ECONOMIC SNAPSHOT | INEQUALITY

The rich and poor in Texas

By MITCHELL SCHNURMAN
Business Columnist mschnurman@dallasnews.com

By TROY OXFORD
Staff Artist toxford@dallasnews.com

Texas is known for big spaces and big hair. Then theres the big divide between rich and poor. Fewer people take home more of the states income, and the top 1 percent of tax lers haul in more than ever. While this tracks the U.S., the trend is often seen as a threat to the middle class and the economy. In Texas, evidence is mixed. Income inequality is high and rising, but so is job growth. And median household income has nally surpassed the nations.

Rich get richer

Texas top 10 percent accounted for almost half of state income in 2011. Thats tax lers earning at least $116,500. The top 1 percent, whose annual take exceeded $414,000, brought in the largest share of state income in at least a century.
50% 40% 30% 20.8% 20% 12.3% 10% 48.0%

A job machine for all

Does Texas create only lousy jobs? Thats a myth. It has many low-paid workers, including the second-highest share earning the minimum wage (after Idaho). But Texas outstrips the nation on the high end, too. And by a larger margin. Job growth by wages, 2001 to 2012
Lowest-wage quartile Lower-middle quartile Upper-middle quartile Highest quartile

34.1%

Top 10 percent
25.6% 12.6% 14.1% 5.6% Texas U.S. without Texas 7.3% 1.2% -4.1% 26.1%

Top 1 percent

0% 1920s 30s 40s 50s 60s 70s 80s 90s 00s 2011

SOURCE: Mark Frank, Sam Houston State University

SOURCE: Federal Reserve Bank of Dallas

Mobility and place

What are the odds of low-income children moving up? In part, that depends on where they live. Researchers tracked children born in 1980-81, whose families were in the bottom fth of income. By age 30, some had advanced to the top fth in income. Share that rose
8.4% 6.4% 5.1% 4.0% 2.6% 8.8% 9.6% 9.7% 10.4% 11.2% 11.5%

Povertys reach
The poverty rate in Texas is higher than the U.S. rate, in part because the state has so many immigrants. In 2012, the federal poverty line was $23,050 for a family of four and $11,170 for an individual. A sampling of states:
Mississippi Louisiana Arkansas Georgia Texas Florida California U.S. New Jersey 10.8% 10.1% 10.0% 19.9% 19.8% 19.2% 17.9% 17.1% 17.0% 15.9% 24.2%

Memphis, Tenn.

Detroit

Houston

Los Angeles

Seattle

Salt Lake City

Alaska New Hampshire SOURCE: U.S. Census Bureau

Atlanta

Dallas

Fort Worth

New York San Jose, Calif.

SOURCE: Equality of Opportunity Project

The bottom line

Texas has a lot of low-paying jobs because it has a lot of low-skilled workers. Almost two-thirds of Texas immigrants dont have a high school education, yet their wages are higher than in the rest of the country. Texas has a glaring problem with health coverage but not with jobs and income. Part of Texas advantage is that it has so many low-wage workers. Its cheaper for business but how long can Texas be a low-cost bidder? We may look good today. The question is whether were preparing for 20 years from now. To compete globally, we have to invest more in our people. Texas is sitting pretty, with jobs and population growing fast, and income on the rise. Thank you, energy boom. Now Texas has to spread the wealth and invest wisely. How does the state help new residents become assets, not liabilities?

Pia Orrenius, senior economist, Federal Reserve Bank of Dallas

Terry Clower, director, Center for Economic Development and Research, University of North Texas

Mitchell Schnurman, business columnist, The Dallas Morning News