By Kurt Badenhausen, Forbes
Rick Perry ascended from Lieutenant Governor to Governor of Texas in December 2000 when then-governor George Bush resigned after being elected the 43rd President of the United States. Perry will retire in January with the tenth longest gubernatorial tenure in U.S. history. Perry made job creation one of his principle mantras, and he has overseen remarkable employment gains under his watch with 2.1 million jobs added during his tenure. The total represents 30% of the jobs added in the U.S. since 2000 and more than twice as many as any other state.
The so-called “Texas miracle” does not show any signs of slowing either with 413,000 jobs added over the last 12 months. Texas is expected to have the nation’s fastest annual job growth rate at 2.7% over the next five years, according to data from Moody’s Analytics.
Texas has low taxes and light regulation, but Perry’s record also has benefited from the headwinds at his back regarding energy. Oil prices hovered around $30 a barrel between 1986 and 2002 before a stunning climb that peaked at $145 in 2008. Prices plummeted during the Great Recession and over the past month, but oil is still trading around $80 a barrel. The higher prices have propelled massive investments in Texas both financially and in regards to human capital. “Texas has done well primarily because it is an energy center. You really can’t get around that,” says Edward Friedman, an economist who tracks Texas for Moody’s Analytics. “Every major energy and oil company has realized over the last 15 years that the only place to be is Houston.”
Texas’ prosperity and pro-business environment have led companies outside of the energy sector to flock to the state in recent years. Toyota announced plans to move its North American headquarters from California to a new campus in Plano that will create 4,000 jobs. The Texas Enterprise Fund granted Toyota $40 million to sweeten the pot. San Francisco brokerage firm Charles Schwab SCHW -0.02% is moving hundreds of jobs out of California with Austin and El Paso targeted for company expansion. Apple AAPL +1.13% is undergoing an expansion that will roughly double its Austin workforce by hiring 3,600 new employees.
Texas ranks first for both its current economic climate and growth prospects in our annual study on the Best States for Business. There are 118 of the largest companies in the U.S. based in Texas, including heavyweights like AT&T T +0.66%, Exxon Mobil XOM -0.29% and Dell . The $1.5 trillion Texas economy is expected to expand 4.1% annually over the next five years, which is second best in the nation. One of the only things holding Texas back in our Best States ranking is the education rate of its labor supply. Only 82% of adults have a high school degree, second lowest among the 50 states.
North Dakota clocks in with the second fastest job growth forecast through 2018 at 2.6% a year. North Dakota is also an energy story with the development of the Bakken oil shale fields (only Texas produces more oil than ND). North Dakota had the country’s most robust economy over the past five years with annual growth for jobs (3.9%), incomes (3.6%) and gross state product (9.5%) all best in the nation. The state operates at full employment and has thousands of unfilled jobs. It unveiled a “Find the Good Life in North Dakota” ad campaign this year to attract skilled workers ranging from engineers to nurses.
Rounding out the top five are a few tourist hot spots that were crushed during the Great Recession when their real estate booms collapsed. Nevada ranks third at 2.5% annual growth with Florida and Arizona close behind. Midwestern and northeastern states were shut out of the top 10. Illinois is projected by Moody’s Analytics to have the slowest employment gains over the next five years at 0.7% annually. U.S. employment as a whole is expected to expand 1.7% per year.
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