Since 2022 Fortune 500 companies have left California and relocated their corporate headquarters to Texas. Chevron and Tesla are among the megacompanies moving to Texas. Those leaving California did so because of high taxes and an unfriendly business climate. Texas, because of its central location, tax friendly environment, proximity to trade with México and robust infrastructure benefited from the influx of corporate headquarters. El Paso completely missed out and it did not have to.
On the surface it may seem like companies wanted to relocate to growing cities. However, recent research shows that the recent spurt of companies moving to Texas and other tax-friendly states chose to relocate to cities with smaller populations and lower office costs. El Paso has lower office costs and offers competitive incentives, but its city leaders ignore a fundamental reason why companies chose the cities they relocated to – a blue-collar workforce and a small population. Starting in 2022, close to 600 of America’s corporations relocated their headquarters, the highest rate in the last seven years. Florida and Texas saw the largest gain in corporations moving into them this past year. The leading reasons for the relocations are lower taxes and lower office rent.
El Paso was not among the top three Texas cities that attracted companies.
The city in Texas that benefited the most from corporate relocations is Big Spring, Texas, with 100% growth in corporate relocations through 2023. Big Spring, east of El Paso, sits in the middle of Lubbock to the north, Midland/Odessa to the west and San Angelo to the east. Its economic development department markets an industrial park and the availability of land, and even downtown revitalization, like El Paso.
But unlike El Paso, the city emphasizes its small population of 28,187 people and its 60% workforce made up of blue-collar workers. Big Spring Texas offers incentives, like El Paso, but emphasizes that the incentives be tied to delivering “new money into the community by providing primary jobs.” The city defines a primary job as one where the worker produces products and provides services that are delivered outside of the local area, thus “infusing new dollars into the local economy.”
El Paso’s Incentive Agreement Portfolio, on the other hand, puts job creation behind capital investments, and makes no mention of whether the job produces local dollars or brings in new money.
Jobs that produce services or products for export to other communities are a stronger economic driver because the work brings in new dollars to the community, instead of recycling the same dollars within it.
An export-based labor force creates local jobs that are paid with dollars from other communities. Targeting incentives for job growth to local restaurants, for example, results in job transitions from one restaurant to another in the community without creating new jobs. As one restaurant reduces its workforce due to competition from the incentivized restaurant, they reduce their workforce to offset the losses in sales.
However, if the tax incentive targets a workforce that sells outside of El Paso, to say, Phoenix consumers, the dollars coming from Phoenix have no impact on other El Paso businesses thus resulting in more jobs for the community.
It is important to note that Big Spring is clear about its small community taking advantage that companies are choosing locations based on smaller communities and not just the incentives. The top three Texas destinations for corporate relocations benefited from their proximity to free trade centers in Texas. But not all three Texas cities offer small populations.
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Dallas, Texas is next on the list of Texas cities attracting corporate relocations. Dallas is the third largest city in Texas and benefits from its proximity to the state’s largest cities and their economies. For this reason, the economic marketing for Dallas is about its large population and access to the Dallas-Fort Worth metroplex. Yet, it was second of the Texas cities that have attracted corporate relocations. The third city with the highest corporate relocations took advantage of both its proximity to Texas’ largest city, Houston, while emphasizing its small population – The Woodlands.
The Woodlands has a population of around 123,000 and it believes that its population will decrease to around 115,000 by 2028. Nonetheless, companies relocated there. The Woodlands, unlike El Paso, is emphasizing its population decline to attract businesses.
It is true that The Woodlands is close to Houston, the largest Texas city, but El Paso benefits from its proximity to Cd. Juárez, México with its population of around 1.6 million people. El Paso has the added advantage of being the most important overland crossing point for Mexican manufactured goods going to California, and coincidently, Dallas and Houston, two of the cities that have attracted corporate relocations recently.
The top three Texas cities that benefit the most from trade with México are Laredo, as the top inland entry point, and El Paso. Houston, although not having an international border, benefits from the U.S.-México trade.
In 2024, the U.S. imported around $500 billion in goods from México. A significant amount of that trade transits through Texas. Around $211 billion of the trade entered through Laredo. In El Paso, around $63 billion in trade from México entered the U.S. during the same period. Another $1 billion entered via the Tornillo bridge while another estimated $32 billion crossed through the Santa Teresa port of entry, bringing the total to $96 billion for the El Paso region. El Paso is around 600 miles from Dallas, while Laredo is around 430 miles from it.
El Paso accounts for around one-fifth of the total trade from México. Texas accounts for two-thirds of the Mexican trade.
Around 14% of Texas’ workforce is considered blue collar workers. Because there is no clear definition identifying what a blue-collar worker is, there is no exact percentage for El Paso, but generally, with its mix of hospitality, warehouses and construction El Paso has a significant blue-collar workforce. The local workforce board makes no effort to identify the mix of white collar and blue-collar workers, preferring instead to show case the city’s affordability and paychecks it says offer a “living wage,” items that a large employer would likely gloss over and not use to make the decision to consider El Paso a place to relocate to.
Big Spring, the number one Texas city that has attracted corporate relocations, emphasizes its blue-collar workers along with its smaller population through its economic development marketing. El Paso’s Economic Department, on the other hand, emphasizes its 875,784 population for the county and its low average wage of $59,866.
Not only is El Paso emphasizing a large population, something that recent corporate relocations seem to be avoiding, but in doing so it ignores the over 1 million workers and consumers across the river in Cd. Juárez. In trying to be more like Dallas, El Paso ignores the most important factor – Juárez. Worse is that the city’s economic development website’s home page includes Juárez in its 2.6 million consumers metrics but completely ignores it in the dashboard that the people making the decisions to relocate to Texas cities would likely use.
The case studies of Big Spring, Dallas and The Woodlands show how El Paso’s leadership continues to miss the free trade economy that fuels the Texas economy. This has been ongoing since 1994 when El Paso leaders chose to bemoan NAFTA, now the USMCA, for the loss of manufacturing jobs that crossed the river leaving a huge opportunity for El Paso to grow its economy through spillover jobs that continue to be needed for the largest economic driver for El Paso and Texas.
Jobs like financial services, transportation logistics, cross-border trade services and legal services for imports, not to mention engineering work for manufacturing plants in Juárez are just some of the jobs El Paso could be offering if the leadership offered incentives that companies want. Instead, El Paso leaders want companies to believe it is a white-collar town with low wages – an economic development failure.