Canary in the Coal Mine | The Perryman Group

Canary in the Coal Mine

By: Dr. M. Ray Perryman
Published in syndication July 19, 2023

Canaries were historically used in coal mines to provide an early warning of dangerous gases. The CNBC rankings, where Texas continues to fall, should be viewed in a similar light. Two years ago, I referred to Texas falling to fourth as "eerily disturbing," a remark that received considerably more attention than I anticipated. Last year, the state dropped to fifth, and in the newest rankings fell out of the top five, trailing North Carolina, Virginia, Tennessee, Georgia, and Minnesota.

CNBC evaluated 86 criteria within 10 categories, assigning weights based on factors identified as "most important to business each year." The heaviest-weighted category is Workforce (where Texas ranks 2), followed by Infrastructure, Economy, and Life, Health & Inclusion. Other categories include Cost of Doing Business, Technology and Innovation, Business Friendliness, Education, Access to Capital, and Cost of Living.

Texas performs well in Workforce (2) and Economy (2), also comparing relatively favorably in Technology and Innovation (8) and Cost of Doing Business (16). Lower rankings were Infrastructure (24 - particularly given recent issues with the power grid), Business Friendliness (25), and Education (35, a sizable drop which doesn't bode well for future Workforce rankings). Regrettably, the state is dead last in Life, Health, & Inclusion.

The specific reasons mentioned for this abysmal ranking were the high percentage of people without health insurance (by far the most in the country) and the low numbers of primary care physicians and licensed childcare facilities per capita. Various actions that are "hacking away at inclusiveness," such as laws related to the LGBTQ+ population, voting rights, and reproductive rights, were also significantly highlighted.

Texas is presently attracting hundreds of thousands of workers every year, and Chief Executive Magazine has ranked it as the "Best State for Business" for 19 consecutive years. Texas also has had the most major corporate locations and expansions for the past 11 years. All of that to say that these concerns are unlikely to diminish economic performance in the immediate future, but they serve as critical harbingers of things to come if key issues are not addressed.

Texas must assure that there are adequate water supplies and transportation capacity and that - when the switch is flipped - the lights come on. Proactive efforts in improving access to health care are similarly imperative. Inclusivity is becoming increasingly essential to competing for high-growth companies and in-demand workers. I've measured the potential effects of numerous discriminatory social policies (including impairing voting rights and gender identity), and their potential negative effects are substantial and very real.

The consistent drop in the CNBC rankings is not likely to derail short-term economic success, but it is a canary in the coal mine that we had best heed. Stay safe!