The New Geography Of Success In The U.S. And The Trap Of The 'New Normal'

Editor’s Note: This post is part of a new special section called “Reinventing America.” As part of this effort, demographer Joel Kotkin and more than a dozen other Forbes contributors and staff writers will focus attention on the challenges facing towns, cities and traditional industries across the nation–and highlight the growing number of surprising success stories we’re seeing, too. Over the coming months we’ll have stories, rankings of who’s doing it right (and wrong), and, we hope, great conversations with readers, so please join in.

This year’s presidential election is fast becoming an ode to diminished expectations. Neither candidate is advancing a reasonable refutation of the conventional wisdom that America is in the grips of a “new normal” — an era of low growth, persistently high unemployment and less upward mobility, particularly for the working class. 

Certainly recent economic news of slowing growth and job creation bolster the pessimists’ case. But Americans may face far better prospects than portrayed by our dueling presidential mediocrities. Let’s look at those states that have found their own way out of the “new normal,” in some cases reversing all the losses of the Great Recession and then some.

The states that have added the most jobs since 2007— Texas, North Dakota, Louisiana, Oklahoma and Alaska – are located in a vast energy and commodities corridor extending from the western Gulf to the northern tip of the Continent. New Yorkand Washington, D.C., prime beneficiaries of monetary easing and a growing federal government, have also clawed back.

But the big winners are in the central energy corridor. Since 2007, Texas has created almost five times as many jobs as New York; California is still down almost 900,000 jobs and Illinois is off close to 300,000.

This should represent what Walter Russell Mead calls “a new geography of power,” the anointing of new places Americans and business go to find opportunity. One example: five of the six best cities for starting over in 2012, according to TheStreet.com, were in the Dakotas, Utah, Iowa and Nebraska.

Why the energy and agriculture states? Since the onset of the new century, much of the sustained growth in the world has taken place not in the financial or information capitals, but in regions that produce basic commodities like energy and food. In the high-income world, the consistently best-performing countries since 2008 have also tended to be resource-rich ones such as Norway, Australia and Canada. Blue social policies work best when financed by petro-dollars and minerals sales.

Domestic and European demand may fall in the next few years, but increasingly global commodity and energy markets are driven by the expanding needs of the major developing countries. This has helped keep energy prices high, particularly for oil. Being good at exploration and drilling has been more profitable than social media. Texas alone has added nearly 200,000 jobs in its oil and gas sector over the past decade and Oklahoma some 45,000. The Lone Star energy sector created twice as many jobs as exist in the software sector in San Jose and San Francisco combined. These jobs have been an outstanding driver of high-wage employment, with an average salary of upwards of $75,000, and located usually in less expensive areas.

Choice plays an important part in the growth. The energy boom has supercharged the economies of the states that have welcomed this growth, including Texas, Oklahoma, Louisiana, North Dakota, Wyoming and Alaska. It has not been much help to New York and California, which are reluctant to crack rocks to extract even relatively cleaner carbon-based fuels like natural gas. In contrast, long-suffering Ohio and Pennsylvania, where there have been significant new finds of shale oil and gas, appear to have decided that Texas, not California, is the model for spurring growth.

The energy-producing states can look forward to a bright future in the long run. U.S. oil and Canadian reserves now stand at over 2 trillion barrels and constitute more than three times the total estimated reserves of the Middle East and North Africa. Observers such as the New America Foundation’sMichael Lind believe that new discoveries, particularly of natural gas, mean that we might actually be living in an era of “peak renewables,” and at the onset of a “very long age of fossil fuels.”

Growth of these sectors — along with construction and manufacturing — could prove critical to our beleaguered working class. There’s not much respect among the university-dominated pundit class for people who work with  their hands or have specific tangible  skills. Instead they need to lower their expectations and seek, as Slate recently suggested, to find work “in the service sector supporting America’s innovative class.”

