Texas has the world’s eighth-largest economy, with its sights on No. 7 France, and has been a model of strength and resilience for decades. Since the pandemic, it has had higher GDP growth and a lower unemployment rate than most states.
It is also, according to the personal-finance website WalletHub, the state with “the most people in financial distress.” This top ranking came as a surprise to a lot of people — but not to me, a Texas native and resident. For all the impressive statistics, Texas doesn’t generate sufficient income or economic security for its residents.
First, it’s always wise not to take any ranking of states too seriously, though WalletHub’s does include tangible and relevant metrics such as credit score and bankruptcy filings, as well as less concrete ones such as searches for the word “loan.” The larger issue, as the Dallas Federal Reserve has noted, is that Texas’ aggregate strength masks an inward fragility.
Per capita personal income in Texas, for example, as measured by the Bureau of Economic Analysis, was about $68,000 last year. That’s less than the national average and the lowest of the so-called “Big Six” states with economies larger than $1 trillion: California, New York, Illinois, Pennsylvania, Florida and Texas.
Texas has a higher poverty rate, 13.7 percent, than the U.S. overall (12.5 percent). And poverty isn’t a rural problem. For all the talk of Rust Belt decline and the loss of manufacturing, or East Coast cities riddled by crime and blight, the metropolitan area with the highest poverty rate in the U.S. is Houston, followed by Detroit and then San Antonio.
The Texas government — distinct from the economy — also distinguishes itself when it comes to the Supplemental Nutrition Assistance Program, or food stamps. Across the U.S., about 88 percent of all individuals eligible for food stamps receive benefits. Texas ranks 46th, with just 74 percent. Keep in mind, it’s a federally funded program, so missing SNAP recipients is leaving money on the table that could be in the Texas economy.
No doubt Texas leaders prefer to focus on their state’s place at or near the top of lists like States With the Strongest Economies or Top States for Business. Indeed, there is a whole subgenre of economic commentary making the case that the Texas economy is better than California’s.
And truly, Texas’ economy is incredible, especially considering where it came from. Forty years ago, it was a state often at the mercy of the oil and gas industry. Since then, Texas has diversified across sectors, become a large exporter, is home to a growing number of companies, and was a net receiver of internal migration during the pandemic.
Yet nothing inhibits introspection quite like success. Ideally, Texas’ ranking in this WalletHub survey should serve as a warning: If left unaddressed, the problems of its most vulnerable residents are just as much a threat to economic strength as the boom and bust of the oil and gas industry several decades ago. Back then, the state’s leaders realized that dependence on one industry would limit potential and were motivated to diversify.
If they want to make Texas truly the strongest state economy, they will need to bring that same motivation and sense of purpose to addressing this era’s fragility: The poverty and economic insecurity of so many of its residents. Growth isn’t enough and the job is not done.
Kathryn Anne Edwards is a labor economist and independent policy consultant. She wrote this for Bloomberg Opinion.