ECONOMIC IMPACT OF THE 2020 CENSUS UNDERCOUNT IN TEXAS

In partnership with Dr. Manuel Reyes-Loya from the University of Texas at Tyler, this research brief estimates the economic impact of the 2020 Census undercount of Texas in terms of output, labor income, GDP, and jobs.

By: Dr. Francisco A. Castellanos-Sosa, Texas Census Institute, Senior Research Associate
Dr. Manuel Reyes-Loya, University of Texas at Tyler, Acting Director and Senior Research Analyst

Our research shed light on the direct and total economic impact of the 2020 Census undercount on the Texas economy. The implications are profound, impacting the allocation of federal funds across various sectors and regions within the state. The Texas Census Institute’s Funding Implications Series has undertaken a comprehensive analysis of the economic impact of the census, serving as a valuable resource for informed decision-making, advocacy, and action, especially as we approach the 2030 Census.

As noted above, Texas incurred a significant financial loss due to the 2020 Census undercount, resulting in a staggering $25.1B loss over the decade after the 2020 Census.

Considering the population projections of the Texas Demographic Center, Texas is expected to have 32,912,882 people in 2030. If action is not taken to reduce the undercount in Texas and it remains the same (at a 1.92% rate), Texas would miss 631,927 people in the next Census. If those residents were counted, Texas would access an additional $28.3B over a decade, resulting in $57B+ in output, $26B+ in labor income, $33B+ in GDP, and 434K+ jobs for the next decade.

Along with the funding implications, the census undercount also brings issue-specific implications. The industries with the largest direct economic impact due to the census undercount are Health, Construction, Education, and Manufacturing. After observing all the inter-industry effects, Health, Real Estate and Rental and Leasing, and Finance and Insurance were the industries most affected by the undercount in 2020 and are predicted to experience the largest benefits of an accurate count in 2030.

The funding implications presented in this brief underscore the critical importance of an accurate Census count.

Additionally, inaccurate data can misallocate resources, hinder effective planning, and risk taxpayer funds. Key industries, including Health Care and Social Assistance, Construction, Educational Services, and Manufacturing, have an outsize impact on economic stability, workforce development, and educational opportunities, with repercussions on the health and well-being of the population, educational quality, and public infrastructure development.

To address the funding implications of the 2020 Census undercount, we offer the following recommendations:

Census Data Quality: Promote initiatives to improve Census data quality, especially at the sub-state level. Encourage cooperation between the U.S. Census Bureau and external stakeholders to ensure more accurate and comprehensive data collection.

Stakeholder Engagement: Engage relevant stakeholders, including industry experts, local governments, and advocacy groups, to raise awareness of the undercount’s impact and work collaboratively to develop strategies for better data collection in the future.

Continued Research and Analysis: Encourage researchers and data analysts to delve deeper into the specific funding implications in various sectors and regions, using the findings from this study as a foundation for further research and detailed analysis.

The potential benefits for the state, projected for the decade following the 2030 census, highlight a compelling opportunity for substantial growth and recovery. By avoiding an undercount, Texas stands to gain over $57.8 billion in output, $26.5 billion in labor income, $33.7B in value added (GDP), and the creation of more than 434,000 jobs.

Notably, the Health Care and Social Assistance industry emerges as pivotal, bearing the largest impact on all examined variables. This industry, accounting for around 90% of the total impact, underscores the critical role that accurate census data plays in shaping economic outcomes. The insights from this study not only serve as a foundation for further in-depth analyses by data analysts and researchers but also offer valuable information to stakeholders, emphasizing the potential gains for Texas in the absence of an undercount in the upcoming 2030 census.

As Texas navigates the path toward the next census, these estimates serve as a crucial resource for informed decision-making, resource allocation, and strategic planning. The prospect of realizing substantial economic benefits underscores the importance of accurate and comprehensive census data in shaping the future trajectory of the Lone Star State.

The 2020 Census undercount in Texas significantly impacts the state’s federal funding, resulting in substantial financial losses across various crucial programs. With an estimated 547,968 people missed in the count, Texas faces a projected shortfall of $25.1 billion in federal funds over the next decade.

The industries with the largest direct economic impact due to the census undercount are Health, Construction, Education, and Manufacturing. After observing all the inter-industry effects, Health, Real Estate and Rental and Leasing, and Finance and Insurance were the industries most affected by the undercount in 2020 and are predicted to experience the largest benefits of an accurate count in 2030.

This research highlights the critical importance of accurate census counts and the wide-reaching consequences of undercounting. The findings advocate for concerted efforts to improve data collection and awareness ahead of the 2030 Census. By engaging stakeholders, policymakers, and the public in understanding and addressing these funding disparities, Texas can better prepare for future censuses to ensure it receives its fair share of federal resources. The Texas Census Institute’s initiative serves as a call to action for robust planning and advocacy to avoid similar undercount repercussions in the next decade.