In this neo-Victorian society, the “new normal” means a society dominated by  “innovative” or “creative” masters and their chosen, lucky servants. Leave your job and family in the Midwest or Nevada to become a toenail painter in Silicon Valley, San Francisco or Boston. Besides losing any sense of one’s independence, it’s hard to see how a barber or gardener can live decently, particularly with a family, in such expensive places.

This bleak reality may not be inevitable, though. In many places construction employment is on the rise from its nadir in 2010. This recovery has been anationwide phenomena but is, not surprisingly, most evident in growth stateslike Montana, Colorado, Indiana, Iowa, Nebraska, Tennessee and Utah.

At the same time over the last two years the nation has added more than 400,000 manufacturing jobs, led by the industrial states hit hardest by the recession. Though these gains are small compared to the losses earlier in the decade, the growth is encouraging; automakers and other industries already are complaining about severe shortages of skilled labor. Maybe, after all, life as a dog-walker and hostel denizen in Palo Alto is not the best one can hope for if you can make enough to afford a nice suburban house outside Columbus or Detroit.

The pundit class may be ready to write off the American dream but many Midwest states are working  to restore it. Over the past two yearsMichigan and Ohio have experienced the biggest drop in unemployment of any states in the union; Michigan leads the way with a drop of almost five percentage points, while Ohio comes in second with a nearly three-point decline. Other key Great Lakes battlegrounds—Wisconsin, Indiana and arguably Missouri—have also seen two-point drops in their unemployment numbers.

Why is this happening? A lot of it has to do with business-friendly state regimes. Unlike Illinois, increasingly the sad sack  of the Midwest, these states have cut taxes, worked to increase the availability of skill training and streamlined regulations. This has allowed them to take advantage of new opportunities.

Improving the business climate represents the third critical element for overcoming the new normal. Most rundowns of the states with consistently favorable business and tax climates – as judged by executives — start with Texas, Utah and South Dakota. Many states that are recovering best from the recession, like Louisiana, Wisconsin, Florida, Ohio, Michigan and Arizona, all have been improving their rankings in business surveys over recent years.

But this should not be seen as an exclusively red state phenomenon. Some blue states as well, notably Washington, have worked hard to keep taxes tolerable and have promoted a rapid expansion of their  industrial sector. Democratic-leaning Colorado, under the leadership of pragmatic Gov. John Hickenlooper, has also strived to main a good business climate and promote growth.

What works, it appears, is not the mindless embrace of GOP or Democratic ideology, but a model that drives economic growth. It’s not rocket science: sensible regulation, moderate taxes and investments to spur job creation and productivity. “There is no Democratic or Republican way to sweep streets,” legendary New York City Mayor Fiorello LaGuardia once remarked and the same is true of economic growth.

The stories of the successful states tell us the key to success lies  in promoting basic industries like energy, agriculture and manufacturing — which then create business service and high-skilled jobs — combined with a broad agenda favorable to entrepreneurs of all kinds. If only one of our presidential candidates would get the message.

Ten Things to Know Before Interviewing at Facebook

Are you eager to land a coveted position at Facebook? Join the club. If you’re lucky enough to get an interview with the social media giant, famous for its laid-back culture and superb perks, there are a few things you should know.

Glassdoor.com, a jobs and career community where people share information and opinions about their workplaces, combed through hundreds of employee reviews to find what Facebook employees and job candidates say about the interview experience.

“If you’re in the job market, no matter where you interview, you want to be prepared as possible so that you can put your best foot forward,” says Glassdoor spokesperson Samantha Zupan. “Getting insights into specific companies, like Facebook, can help you find out what it’s like to interview at a company.”

Here are 10 things job seekers should know about Facebook before the interview:

• Let your passion for the job come through. This is essential for an interview at any company, but a Facebook IT analyst candidate said it’s particularly important at Facebook that you express your passion for the everyday tasks and responsibilities that the job requires. How do you do this? Talk enthusiastically about your goals, your accomplishments and any contributions you made to a former employer.

