Open for Business: How the Growth and Increased Competitiveness of the Workforce Are Attracting Business Investment and Transforming the Rio Grande Valley
By Dr. Kevin Peek and Dr. Ali Esmaeili
The Rio Grande Valley (RGV) is often referred to affectionately by the local population as the “Magic Valley.” This appellation, while expressed figuratively, might seem to hold some degree of truth when considering the unprecedented economic growth and development experienced by the region over the last 25 years.
After all, if not magic, how can we explain the transformation from an economy based almost entirely on agriculture, with limited opportunities and high indices of poverty, to the diverse and thriving economy that we know today, and all in a relatively short period of time?
The answer, while not excluding the possibility of a small dose of magic, can be found primarily in the expansion of companies to the region seeking to capitalize on factors such as a burgeoning consumer base with greater purchasing power, proximity to the US-Mexico border, a friendly investment environment, abundance of affordable capital resources and, most importantly, a growing and competitive workforce.
The remainder of this short article focuses specifically on this last factor beginning with an overview of how the workforce has grown and become more competitive, continuing with a brief analysis of how these changes have attracted business investment and promoted regional prosperity and concluding with final comments on the need for regional leaders to continue adopting policies that support these trends.
The first change in the workforce mentioned above, an increase in its overall size, constitutes a significant incentive for companies to invest in the region. As many of you already know, the RGV is located on the southernmost tip of Texas along the US and Mexico border and is home to two of the fastest growing metropolitan statistical areas (MSA) in the country: the McAllen-Edinburg-Mission MSA and the Brownsville-Harlingen-San Benito MSA. During the last 20 years, both MSAs have benefited from an unprecedented and continuous increase in their respective populations, that was only slightly interrupted during the height of the COVID-19 pandemic. From 2000 – 2020, the McAllen-Edinburg-Mission MSA grew from 569,463 to 900,000 residents and the Brownsville-Harlingen-San Benito MSA from 335,227 to 423,029 residents.
This upward trend is generalized throughout the region but can be seen most acutely in the more densely populated areas. In the last ten years, alone, McAllen – the most populated city in the RGV with 142,5547 residents – grew by 12.4%, nearly double the national average of 7.2% for the same time period. The increase in the size of the population contributed directly to the size of the workforce and is, in large part, both a cause and consequence of new types of non-agricultural business investment in the RGV. The second change in the workforce contributing to the dramatic increase in the number of companies locating in the RGV is its enhanced competitiveness in the form of greater and more advanced and diverse training and education.
Throughout most of its history, the RGV maintained an agricultural-based economy characterized by low wages, endemic poverty and stagnant socioeconomic mobility. Growing awareness of the urgency to diversify the economy if the RGV were to revert the downward spiral of poverty, coupled with greater appreciation of the deficiencies of the local workforce in a globalized economy, prompted public and private sector leaders in the early 1990s to begin developing strategies to increase the quality, diversity and accessibility of academic and workforce training programs.
While a detailed exposition of these strategies is beyond the scope of this brief article, the results have been nothing short of amazing and can be seen in both the reduced indices of poverty throughout the RGV (45.5% in 1989 to 23.9% today) and the multi-sectorial surge in workforce and academic credentials. For example, from 2001 to 2022, the high school graduation rate rose from 78% to 90%, compared to the state average of 89%; 42% of youths between the ages of 18 and 24 currently have some college education or an associate degree, compared to 22% for the previous generation; more than 20% of all dual credit students in Texas are enrolled in the RGV; technical and vocational programs have more than doubled in the last ten years and much, much more.
The availability of quality, accessible academic and workforce credentials have made the workforce much more competitive and attractive to companies. And, even more important, these credentials have improved the quality of life of our workforce and their families. Just last month, in December of 2022, UTRGV was ranked fourth in the country for fostering the economic mobility of its graduates.
Basic economic theory, empirical evidence and no small amount of feedback from new companies confirm that the aforementioned changes in the size and qualifications of the workforce have and continue to attract private sector investment to the RGV. SpaceX, ZOHO Software Development, ColiMex Inc., TaskUs, HOLT Cat and Clean Label Foods are just a few of the many companies that have recently moved to the area, identifying the quality and quantity of the workforce as determining factors in their decision. And, as recently as 2016, the metro area was ranked No. 1 in the “Best Cities for Jobs” survey conducted by ManpowerGroup with the quality and quantity of the workforce as two of the leading selection criteria. This increased investment didn’t happen by accident but is the product of careful planning on the part of regional leaders working together to create a better future for the RGV and its families.
As a closing comment, it’s indispensable that public and private sector leaders continue to prioritize policies and programs that contribute to the competitiveness of the local workforce with the goal of attracting more companies to our region. Fortunately, it looks like we’re moving in the right direction. Much of the current work of local government agencies, economic development corporations (EDCs), institutions of higher education, workforce development commissions and multi-sectorial organizations like the Prosperity Task Force and Border Issues of Texas are collaborating in meaningful ways to ensure that the RGV’s workforce remains among the best and most competitive in the country.
Editor’s Note: The above guest column was penned jointly by Dr. Kevin Peek, an economics professor at South Texas College, and Dr. Ali Esmaeili, dean of math, science and bachelor programs at South Texas College. The column appears in The Rio Grande Guardian International News Service with the permission of the authors. Peek can be reached by email via: [email protected]. Esmaeili can be reached by email via: [email protected].
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