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Economist Michael Cox has a slogan to suggest if you're trying to attract talented workers from either coast: Move here and get a free BMW.
It's not false advertising, says the former chief economist for the Federal Reserve Bank of Dallas, who's now at Southern Methodist University.
Most professionals working in the Northeast and California pay the equivalent of a year's worth of expensive car payments in annual personal income tax – which we don't have.
But we don't need an ad campaign to encourage immigration to North Texas.
Every year for the last three years, Dallas-Fort Worth has added a Little Rock to our population, Cox says. Maintain that annual increase of 165,000 for three years, and we will have "annexed" a San Jose, Calif., since 2007.
"Every six years, we add a million people," says Cox, who heads the O'Neil Center for Global Markets and Freedom at SMU. "That's unbelievable. When they lose their jobs in Cleveland, they say, 'OK, let's pack up and move to Dallas.' "
If population trends continue, we'll replace Chicago as the third-largest metropolitan area in 20 years, if not sooner, Cox says. Why here? Why now?
"The world has fallen in our lap," he says. "We're a service-based economy. We're perfectly poised for growth domestically. Now we have global growth through technology that enables us to be the 'it' economy."
Think of Texas as the target, attracting individuals and companies fleeing high taxes, faltering economies and sky-high costs. For every dollar a person or company makes in most of the Northeast or California, the state grabs about 10 cents in taxes. Texas lets you keep the full dollar.
Now think of Dallas-Fort Worth as the bull's-eye. More than any other Texas metro area, Dallas-Fort Worth has tied its future to foreign economies with large populations, fast-growing workforces and increasing wages.
For decades, we've been telling ourselves how smart we are to live here. We have hot weather. But we also have air conditioning.
"You don't have to shovel heat," says John Holt, chief executive of Dallas-based SWS Group's banking subsidiary, Southwest Securities FSB.
Cox developed a following during his 25 years at the Dallas Fed. For 10 of those, he was the chief economist guiding the bank's policy with his economic analysis.
With the help of others, Cox developed a critical index used by the entire Federal Reserve System. The "spaghetti index" tracks employment ups and downs in each of the 12 Fed districts.
"I would have preferred to have called it the Cox index, but others at the Fed thought it looked like a bowl of spaghetti," he says.
Since taking over as director of the O'Neil Center, Cox has spent two years crunching statistics, devising new formulas, reformulating old ones, and analyzing demographic and employment trends for a major presentation about D-FW as the "it" economy.
Using more than 100 slides, Cox sets out to prove that home and Oz are one and the same.
Tom Leppert has seen Cox's hourlong presentation and buys the thesis – which is natural since he's the mayor of Dallas. But he says he believed similar arguments when he moved here with the headquarters of Turner Corp. in late 1999. You know: central location, outstanding airport, low-cost economy, quality of life.
OK, we're a little short on oceans and mountains, says Leppert, who moved here from Hawaii. But from his experience, Dallas turned out to be a "hard-to-beat place" to run an international business and raise a family.
"All of the pieces have been here for years," Leppert says. "But our advantages have been magnified because other areas of the country have gone in the wrong direction." Global economy
Forbesmagazine cites "tortuous commutes and nose-bleed-inducing taxes" as reasons why New York and Chicago made its just-released 2010 list of America's 20 most miserable cities. Philadelphia; Sacramento and Modesto, Calif.; Miami; and a host of economically hammered Midwestern cities also made the list.
So why is Dallas-Fort Worth coming into its own?
Globalization and technology, Cox says. We've developed the goods and services that the New Economy wants.
Although Houston has one more Fortune 500 company than D-FW, revenue from foreign sales by Houston's largest corporations was less than half of the $387.3 billion generated abroad by those based in North Texas in 2008.
For example, Texas Instruments Inc. sold nearly 90 percent of its products abroad. Foreign sales accounted for nearly half of everything Kimberly-Clark Corp. produced.
The thrust of the global economy for several decades will be powered by services, Cox predicts. Unlike energy-centric Houston, our diversified economy has created a diversified service sector.
The Internet allows professional, information technology and financial services to be traded around the world. And we have those.