• Make time for multiple, lengthy interviews. A Facebook operations engineer candidate said: “I had a quick screening phone interview with the recruiter, before having two technical phone interviews, where we shared a collaborative text document so that they could see what I typed. Each of the two interviews lasted about 45 to 60 minutes. Finally, I had a somewhat shorter (30 minute) management interview.”  “Multiple interviews can give you a chance to interview with a mix of people who you may be working with including a recruiter, an H.R. person, various team members, top executives and in some cases the CEO,” Zupan says. “While it can be tiring to go through interview after interview, it’s a good opportunity for a candidate to interview the company to determine if the job opportunity is going to be a good fit.”

• Be prepared to discuss how you’ve worked well in a team environment. A Facebook user operations analyst candidate pointed out: “The questions consisted largely of my experiences working on a team, what I thought I brought to teams, what to do if a team member is not participating, etcetera.” Before your interview, think about specific instances where you thrived as a team member or team leader. Also think about the challenges of team projects, and how you would resolve them.

• Don’t expect everything to go flawlessly during the interview. A Facebook Human Resources candidate said there was general confusion as to what the essential responsibilities of the actual role were going to be. “I left thinking their recruiting and interviewing process could sure use some refinement,” the candidate wrote. “The important lesson here is to remember to think about more than your responses to interview questions,” Zupan says. “You should also be thinking about the entire interview experience. For example, consider what the interview experience says about the company culture, the work environment and workplace relationships.”

• Think about what you would do to improve Facebook. A Facebook product marketing candidate wrote: “The interviews typically involved them asking me questions about issues Facebook was facing, then turning my answer into a case around how to improve that. Definitely think about metrics before heading to your interview,” the candidate suggested.

• Consider if the company culture is a good fit for you. A Facebook senior technical recruiter candidate noted that the Facebook office he or she interviewed at was open and lively; yet “I could see where it could be somewhat distracting,” the candidate wrote. “Remember that companies and jobs are not one size fits all,” Zupan says. “Some people like a structured work environment, whereas others may thrive in a more casual environment.” Another way to determine if the company is a good fit is to meet your would-be colleagues and bosses. A Facebook software engineer candidate said: “After the interview, I wasn’t sure if I would be happy working at Facebook so they let me come back and speak with my would-be manager and director, as well as some coworkers, so I could make a good decision.”

• Know the appropriate interview attire. You may learn from the company’s website that the culture is laid back and informal—but that doesn’t mean you should sport sweats to the interview. A Facebook user operations analyst candidate suggested that you wear “business professional” attire, even though the interviewer will most likely be in jeans and a T-shirt. “Depending on the job and the company, there can be some wiggle room in terms of how professionally you dress,” Zupan says. “But I suggest veering on the safe side and dressing up for an interview – it’s your opportunity to present yourself in the best light possible.”

• Be prepared for tough (or even odd) interview questions. Facebook candidates were asked questions like: “How would add new Facebook members to the database of members, and code their relationships to others in the database?” “If you were an animal what kind would you be and why?” “What is the difference between Facebook ads and Google Ads?” “Should Facebook be available in China?” and “What do you see as Facebook’s biggest challenge in the next five years?” There is no real way to prepare for such questions—but remember that the interviewer is assessing your thought process and how you perform under pressure. Stay calm and take your time answering the tough questions.

• Get the inside scoop from someone who works there. See if you have an inside connection at the company; someone who can tell you what it’s like to work and interview at the company. How? Spread the word that you’re interested in working at Facebook, search on sites like LinkedIn to find connections, or sign in to Glassdoor using your Facebook account to see which of your friends (or friends of friends) have a connection to the company, using its new “Inside Connections” tool.

