Have to deal with the income inequality issue
“Even for Texas, the growth rate is almost unsustainable,” Pia Orrenius, a vice president and senior economist at the Dallas Federal Reserve, told The Associated Press. “This incredible growth has brought lots of people to the state, and the demand for services is growing so fast. At some point, the state is going to have to deal with the income inequality issue.”
Even while wages and employment in Texas grow faster than the national average, with six-figure wages from the oil and gas sector lifting up the general economy, the state has a much higher percentage of low-paid, low-skilled immigrants and higher share of workers earning the minimum wage than the average state, Orrenius says. The budget in Texas, the second-largest state by gross domestic product, is already stretched by rapidly increasing health care and education costs, the Dallas Fed says in a third-quarter 2014 report.
According to 2012 U.S. Census data, the lowest 20 percent earn an average $11,296 per year in Texas, while the top 5 percent earn $317,661. Texas ranked eighth in the country in wealth gap in a February report by the Economic Analysis and Research Network of state and regional organizations, where it showed that in 2011, the top 1 percent in Texas earned 26.3 times more than the bottom 99 percent.
The Standard & Poor’s report being released Monday suggests that the gains flowing to the top 1 percent around the U.S. come at a broader cost to society. Not only does rising inequality appear to stunt overall economic growth, but S&P; links it to a slowdown in average yearly gains in state tax revenues.