Socio-economic Disparities Pose Risk to Texas Economic Growth and Business Prosperity

Ann Arbor, MI — Texas has long enjoyed one of the strongest economies in the nation. Its rich natural resources, diversified industry, and growth-oriented policies have contributed to economic strength far above the national average for decades. Yet widening disparities among the state’s growing population, particularly among minority groups, puts this growth at risk, according to a new report by Altarum that was funded by the Greater Texas Foundation.

Indeed, the youngest and fastest-growing populations in Texas—those that will dominate the workforce in the near future—lag behind in education, health, and income. And this lag, if it isn’t closed, will force Texas businesses to import tens of thousands of professionals from across the United States, potentially putting those businesses at a competitive disadvantage.

"The Business Case for Expanding Opportunity and Equity in Texas" examines this development and the economic stakes and opportunities it presents, focusing not only on the cost for the individuals most affected, but also for Texas’ businesses, governments, and communities.

By closing the disparity gap, the Texas economy would benefit from billions of dollars in additional personal income, tax revenue, and purchasing power. Consider a few highlights from the report:

• If the average Hispanic, black, or other person of color in Texas earned as much as their white counterparts at each age, by 2050, earnings would grow by more than 50% ($335 billion). This growth would increase economic output in Texas by nearly $2 trillion—more than the current gross domestic product (GDP) of Canada, Australia, Korea, Spain, or Mexico.
• By 2050, closing the earnings gap would be associated with $34 billion more in spending on food, $9 billion on apparel and services, $45 billion on transportation, and $13.6 billion on entertainment spending.
• An additional $335 billion in earnings would generate more than $25 billion in state and local tax revenues by 2050—greatly improving the fiscal outlook for Texas.

These projections represent a significant opportunity to improve outcomes and support a vital economy long into the future. Currently, educational achievement in Texas lags behind employer demand—only 37% of Hispanic adults in Texas have a post-secondary education, compared with 52% of blacks and 61% of whites. Higher education has benefits beyond a more educated workforce, which translates to increased earnings. It is associated with better health, longer life, less likelihood of being incarcerated, and more volunteering, charitable donations, and civic involvement.

Work is already underway in Texas to reduce educational gaps and improve life outcomes. Supporting and investing in these policies and programs as individuals, employers, and communities is not only the right thing to do, it is the path forward to a stronger and more prosperous Texas for all.