• Be prepared to sign a non-disclosure agreement. A Facebook software engineer candidate wrote on the Glassdoor site that the firm had asked him to bring a signed copy of the non-disclosure agreement to the interview. “Candidates shouldn’t be scared away by NDAs, but it is important to read the terms of the agreement carefully so you know what a company is asking,” Zupan says.

Think You Control The Investments In Your 401(k)? Read This Horror Story

Think you control the investments in your 401(k) and are on the hook for any gains or losses? Well, you’re half right, anyway.  In certain circumstances your investments can be switched without your approval, but you’re still on the hook for the losses. That’s the disturbing lesson in a decision handed down last week by a three judge panel of the Sixth Circuit U.S. Court of Appeals. Here’s the story:  James C. Bidwell and Susan Wilson were long-time members of the emergency room flight crew at the University of Louisville’s Medical Center. Both participated in the not-for-profit hospital’s 403(b) plan —it’s like a 401k– and had consciously chosen to invest 100% of their savings in Lincoln National Corp.’s   Stable Value Fund, which guarantees return of principal and at least 3% interest a year. Until 2006, many employers, including the Medical Center, used such stable value funds as the “default” option for workers who didn’t pick their own investments, because they didn’t want liability if workers lost money. But in the Pension Protection Act of 2006, as part of an effort to boost the “automatic enrollment” of workers in retirement savings plans, Congress decided to protect employers from liability if they invest the savings of workers who neglect to pick their own investments in a “qualified default investment alternative” approved by the Department of Labor. In 2007, DOL named target date funds—but not stable value funds—as qualified default investments. Target funds hold a mix of stocks and bonds that gets more conservative (i.e. with fewer stocks) as a worker approaches his target retirement date. While target date funds  don’t guarantee principal, DOL decided they’re a better long term bet for workers, particularly young ones.  Noting that  some plan administrators might not know who had consciously invested in a stable value fund and who had previously ended up in one by default, DOL even allowed employers to switch both categories of workers and escape liability. On June 16, 2008, at the Medical Center’s behest, Lincoln Retirement Services Co. mailed letters to all 2,532 plan participants with 100% of their money in the stable value fund saying they would be switched into one of Lincoln’s LifeSpan (target date) funds in a month, unless they objected.  Both  Bidwelll and Wilson swore in affidavits that they open all their retirement plan mail and never got the notices, which were sent by regular first class mail. Both say they didn’t learn of the switch until they got their third quarter 2008 plan statements in mid-October. Disastrous timing. Between July 16^th and Oct. 15^th, the S&P 500 index had fallen 27%. “They opened the statements and both told me their mouths flew open. They were aghast at what had happened,” their attorney,  John Frith Stewart,  of Stewart, Roelandt, Craigmyle & Lynch in Crestwood, Kentucky, said in an interview. Both workers immediately called to switch their money back to the stable fund, but by that time Bidwell had lost $85,000 and Wilson $16,900.   The Medical Center plan administrator denied their requests to be made whole and both the district court and a three judge appeals panel agreed the hospital qualified for protection from  liability under the new safe harbor rules. Stewart argued, unsuccessfully, that DOL exceeded its authority in allowing plan participants who had chosen their own investments (instead of just those who were already in a default) to be switched. He also argued that even the DOL regulations require employees to be in “receipt” of a notice before an automatic switch–and there was evidence his clients never received a  notice.  “It doesn’t say `once a notice has been mailed’. It says ` receipt’,’’ Stewart complains.  Bidwell and Wilson haven’t yet decided whether they’ll ask for the case to be reheard en banc—that is by the full appeals court. One irony of this case, Stewart says, is “so many people will take an envelope (from their retirement plan) and toss it aside. But these clients were meticulous in their work and in checking their letters.” He notes that because the two were mostly worked outside the hospital, they didn’t get communications provided at work to other plan participants. “Somebody has changed the rules on you without you knowing it. That’s the horrendous part,’’ he says.Target Date Funds Devour Nation’s 401(k)s! Disney Or Hitchcock? Should You Trust Your Retirement To A Target Date Fund?

