the quality-of-life score is the state’s abortion ban, which is among the strictest in the nation.
“The industries that Texas is trying really hard to attract are biotechnology industries, the startup companies, and the other kinds of tech,” said science writer Camille Rey to CNBC.
Rey’s husband is a bio-scientist. The couple are the kind of educated professionals Texas is trying to attract, working in industries Texas has been seeking to boost.
“You have to create a friendly environment for the employees because, without the employees, the companies are not going to want to go there.”
And as a state with a growing percentage of workers of color, the fact that Texas is viewed as ground zero for the attack on democracy via rabid voter suppression laws and what many view as an anti-democracy state takeover of the Houston Independent School District also contributed to Texas falling out of the CNBC’s top five states for business.
