Michael Lucci, the Director of Jobs + Growth at our sister free market think tank in Illinois, the Illinois Policy Institute, posted an analysis today that revealed that Texas’ median household income passed Illinois in 2012.

He noted, “The common refrain made against Texas by those who defend the status quo in Illinois is that the jobs being created in the Lone Star State are lower-paying and less-rewarding opportunities. But not anymore.” 

Lucci went on to comment that taxes are higher in Illinois as well and that, “Since 1984, Texas has created nearly 5 million new employment opportunities. Illinois created less than 1 million.”

I’m delighted for Lucci’s fresh look at federal income data which used U.S. Census Bureau median household income data for 2012. In my own comparative analysis of the 8 biggest states, much of which is contained in the 2014 update to “The Texas Model: Prosperity in the Lone Star State and Lessons for America” I used per capita income, and then adjusted for the cost of living index in the state. By that measure, Illinois still edges out Texas, though the gap is closing in Texas’ favor.

Lucci’s look at U.S. Census Bureau median household income as adjusted for inflation caused me to look at the same data, but expanding the comparisons to the largest 8 states and the U.S. from 2002 to 2012. Here’s what that chart looks like. In 2002, Texas was 7th of 8, with Florida last and California first. In 2012, Texas moved into 2nd of 8, with Ohio last and California first.

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But, household income is spent on goods and services and the cost of goods and services varies widely from state to state. Applying the 3rd quarter 2013 cost of living index values to 2012 median household income yields an interesting result showing the true purchasing power, before taxes, in the 8 biggest states. By this measure, the Lone Star State stands as the best of the large states for the middle class to achieve a high standard of living.

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