Yahoo, Facebook Kiss And Make Up, Ending Crazy Patent War

Ending one of the more bizarre spats in Silicon Valley lately, Yahoo and Facebook have settled their patent dispute. Yahoo had sued Facebook back in March, alleging the social network infringed on 10 Yahoo patents concerning advertising and social networking itself.

The suit had turned much of Silicon Valley against Yahoo, since the suit seemed so clearly timed to force soon-to-go-public Facebook into coughing up a big cash or stock settlement. But the move backfired, as Facebook then not only spent big bucks to buy its own patent trove, it countersued Yahoo. Not long afterward, Yahoo’s then-CEO Scott Thompson, whom some has said was a driver of the suit, left under a cloud thanks to apparent doctoring of his resume. In early June,negotiations began between the two companies to end the fight.

How dumb an idea was Yahoo’s decision to sue one of the most powerful and influential companies in technology today, one that had been a partner up to then? So dumb that the settlement doesn’t include monetary considerations to Yahoo at all, beyond a vague promise to work together more closely in the future–promises that Yahoo CEO Ross Levinsohn and Facebook COO Sheryl Sandberg failed to shed any more light on in aninterview with AllThingsD’s Kara Swisher. From the release:

Yahoo! and Facebook today announced that they have entered into definitive agreements that launch a new advertising partnership, extend and expand distribution arrangements, and settle all pending patent claims between the companies.

Under the agreements, which include a patent portfolio cross-license, the parties will work together to bring consumers and advertisers premium media experiences promoted and distributed across both Yahoo! and Facebook. Yahoo! and Facebook will also work together to bring Yahoo!’s large media event coverage to Facebook users by collaborating on social integrations on the Yahoo! site. …

 Going forward, Yahoo! and Facebook have agreed to work more closely and collaborate together on multiple tent-pole and anchor events annually over the next several years to provide unparalleled experiences for consumers and world-class sponsorship opportunities for advertisers.

What the deal doesn’t settle, however, is the wretched state of patent law, especially as applied to fast-changing technology industries, that made the short-lived war possible in the first place. Some companies, such as Twitter, are trying to change the game with new policies that limit when they can sue. And the influential appeals court judge who recently tossed out Apple’s patent lawsuit againstGoogle‘s Motorola Mobility unit, Richard Posner, is questioning whether software should be patentable at all.

But notwithstanding the Yahoo-Facebook accord, it seems far more likely that patent wars will worsen before they improve.

Whew! Justice Roberts' Decision Means Focus Can Now Turn to Real Health Care Dilemma

Whew! Now that’s over, maybe we can get back to the real work at hand. Will the Affordable Care Act be successful? It’s a grand experiment. And reporting on the mandate and exchanges that go into effect after 2014 is going to be the story in health care in the U.S. for years to come.

While in my post yesterday  I summarized where health care in America will go, if as the betting assumed the mandate was struck down, all attention now can turn to speculation about how the mandate will actually work.  Based on reporting by my staff at Bloomberg News when I was running the health team there last year,  and similar stories elsewhere, the economic argument for the mandate is solid.

To summarize, the mandate requires everyone who isn’t covered by an employer’s health plan, or by a government plan, to buy health insurance or pay a fee (the Court says it’s a tax!). Each state will be required to set up a web-based site where insurance buyers can compare and shop for plans. Insurers will have to take all comers, no matter if they have pre-existing medical conditions. The economic argument, which as readers know was initially a conservative and Republican idea going back to the early 1990s, is that insurers can afford the cost of care for the sick, such as those who already have a health condition, with the premiums paid for young and healthy people who are unlikely to require much, if any, care.

