Poverty in America is on the rise. And to many of the major media outlets, the fact that the poverty rate in Texas has increased slightly faster than the national average the only trend that matters. But as always, more than cherry-picked data and emotionally-driven quotes are needed in order to understand the numbers.
At CNN Money, Tami Luhby slams Texas policies for creating a poorhouse of a state in which 18.4 percent of residents (as opposed to 15.1 percent nationally) live below the poverty line. The summation of the piece is this: it’s no fun being poor, but because Texas spends less on certain social services than many other states do, it must really be horrible to be poor in Texas.
While looking at the influx of people living in poverty, Luhby acknowledges that “a combination of both economic and demographic factors” is to blame. Large populations of minorities and young people – both of whom are at greater risk of being poor – are major reasons for Texas’ above average poverty rate. But even though she gets the diagnosis right, Luhby’s prescriptions are dead wrong.
About 550,000 Texans (9.5 percent of the hourly labor force) worked for wages at or below the federal minimum wage on $7.25 last year. That’s over a half million people making $15,000 more per year than those who are unemployed. Yes, it may be hard to support a family flipping burgers at McDonalds, but most minimum-wage earners (62.3 percent) are working part-time seasonal or supplemental jobs and a large portion of them (22.8 percent) are teenagers. Implying that there are 550,000 single parents with multiple children earning minimum wage in Texas is simply disingenuous.
Regarding Texas’ safety net, Luhby bemoans a lack of availability and access to social services that might assist the poor, disregarding entirely the idea that employment, not handouts, can be the most effective way to overcome poverty. In order to attract employers and expand the state’s job market, Texas has kept taxes low. Because tax revenue is limited, so is spending on unemployment and other welfare programs. So far, this has been a good trade-off.
But despite all the negative rhetoric aimed at Texas’ poverty rate, there is sunshine on the horizon. Personal income growth in Texas has increased at a more rapid rate over the past five years than it has in nearly any other state. Since 2006, personal income in Texas has grown 66 percent faster than the country as a whole. Only two states, North Dakota and Wyoming, experienced greater growth.
Texas’ low cost of living can make financial burdens much easier on be poor compared to more expensive states like California or New Jersey. According to the Council for Community and Economic Research, Texas is the 2nd-least expensive state to reside in – 46 percent cheaper than California. Even when discrepancies between the states’ median incomes are taken into account, Texas is still 27 percent more affordable than California.
The poor and unemployed will always be drawn to cheaper locations with more opportunity. These factors make Texas especially attractive to such people, and are the explanation for the state’s larger-than-average poverty rate. Texas has relied on its economic opportunity and widespread wealth creation – as opposed to ineffectual handouts and quick fixes – to act as a safety net. And by the amount of indigent migrants that are attracted to Texas looking for a better life, the strategy seems to be working.