Earlier this month, CNBC released its list of the best states for business in the U.S., where Texas ranked number 3. This seems like huge news for the state, but some experts have sounded the alarm that Texas may lose its business appeal soon.
Texas has attracted a lot of companies, that’s without questioning. This appeal began under former Texas Governor Rick Perry, when he began marketing the state as a friendly appeal alternative to California. Perry’s efforts managed to attract companies such as Charles Schwab, Oracle, HP, Tesla, CBRE, and Dropbox. Now, more recently, Elon Musk moved both SpaceX and social media platform X to Texas, citing California’s restrictive laws as the tipping point.
However, the Financial Times noted that questions arise about whether Texas can maintain its appeal. While its economy grew by an average of 3% annually over the past decade, recent growth has slowed to 2.5%, while it is still outpacing the national average of 1.4%, Texas’ economy is clearly slowing.
Texas’s allure is also waning due to creaking infrastructure and rising costs eroding its low-cost appeal. Many locals feel left behind by the surge in high-end jobs, and some companies are reconsidering their presence in the state. For example, Oracle, which moved from Silicon Valley to Texas in 2021, now plans to make Nashville its global headquarters.
Texas Monthly noted that Oracle’s departure from Texas was the first sound of alarm for business in the state. While the state lost a big company, it gained SpaceX and X, however, the Monthly also noted that Musk’s companies are highly volatile. For example, Tesla is facing major struggles and had to lay off nearly 2,700 workers.
The report also highlights that there has been significantly less investment in startups. In 2021, venture capitalists invested $6.75 billion in Austin startups, while in 2023 they invested only $3.8 billion.
The report also highlights that there has been significantly less investment in startups. In 2021, venture capitalists invested $6.75 billion in Austin startups, while in 2023 they invested only $3.8 billion.
The same CNBC study that was praised by state leaders, also highlighted that Texas is the worst state to live in, citing its lack of rights and poor healthcare quality.
Despite these challenges, Governor Abbott remains confident in Texas’s ability to attract businesses, emphasizing the state’s continued population growth and economic momentum. However, only time will tell if the state can retain the companies it attracted.
