Texans admittedly love competition. For us economic freedom fans, it’s a driving force. We love touting “#1″ status on lots of lists, but is that status always good? Three sets of new rankings offer interesting and fun insights (and responses) to Lone Star State realities and perceptions.
Texas isn’t a welfare state mecca. A newly-released Cato Institute study finds welfare paying more than a minimum-wage job in 35 states. This status undoubtedly creates little incentive for entry-level work by instead promoting long-term dependence on government help. Texas – thankfully – has fairly responsible policies in this area.
The Cato study follows up on the institute’s 1995 groundbreaking study, The Work vs. Welfare Trade-Off, which estimated values of the full welfare benefit packages available to typical recipients in all 50 states and the District of Columbia. The study found that not only did the benefits’ value greatly exceed the poverty level, but because welfare benefits are tax-free, their dollar value often exceeded the take-home income of an entry-level worker.
How did Texas stack up in the new study? Key findings include:
- Texas welfare benefit packages went from $23,376 (adjusted for inflation) in 1995 to $18,037 in 2013 – a net reduction of $5,338 placing Texas as #47 in the state ranking. Hawaii was #1 with its 1995 package of $41,910 growing $7,265 to $49,175 in 2013.
- The earned wages one would need to equal welfare benefits and the changes since 1995 offer additional insight. Texas was again #47 as welfare packages valued at an inflation-adjusted $22,968 in 1995 come in today’s dollars at $12,550, a decrease of $10,418. Hawaii ranked #1 here as well with a 1995 amount of $55,001 in wages needed to match welfare benefits now increased $5,589 to $60,590. In other words, Hawaii provides more incentive to remain on welfare than does Texas.
- Welfare pays more than a minimum-wage job in 33 states with programs in 12 states and the District of Columbia paying comparable to more than $15 per hour. In eight states, the welfare wage equivalent value pays better and in numerous other states, nearly as well. Texas maintains the #47 spot as its $12,550 pre-tax welfare-to-wage equivalent comes in at $6.03 per hour. Predictably #1, Hawaii’s $60,590 pre-tax welfare-to-wage equivalent equates to $29.13 per hour. Both Texas and Hawaii have a $7.25 per hour minimum wage rate.
- Texas’ $12,550 pre-tax wage equivalent again provides less welfare incentive at #49 as it is is 39.1 percent of the state’s $32,115 median salary. In major contrast, Hawaii maintains the top spot as its $60,590 pre-tax wage equivalent equates to 167 percent of the state’s $36,275 median salary.
Click here to view the full study including more detailed analysis and methodology.
Texas maintains a relatively healthy economy through a diversified business climate and prudent fiscal policies often derived from major battles over tax rates and spending. Hawaii, on the other, relies heavily on tourism, an industry subject to significant swings.
Another indicator of Texas’ strength comes through information put out earlier this week by the Tax Foundation. The Dallas Morning News calls Texas “a big winner in the interstate movement of people and their taxable income in the last decade” citing how people migrating to a new state bring their income as well as that often also of a spouse or partner.
Texas ranked No. 3, after Florida and Arizona, in netting the most income from people’s moves in and out of the state from 2000 to 2010, according to the Tax Foundation’s analysis of federal income tax returns. Newcomers brought a net $17.6 billion of adjusted gross income to Texas.
“This shows pretty much what we know” — that Texas has had net in-migration for many years, said Pia Orrenius, senior economist for the Federal Reserve Bank of Dallas.
Nick Kasprak, analyst for the Tax Foundation, said, “The general trend has been people moving from the Northeast to the Southeast and Southwest.”
Florida gained the most from the decade’s migration, netting $67.3 billion. Arizona was No. 2 with $17.7 billion.
New York saw the biggest decline in net personal income ($45.6 billion) as more people moved out than in. Next were California ($29.4 billion) and Illinois ($20.4 billion).
California was the source of $4.46 billion, a quarter of Texas’ net gain, with Louisiana ($2.63 billion), Illinois ($1.53 billion), New York ($1.13 billion) and Michigan ($1.04 billion) following.
Most current U.S. census data places Texas and its 140,888 net migrants for the year ending July 2012 as the top state migration destination with Florida second and Arizona third.
While many factors influence state migration, Texas’ lack of an income tax is thought to figure prominently. Florida additionally has no state income tax while Arizona’s 4.54 rate is the nation’s fifth-lowest. California’s 13.3 percent rate is the nation’s highest with New York at 8.82 percent, the eighth-highest.
Texas’ economic rankings portend positive things, but that view certainly doesn’t translate to a Business Insider poll that queried 1603 respondents on subjects like which of the country’s states were “the drunkest, the hottest and which had the silliest accents.”
Not surprisingly, Texas fared prominently in these rankings.
Reminding the consequences of too often playing that “‘we can leave America whenever we feel like it’ card,” Texas scored highest (11 percent) as the least favorite state.
Citing America as “pretty down to mess with Texas on anonymous surveys,” Texas is also the fave at 21 percent for being kicked out of America.
Texas was mentioned in responses to many other questions both good and bad. Love or hate us – at least we’re not forgotten.
Houston Chronicle’s John Boyd aptly responds to the results advising “Texans are totally cool with this, but be warned: They’re taking all the steak and Dr Pepper with them.”
He additionally reminds how “we Texans don’t care” using a classic from Texas songwriter Ray Wylie Hubbard to punctuate that point.
And the only thing to add is from the great Charlie Daniels. While not a Texan, this son of the South understands Texas and well-captured our spirit:
And you can call them country and they don’t care
And if you don’t like the way they wear their hair
You can take you likes and shove ‘em on up the line
People in Texas don’t care if the sun don’t shine