When the Census Bureau announced congressional reapportionment late last month based on the 2020 population count, Texas, which gained two congressional seats, and Florida, which added one additional seat—the tenth consecutive census that the state’s delegation has grown—were two of the biggest winners. Illinois, which has lost ten seats in 70 years; New York, which has seen its congressional delegation shrink by 15 members in the last 50 years; and California, which will lose a congressional seat for the first time, were among the biggest losers.
Two other, less noted, news stories help explain what’s going on. In a newly released survey, the CEOs of America’s top companies rated Texas as the best place in America to do business. Florida was their second choice. California, New York, and Illinois, by contrast, were the CEOs’ three lowest-rated states. Similarly, last week, Texas and Florida cities dominated a new list of locales that experts rate as the best in which to start a business. Neither result is new or surprising. Texas has finished atop the executive survey, undertaken by CEO Magazine, for more than a decade, while California and New York have resided at the bottom for equally as long. America remains a land of opportunity where job growth helps drive population gains, and the shift that we’re seeing in political power has been evident in business for years now.
If anything, the realignment illustrated by these surveys is likely to get only more pointed in the coming years. That’s because the pandemic has, in the words of CEO Magazine, made business executives “an increasingly restless bunch” who are “open to all kinds of new ideas about how—and, more to the point—where to do business.” Encouraged by the rise of remote work and the lessons they’ve learned from a year of adjusting on the fly to a rapidly changing business environment, 44 percent of CEOs surveyed said that they are more likely to consider new locations for their businesses after the pandemic.
And what these business execs saw of pandemic-era political leadership has apparently made a difference. States that remained open for business, where executives said they were able to work with politicians to keep their economies going, scored stronger on the CEO survey. “The Sunshine State is the clear winner in last year’s economic perception derby,” the magazine observed, based on what CEOs reported of Governor Ron DeSantis’s resistance to closing down the state for extended periods. South Dakota also appears to have benefited from being one of the states with the least-restrictive Covid-19 lockdowns: it gained 12 places in the annual survey among executives.
A different kind of study by WalletHub reinforces the CEO survey’s findings. The financial site enlisted business experts to rate 100 cities across America on their overall business environment (including job growth and business-survival rate), on access to resources like financing, and on local costs. The top 20 places on this list included five Texas cities—ranging from such big cities as Dallas, Austin, and Fort Worth to smaller ones such as Laredo and Lubbock. Florida counted four among the top 20—Orlando, Tampa, Jacksonville, and St. Petersburg. Only one California city landed in the top 20—Irvine at 20th. New York fared far worse. Only two places in the state—Buffalo and New York City—made the list, and they ranked among the bottom ten as good places for new business. Illinois had just a single city among the 100—Chicago ranked a mere 80th as a good place to start a firm.
The results were especially pertinent because the stakes for an entrepreneur in finding a supportive environment for a new firm have rarely been higher. In another online survey by WalletHub, some 7.5 million business owners recently said that they regretted founding their own firms. About 6 million said that the road back from the pandemic would be a long one—more than a year on average.
The kinds of population shifts revealed by the Census occur over decades, giving political leadership in stagnant places ample opportunity to address their problems. But the concerns raised consistently by executives and entrepreneurs in places like California and New York appear not to matter much to politicians. Despite the economic blows suffered by New York during the pandemic, which included the flight of tens of thousands of New York City residents from the state, Albany is making little effort to boost its appeal to businesses. Even after receiving billions of dollars in pandemic aid from Washington, New York recently raised taxes on businesses and high-earning individuals by an estimated $4.3 billion, a move one business leader called “a political statement aimed at punishing the rich—not a reflection of economic need.” California businesses, meantime, narrowly escaped a huge tax increase last November when voters rejected a change to the way commercial properties are taxed that many politicians supported. But in the aftermath, proponents of that levy are now lobbying for a so-called wealth tax on the assets of Golden State high earners. Illinois governor Jay Pritzker has similarly tried everything he can to raise the state’s income tax, though voters last November strongly rejected a constitutional amendment that would have allowed him to do so. Pritzker has vowed to find another way to boost taxes.
Hotspots of growth around the country should take note: the biggest obstacle to their own continued success is keeping up with it. When, for instance, the electricity went out in Texas in February after a rare winter storm, the power shutdown represented a black eye for the Lone Star State. The outage alone, CEOs in the “Best States” survey said, wasn’t enough to tarnish the state’s business reputation, as long as it didn’t represent a long-term infrastructure trend. In recent years, Texas has consistently scored well on its installed infrastructure—but so did New York and California once upon a time.
If there is a lesson in the long decline of once economically powerful states, it is that arrogance and overconfidence, once they set in, are hard to overcome.