The evidence that coupling the requirement to buy insurance with a so-called “guaranteed issue,’’ the phrase that means insurance must by sold to those even with a previously existing medical condition, is already emerging from Massachusetts. Studies show most the population is now covered by some private or public plan. Most important, insurance rates to consumers who buy insurance on their own have held steady, suggesting that insurers are able to spread the risk as the mandate’s original creators back in the 90s expected. Health costs to the Massachusetts government have jumped, mostly due to subsidies to help pay for premiums offered to those with lower incomes. That surely will happen as a result of the national mandate, too.

What will be important to watch is whether private insurance companies will actually sell coverage via the exchanges and whether the new business they gain will be a boon to their bottom line. Most important, and critical to Obamacare’s success, is whether Aetna, Cigna, UnitedHealth, the blue cross plans and others, take advantage of all the new customers by creating plans that, as I noted in yesterday’s post, actually give doctors, hospitals and patients an incentive to make cost-effective decisions. By having so much of the population covered either by private insurers, or by Medicaid, as a result of the law’s expansion of coverage – also upheld by the Court – there is a real opportunity for the first time ever to coordinate and manage care. That’s where the Obamacare experiment will really matter.

The constitutional issue of the mandate all along seemed like an almost two year distraction. Attention now must turn to rule making out of the Department of Health and Human Services, the willingness of private insurers to offer interesting coverage plans at attractive rates to consumers not covered by employers or government plans, and how the state run web-based exchanges are set up.

In the end, the court ruled 5-4, as many expected. The shocker for court watchers was that Justice Roberts joined the majority. He did so by dismissing the so-called commerce clause as the point of contention and instead bought the Solicitor General’s argument that the mandate is constitutional because it involves the federal government’s power to tax. Opt out of buying insurance, the ruling states, and one simply can pay a tax. Interestingly, the law never calls the opt-out payment a tax, but rather a fee or assessment.

As others are noting more eloquently than me, the ruling is likely to stand as one of the most influential in Supreme Court history. The political fallout will be worth watching, too, as Governor Romney can campaign on repealing the law and President Obama can tout passage of the law the as the kind of LBJ or Roosevelt accomplishment that makes history. Senator Majority Leader Mitch McConnell, Republican of Kentucky, already is setting up the battle lines with this, as quoted today, on CBS News:

“Today’s decision makes one thing clear: Congress must act to repeal this misguided law. Obamacare has not only limited choices and increased health care costs for American families, it has made it harder for American businesses to hire.’’

By the way, if you are looking for a great blow-by-blow as to how the law came about, and especially how the mandate came to be despite President Obama’s initial antagonism to it, I suggest you read Fighting for Your Health: the Epic Battle to Make Health Care a Right in the United States by Richard Kirsch.

While Rest Of U.S. Economy Plods, Houston Gets Hot

This article appears in the July 16 issue of Forbes magazine.

Direct Energy Chief Executive Chris Weston needed a new home for his company, which provides electricity, natural gas and home energy services to 6 million residential and business customers across North America. The Toronto firm considered as many as 15 cities for its new headquarters, but only one ever really had a chance. “Houston was the obvious answer in the end for us,” says Weston.

In January his company announced that it would ­relocate its office to the booming Texas city and hire 200 people immediately. The move will generate an annual local economic impact of $59 million, according to the Greater Houston Partnership.

Why was Houston so obvious? “You have a constellation of energy companies in Houston, and the city provides a ­stable structure with its political and regulatory commitment, which we find extremely important,” says Weston, who’s led the $10-billion-in-sales subsidiary of U.K.-based Centrica since 2009. Others agree. Exxon Mobil is building a 385-acre corporate campus here that will accommodate 10,000 employees. The company announced this month it was transferring 2,100 employees from Fairfax, Va., as well as 110 from Akron, Ohio, to Houston. BP and Anadarko Petroleum are consolidating U.S. operations here as well.

