Texas Economy & Cost of Living

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The civilian labor force in Texas is the second largest in the nation. It stood 10.5 million in April 2001. The relatively young Texas population combined with faster-than-average growth means continued availability of workers in the future. Higher-than-average worker productivity and strong support for job training initiatives are key state advantages. A strong work ethic prevails in Texas, a right-to-work state. According to the Texas Comptroller’s Office, the state is home to the second largest tech workforce, with 551,000 high-tech workers adding 152,000 jobs between 1990 and 2000. The Texas labor force increased by more than 345,000 workers between 1999 and 2001. Not surprisingly, a record number of Texans are now employed. More that 1.8 million jobs were added in Texas in the 1990s, a level unmatched by any other U.S. state.

Occupational Outlook

Much like the rest of the nation, most of the new jobs being added through 2010 will be service-oriented occupations. By 2003, the number of non-farm jobs will reach the 10 million mark. The numbers will likely approach 11.6 million by 2010. Statewide, service-producing industries will add about 199,000 jobs annually between now and 2010. The fastest growing sectors of the economy over the next decade will be largely in industries requiring specialized education and skills. Those industries include the high-tech communications, engineering, research, and business services, which includes software and data processing.

Productivity and Wages

No matter how it is measured, Texas manufacturing workers show significantly higher productivity levels than the national average. A close look at the data shows that the value added to the manufacturing process is 17 percent higher in Texas than the U.S. average on a per-employee basis. This figure is 15 percent higher on a per-payroll-dollar basis and 22 percent higher on a per-production-hour basis.

In selected manufacturing industries, the productivity differential between Texas and the U.S. average is even more dramatic. Productivity rates in the chemical industry (which includes plastics resins, pharmaceuticals, and some biotechnology products), the industrial machinery industry (which includes computers and peripherals), and the electronics industry (which includes telecommunications equipment and microelectronics products) are particularly high in Texas compared to the U.S. average.

The typical manufacturing production wage in Texas runs about 12 percent below the national average. For workers, a low cost of living in Texas balances lower wages. For business owners and investors, lower production wages make Texas a more competitive location.

Texas Business Taxes

Texas has one of the lowest tax burdens in the nation, ranking 48th among the 50 states in per capita state taxes in 1998. Total state taxes averaged $1246 per person, 29 percent less than the national average of $1761. Similarly, state taxes in Texas are low relative to income. Total tax collections amounted to just over $49 per $1000 of personal income in 1998 compared to the national average of $64 per $1000 of income.

Texas has no personal income tax, nor does Texas have corporate income tax. Our corporate franchise tax, however, does have a component based on earned surplus. Earned surplus is essentially federal net taxable income plus compensation paid to corporate officers and directors if the corporation has more than 35 shareholders.

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