D-FW interior designers, architects and engineering companies design royal palaces, resorts and even amusement parks in the Middle East, casinos in Macau, skyscrapers in Europe and manufacturing plants in China and India.
We're big in computer programming. We're home to global hedge funds.
Local bankers like Holt help customers do business around the world. Even though Southwest Securities is not a giant, he expects its foreign segment to expand as customers become more globally focused.
"You don't have to be big to be global," Cox says. "You just have to develop a global mindset. Once you do, you've got tremendous opportunity." Diversity helps
Another advantage is D-FW's diversified population, which as of the last census included 265,000 Asians who help connect us with those growing parts of the world, he says.
Immigration from countries to our south is another plus, Cox says.
"At one end of the income distribution, they're building houses, taking care of our children, being our maids, providing lawn care, being police and firefighters. At the other, they're lawyers, bond dealers, business owners, professors.
"We need to celebrate our diversity."
The biggest challenge is improving education from pre-K through college if D-FW is to have the workforce required to fuel economic growth, he says.
"We have to embrace economic freedom. We need to remake our economy over and over again and not get stuck on one thing.
"We need to embrace globalization, look abroad for sales and resist policies to stop outsourcing.
"And the absolutely worst thing we could do as a state is to initiate income taxes."
Unbridled growth will stress roads, schools, health care and other services, says Al Niemi, SMU's business school dean. But those problems pale against the woes being experienced elsewhere.
Long term, our problems are likely to be environmental. Air quality and water could become serious issues as D-FW adds several million people, Niemi says.
And there's the specter of longer commute times. "We do not want to become the next Los Angeles."
The article I posted was quoting Michael Cox a former Chief Economist of the Fedral Reserve Bank in Dallas. The economic index he developed is used by the entire Federal Reserve System. It has merit.
Most To Least Diverse (100% Scale):
- Chicago: 95.0%
- Baltimore: 94.8%
- Salt Lake City: 94.6%
- Buffalo: 94.5%
- Nashville: 94.1%
- Columbus: 94.1%
- Atlanta: 94.0%
- Portland: 93.6%
- Oakland: 93.6%
- Philadelphia: 93.5%
- Miami: 92.4%
- Los Angeles: 84.7%
- New York City: 80.6%
- Houston: 74.4%
- Washington DC: 62.2%
- Las Vegas: 58.9%
- Seattle: 58.8%
- Jersey City: 56.9%
- Honolulu: 56.1%
- San Jose: 44.2%
Go back and re-read my post. Where is DFW in this rating? Unless you want to tell me that Las Vegas has a more diverse economy which you and I both is nowhere near the case. They left out DFW, Boston, and San Francisco all of which have a more diverse economy than Vegas or San Jose.
Riddle me this. DFW has a $380 billion economy, Metro Houston has a $409 billion dollar economy. We can all name things that are huge parts of Houston's economy (oil, shipping, medicine, etc.). Name something that is as much a part of DFW's economy as one of the things I just named in Houston's economy.
Again show me something that includes both DFW and Houston (by metro area) to settle the question. Until then we dont know.
Riddle me this. DFW has a $380 billion economy, Metro Houston has a $409 billion dollar economy. We can all name things that are huge parts of Houston's economy (oil, shipping, medicine, etc.). Name something that is as much a part of DFW's economy as one of the things I just named in Houston's economy.
I already answered this.
And Vegas has a wonderful economy. That is why they are doing so well now.
They are national leaders in
Gambling
Prostitution
Poll Dancing
Venereal Disease treatment
Lawyers
Alcoholism treatment
the list just goes on and on. Why wouldn't the economy of Vegas be more diverse than SF, Boston or DFW.
You think you did, but youre answer was incomplete and there isnt a link to expand on it. An economy is diverse or it isnt. Whether an economy is more international or domestic is not the determinent of whether an economy is diverse or not. An economy can be very domestic and very diverse and likewise an economy can be very international and not diverse.
Ill stand by what I said. If we can see a study that has all the major metro areas ranked, I will take it seriously. The fact that Boston, San Francisco, and DFW were left out means we dont know where they would place.
By the way as a fun fact, DFW's largest sector is technological industry, not oil/energy or manufacturing.
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