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Why the recession (mostly) didn't mess with Texas

Texas is weathering the downturn much better than most states. But why? Is it because they sell energy rather than houses? Because they have low income taxes? Because they have high property taxes? Lots of cheap, immigrant labor? Fewer unionized workers? A healthy manufacturing sector?

Maybe.

By Ezra Klein  |  August 2, 2010; 8:37 AM ET
 
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Comments

CNBC (see http://www.cnbc.com/id/37642856/CNBC_s_Top_States_For_Business_2010_And_The_Winner_Is_Texas) ranks Texas, Virginia, Colorado, North Carolina, and Massachusetts as the best states for business. These states do have something in common, and CNBC offers a useful quiz (see http://www.cnbc.com/id/38108880/ ) which helps to demonstrate the similarities.

Posted by: rmgregory | August 2, 2010 9:28 AM | Report abuse

Low taxes, business friendly environment statewide, low government regulation, low labor costs due to above and lack of unions, on and on. Everything high unemployment states like California and the U.S., under Obama, doesn't do.

Posted by: RobT1 | August 2, 2010 10:05 AM | Report abuse

Low taxes, business friendly environment statewide, low government regulation, low labor costs due to above and lack of unions, on and on. Everything high unemployment states like California and the U.S., under Obama, doesn't do.

Posted by: RobT1 | August 2, 2010 10:07 AM | Report abuse

Gee, I thought it was because Texas has heavily regulated (you know, through the government) the real estate market which helped keep them from going overboard on suburban development and drive up the property bubble.

Did I mention the high property tax rates?

Posted by: lol-lol | August 2, 2010 10:13 AM | Report abuse

Texas unemployment rate: 8.5%
New York unemployment rate: 8.2%

Low taxes, no regulation, no unions - that must be why Texas is doing so much better than New York.

Posted by: Bloix | August 2, 2010 10:37 AM | Report abuse

Bloix, poor analysis to simply compare current employment rates. You would want to look at the trend in net jobs created and changes in the size of the workforce. Presumably, many more people have moved to Texas looking for work, ie, the unemployed of the northeast migrate south. Additionally, Texas is presumably absorbing more immigrant populations, both legal and illegal.

Posted by: cdosquared5 | August 2, 2010 12:26 PM | Report abuse

There's a saying. I believe it is: "I would rather be dead in California than alive in Texas." Or maybe that's "alive in Arizona". Either way works.

Posted by: slag | August 2, 2010 12:53 PM | Report abuse

Texas screwed up earlier. It's also running off deficit spending while screwing over its future.

The comments to that piece make the point that Florida's not that dissimilar, and is getting whacked. More military-industrial complex work in TX, though.

Posted by: pseudonymousinnc | August 2, 2010 12:54 PM | Report abuse

And with their decimation of social spending (education, anyone?), they're bankrupting themselves even faster. Yeah, top job talent sure wants to move to a state where their kids can't get a good education. I don't care how "low" your taxes might be. You're paying for it somewhere.

But hey, till then, if people want to go find jobs in the fire-ant ridden awful climate that is Houston and most other cities there, go for it. Less folks in my dry temperate home :)

Posted by: Rossi1 | August 2, 2010 3:00 PM | Report abuse

1) The housing bubble was very localized (S. CA, Florida, ...). TX did not have a housing bubble, ironically because they had stronger lending rules than most on taking equity out of a home, and more. So, their rules basically prevented a bubble.

2) Where the bubble was most pronounced, was the same areas where employment was propped up by building houses. And, the economy was propped up by taking $$$ out of homes (which has now stopped everywhere). So, these factors helped -- a lot.

3) All dig/drill and sell areas have remained strong (Look at CBPP's chart, and the states with the lowest drop in revenues, and you'll find a correlation with mineral generated wealth).

4) I'd guess there is a lot of defense work in TX, another sector that has avoided the business cycle.

Those are my quick takes.

Posted by: rat-raceparent | August 2, 2010 3:59 PM | Report abuse

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