Whether you’re a resident or visitor, fewer sights are better than the “Welcome to Texas” road sign greeting all who cross over into the Lone Star State.
There’s no question that the Texas of today is a bright and shiny frontier, a land of opportunity boasting fast-growing cities and a sustainable economy. This has helped the state outpace the rest of the country in population growth and job creation. Texas leaders are open about their efforts to woo businesses and investments from the East and West Coasts. And the influx of corporate relocations proves it’s working. Consider that Irving/Las Colinas is known as the “Headquarters of Headquarters,” and with good reason.
I was initially thrilled to read the latest CNBC rankings of top states for business place Texas fifth (just behind North Carolina, Washington, Virginia, and Colorado). Then, I hit a big bump in the road.
Texas is down from fourth in 2021 and far down from second in 2019. Although fifth certainly isn’t disastrous, it signals a trend that needs to be reversed.
CNBC measured all states under 88 metrics in 10 categories. Each category is weighted based on how often states use them as a selling point in business growth and economic development marketing materials. In doing so, the CNBC study ranks the states based on the characteristics they use to promote themselves.
In most areas, Texas compares quite well. Texas ranked second to Colorado (after topping the rankings for many years) in likely the most important category: Workforce. This ranking includes the concentration of educational attainment, net migration of educated workers, productivity, right-to-work laws, science, technology, engineering, and math (STEM) workers, talent attraction, and worker training programs. Businesses won’t relocate or expand in places where they can’t get essential workers.
Texas also compared well in other areas, including Technology and Innovation (fourth), Economy (eighth), Cost of Doing Business (12th) and Infrastructure (14th).
The two rankings where the Lone Star State crashed and burned are Business Friendliness (34th) and Life, Health, and Inclusion (49th).
Business Friendliness includes the overall bureaucracy, legal climate and regulatory framework. CNBC also considered how welcoming states are toward emerging industries, including cryptocurrency and cannabis.
The almost end-of-the-road rank in Life, Health, and Inclusion (Arizona placed 50th) is more challenging. The most problematic issues for Texas in this category are the lack of inclusiveness in state laws and the high uninsured rate. As CNBC describes it, “Combine an era of enhanced social consciousness with a growing worker shortage, and it explains why, now more than ever, companies are demanding that states offer a welcoming and inclusive environment for employees.”
Let’s face it. The positive impact of diversity and inclusion is no longer up for debate. Gartner found that inclusive teams improve team performance by up to 30% in high-diversity environments. As reported by Deloitte, diverse companies enjoy 2.3 times higher cash flow per employee. In a BCG study, companies with diverse management teams had a 19% increase in revenue compared to their less diverse counterparts.
A diverse and inclusive workplace generally has five key benefits:
- Better conflict resolution and problem-solving skills
- Greater resilience and ability to adapt to change
- Heightened empathy and understanding of consumer needs
- Increased openness to discussing and managing mental health issues
- Superior sense of safety and belonging
When business gets political, achieving goals for inclusivity, growth and sustainability are particularly challenging. Leaders may mean well, but it’s time for a new way of thinking if Texas expects to keep the momentum moving down the road.
Diane Butler is president of Butler Advisers.