By Marin Wolf5:00 PM on Jul 28, 2021 CDTVeteran Waco economist Ray Perryman is used to seeing an annual parade of best for business rankings that put
Veteran Waco economist Ray Perryman is used to seeing an annual parade of best for business rankings that put Texas at the top.
Those rankings shape perceptions about the state’s business climate — a longtime selling point touted by politicians and economic development specialists alike.
That’s why Perryman finds one recent ranking “eerily disturbing.”
Texas fell to fourth in business news network CNBC’s annual ranking of best states for business, dropping two spots from its 2019 ranking. Virginia, North Carolina and Utah beat out Texas. The network didn’t do a 2020 ranking because of the pandemic.
So what led to Texas’ decline?
Look no further than the Lone Star State’s 49th place finish — ahead of only Arizona — in CNBC’s expanded category called life, health and inclusion. This year, that category included inclusiveness initiatives, health care resources, progress in ending the pandemic and other more traditional quality-of-life measures.
“This ranking is a compelling early warning signal that short-sighted, counterproductive policies risk eroding the progress over the past 30 plus years in building Texas to be the most competitive economy in the country,” said Perryman, president and chief executive officer of The Perryman Group. His firm produces economic estimates of everything from Texas’ epic winter storm to the consequences of Texas and Oklahoma leaving the Big 12 athletic conference.
“It’s an unforced error that the state can ill afford,” he wrote in his weekly column published on his website. The column was titled “This Stuff Matters!”
The study, released July 13, ranked states based on 85 metrics across 10 categories that ranged from infrastructure to cost of living.
In order to evaluate each state, CNBC weighted each category based on what states emphasized in economic development marketing materials viewed by companies considering relocation or expansion. States could earn 2,500 points. Cost of doing business was worth the most, followed by infrastructure and life, health and inclusion.
Texas ranked first in workforce, third in access to capital and fifth in economy.
“While the size, depth and breadth of the Lone Star State’s economy put it at the heart of any conversation about competitiveness, Texas has relentlessly pursued policies that run counter to inclusiveness,” said an article accompanying the study.
The state has been embroiled in a battle over voting rights, with Democratic lawmakers fleeing the state earlier this month to avoid voting on election rules legislation in this summer’s special session. Voting rights activists are planning a “March for Democracy” that’s expected to draw thousands to the Texas Capitol on Saturday.
The Perryman Group estimates that policies restricting voter access could lead to an overall decrease in business activity to the tune of $14.7 billion in annual gross product by 2025.
“Irrespective of politics, such laws have substantial adverse economic consequences,” Perryman said.
Texas didn’t fare much better in the education category, where it came in 33rd. And that worries Perryman the most.
“Many districts have massive infrastructure deficiencies, while others struggle to keep pace with explosive growth,” he said. “As if that weren’t enough, Texas ranked 41st nationally in spending per student. The pandemic exacerbated all of these issues, and it will take substantial resources to catch back up, much less make forward progress.”
Looking ahead, Perryman said the state needs to make changes in order to maintain its stronghold in having a welcoming business climate.
“Texas has many assets, a tremendous record in economic development over the past 20 years and the potential for a great future,” he said. “But these issues must be addressed.”