Ohio and Texas: A tale of two states

Joel Kotkin reports on Texas and Ohio:

Texas presents, in many ways, Ohio’s mirror image. This free-market haven is among the few large states that enjoy both strong net internal migration of domestic residents and growth in immigration. Despite its less than stellar reputation among northeastern intellectuals and journalists, Texas also has become a major draw for college-educated workers in their late 20s and beyond. This is not merely an Austin phenomenon, but it is also true for Houston and Dallas.

Economically, Texas is on a roll, driven in large part by its historic role as an energy center. Bill Gilmer, a Houston-based economist from the Federal Reserve Bank of Dallas, ascribes the growth to several critical factors, including higher energy prices, relatively low housing and business costs and a recovery in the technology sector. “Everything’s now hitting on all cylinders,” Gilmer said.

Anyone who has spent time working in Houston, as I have, has noticed the big “buzz” of economic activity that shows the place has come back. The streets are definitely more crowded now than they were just a few years back, and there seem to be a lot of high-end stores and restaurants opening all around.

Houston’s job growth is running at about twice the national average, with manufacturing, finance and professional and business services all gaining. Incomes, adjusted for cost of living, have grown more quickly there than in most other cites. But it’s energy, Gilmer and other economists believe, that’s driving growth, bringing a whole cadre of new, highly paid professionals to an increasingly sophisticated high-tech business.

“Our business has been growing 40 percent for the last three years,” exults Chris Schoettelkotte, CEO of Manhattan Resources, a Houston-based executive search firm specializing in recruiting energy executives. “We’re pulling people from Wharton, Harvard, MIT and UCLA like never before.”

Houston is not alone in benefiting from the energy boom. Dallas, Midland-Odessa and other areas are also reaping a windfall. Technology, too, is making a comeback in the Lone Star State. Austin is often lumped in with “hip” places such as Boston or Silicon Valley, but unlike them, it is adding jobs and enjoying a big surge of new migrants.

Lower housing prices and no state income tax, it appears, appeal to techies as much as other high-income folks, particularly engineers and executives entering their child-rearing years and moving primarily into the city’s sprawling suburbs.

The high tax,high regulation places just can't compete.