Oil and gas drive the Houston economy and are responsible for 50% of the jobs related to the export of goods and services outside the area. But that’s gone way down over the past 30 years. Energy represented 87% in the early 1980s. That diversification helped Houston emerge from the recent recession faster than any other large U.S. city. Houston’s ­employment dropped 16 straight months from its peak in August 2008. Yet the carnage was much worse in other major metros like Riverside, Calif. (48 straight down months), Phoenix, Ariz. (38), Los Angeles (36) and Minneapolis (36). Houston and Washington, D.C. are the only major metros to have ­recovered all the jobs they lost in the recession.

Houston ranks No. 20 in FORBES’ 14th annual ranking of The Best Places for Business and Careers (for the Top 25, see p. 100). While the rest of the country plods along, Houston’s $384 billion economy boomed by a China-like 8.6% in 2011, best in the U.S., and is expected to expand 8.5% this year. Job growth has been the eighth best in the country since 2006, at an annual 1.2% pace. Moody’s Analytics forecasts employment gains of 3.2% a year through 2014, which would rank Houston sixth among the 200 largest metro areas. People are chasing those jobs. The Houston metropolitan area, with a population of 6.1 million, experienced a net migration gain of 313,800 new residents during the past five years. Compare that with the three metros ­bigger than Houston: New York, Los Angeles and Chicago. They had a combined loss of 365,700 (see chart).

The 25 Best Places For Business And Careers

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Houston went through a devastating recession in the 1980s as the price of oil plummeted and 220,000 jobs were lost. The recent economic downturn was much shallower for Houstonians. The price of oil plunged again (down more than $100 per barrel between July 2008 and December 2008), but energy companies did not overreach this time in the climb up to $145 oil. Only 1,200 oil and gas extraction jobs, or 2.6% of the total, were lost during the recent recession, and companies have since added back 7,200 jobs in the sector. Home builders also avoided the overdevelopment seen in other cities like Phoenix. The result: Home prices increased 16 of the past 17 years, according to Moody’s Analytics. The only decline—in 2008—was less than 1%.

Energy continues to power the economy, but health care, transportation and technology are gaining. Three of the four top medical research institutions in Texas are based here. The Texas Medical Center, employing 92,500 people (annual budget: $14 billion), is the largest in the world and ­includes the renowned MD Anderson Cancer Center. The Port of Houston ranks first in the U.S. in foreign tonnage and first in U.S. imports, generating $179 billion in annual statewide economic impact, according to a 2012 study. NASA and the Johnson Space Center make it an aerospace hub as well. “[Oil and gas] is still king here, but there are so many different pieces to it that we are not a one-industry town,” says Mayor Annise Parker.

Recent nonenergy companies ­making the move to Houston include Waste Connections, the third-largest trash hauler in the U.S. It moved its headquarters from Sacramento, Calif. this year to escape the poor California business climate. Dow Chemical announced plans in April to construct a new ethylene production plant, a $470-million-a-year bonus for Houston’s economy.

In all there are 68 publicly traded companies with more than $1 billion in sales headquartered in Houston, second only to New York, with 83. Twelve ­billionaires call Houston home, led by energy titan Richard Kinder, worth $8.2 billion.

What could slow Houston down? A prolonged period of cheap oil would certainly sting. “The energy industry is very volatile, and that adds volatility to Houston,” says Edward Friedman, an economist who tracks Texas for Moody’s Analytics. Still, Friedman thinks the emergence of China and India as economic powers will keep oil prices from collapsing anytime soon.

Farouk Shami, founder and ­chairman of Farouk Systems, which manufactures more than 1,000 beauty products, moved his manufacturing ­operations from China to the U.S. over the past three years. He says costs ­increased 15% after the move, but it was worth it because he produces a ­better-quality product—resulting in fewer ­returns—and no longer has three months of inventory sitting on the shelves. Farouk now employs 2,000 people in the area. Shami, a ­Palestinian-American who took a run at the Texas governor’s office in 2010 but lost ­decisively in the Democratic primary, is decidedly pro-Houston. “Houstonis the future of America,” he says. ­America could do a lot worse.