A recent front-page article in Investor’s Business Daily put the differences in the economic climates of California and Texas in sharp relief. Not surprisingly, California consistently ranks at or near the bottom in terms of business friendliness while Texas is in the top 5. Indeed, Chief Executive magazine has ranked Texas as the most friendly state for business for eight straight years.
The article cites various metrics for its conclusions, including the following:
• GDP. The growth in GDP in Texas over the recent past has been far greater than that of California.
• Jobs. Since June 2009, Texas has created twice as many jobs as California.
• Taxes. California has one the nation’s highest rates of taxation, before the recent increase of the top income tax rate to 13.3%. Texas has one of the lowest.
• Education. According to a study by McKinsey & Co., Texas students perform far better, including Latino, black, and poor students, despite lower state expenditures.
• Poverty. Despite its broad and expensive governmental programs, California ranks No.1 in poverty (23.5 percent of its population). Texas’ rate is 16.5 percent.
The piece also cites an interesting measure devised by Mark Perry, an economist at the University of Michigan. Termed the “U-Haul Index”, it tracks the cost of renting a 20-foot truck one-way between the two states. It turns out that the cost from San Francisco to San Antonio is $1,693, while the reverse trip is only $983. The reason is simple-much greater demand to come to the Lone Star State than to go to California.
If this was a fight, Texas would win by TKO in the 1st round. We can only hope that the Texas-bound West Coast refugees don’t pack their California points of view with the rest of their belongings.