When most people think about technology in the United States, they probably think of California's Silicon Valley. While the Golden State is unquestionably home to some of the most innovative and exciting tech companies in the world, it is actually the Lone Star State of Texas that is the most lucrative tech exporter in the United States today. As the TechAmerica Foundation states, "Companies in Texas making semiconductors, telecommunications devices, computers, and other items shipped more than $45 billion in products to other countries in 2012." This number is on a steady rise, raising $3 billion more than the previous year.
With Texas now in the tech spotlight, many are beginning to chastise the way Texas made this happen. Inside the state's borders it's tough to find a detractor, leaving some to believe that California and others are just a handful of sour grapes. While Texas saw a $3 billion dollar increase, California experienced a three percent decline, resulting in exports totaling just below $45 billion. Whether you agree with how it got there or not, Texas is at the top in the industry and its future looks promising.
How It Happened
Texas Governor Rick Perry may catch a large amount of grief in and outside his state, but when it comes to business, he appears to have a large following among his constituents. Gov. Perry is a proud proponent of Texas' business-friendly approach, which leaves companies a little more breathing room when it comes to taxes and cost of living.
When comparing the lives of the average person making a $35,000 income in San Jose, CA and Austin, TX, living in Texas will save a person a pretty considerable sum. Housing in Austin is about 67 percent of what housing costs in Silicon Valley. Utilities are a savings of 27 percent, and transportation stands at 13 percent less. Coupling low taxes and easier living wages made Texas an easy sell from the get-go. In deciding where in America to start a business, Texas’ policies make it hard to top.
Through the Texas Enterprise Fund and Texas Emerging Technology Fund, companies are receiving grants, and research institutes have had almost $194 million dollars invested in them so that innovative technology can be explored and potentially created. With incentives such as these to go along with the lower cost of living in Texas, a move seems like a no-brainer.
Some in California have labeled Texas' promotion of these incentives as a "cry for help." Many have hit back at these claims. A recent quote from Texas Republican Rep. Kenny Marchant states Texas' intentions: “While America stands at the cutting edge of tech trade growth, we must continue building an environment in which entrepreneurship, creativity, and open markets freely flourish.”
The Boom Goes On
Verizon, Texas Instruments, and several other tech companies have headquarters based in the thriving city of Dallas. With IBM, Google, Facebook, and countless others having offices in the state, the presence of big business was already well established in Texas. With a close proximity to Mexico, Texas was able to export $22 billion worth of tech to America’s neighbors to the south. Some critics have claimed this as Texas moving inferior products to Mexico, while Silicon Valley concentrates its efforts on broader global exports. Those detractors seem to be quiet on the issue of the other $23 billion Texas gained in 2012.
In historic San Antonio, business is thriving due to the new industry boom. As Democratic Representative Joaquin Castro stated, “The high tech industry is not only growing in Texas, but it is also yielding thousands of high paying jobs in our state.” Latest numbers show that the tech industry is supporting 331,000 jobs in Texas alone. Furthermore, Texas is responsible for 22% of the nation's tech manufacturing industry.
As smaller cities like San Antonio and Austin begin to see more of the benefits that their larger in-state counterparts do, it's hard to see just how far this boom can go. While some have claimed living expenses are already on the rise, the numbers could be too early to tell. However, if the cost of living and manufacturing can stay relatively low, Texas could reign supreme for quite some time.
Where Does It Go From Here?
Expect Austin to be the big winner from the Lone Star State's massive growth. A city that prides itself on its population of hip individuals with an already established love of technology is a natural fit to be the next destination for domestic industrial growth. In 2012, Apple broke ground in Austin to use the location as "America's Operations Center." The title alone should show that Apple means business in Texas. If lip service isn't enough to win over the doubters, Apple is sinking $304 million dollars into the project. With an estimated completion date of 2021 Austin seems poised to be a tech mainstay, assuming all goes to plan.
Furthering Texas' cost of living incentive is that the bottom 10% of the Apple employees will be making an average annual salary of $35,000, while contractors receive at least $11 per hour. As long as this wage can change with inflation, this will be another tug on the heart strings of Americans looking to relocate.
With Texas' numbers rising, it is hard to find anyone that is predicting a decline in the near future. While some on the outside will be complaining about the change in the tech landscape, it should be mentioned that the States has another destination for a progressive industry. Whether you label Texas as Silicon Valley South or not, it's hard to knock a part of this country thriving at new industries. Just like the stars at night, the future for the tech industry in Texas looks big and bright.