Governor Rick Perry's 'economic miracle' could take him to the White House. But for many, his state is a land of hunger and poverty – even for some of those who have a job

They arrived before dawn to wait for the food truck. Middle-aged men, young women with children, the elderly and the retired, mixing with the low-paid on their way to work. As the sun rose high in a blue summer sky, several hundred people clustered in precious spots of shade in Dove Springs, a suburb of the Texan capital of Austin. Some brought garden chairs to sit on.

When the truck from the Capital Area Food Bank eventually came, each person patiently waited to pick up a box containing cans of spaghetti sauce, fruit juice, a few pounds of potatoes and some pears. Connie Gonzales, an Austin city official, watched the crowds of hungry and desperate people and said that they grew bigger each week. "It is the economy. It is bad. Any help these people can get, they really need it," she said.

It is not meant to be this way. Not in Texas. After all, this is governor Rick Perry's Lone Star state. This is the Texas whose record at job creation is at the centre of Perry's bid for the Republican presidential nomination. This is the state whose economic "miracle" is being hailed as a conservative blueprint for the future of America – "Texas exceptionalism" as rightwing columnist George Will glowingly called it. This is the state of low taxes and low regulation and which is so pro-business that corporations are booming here. It is the state that dodged recession and has roared back into recovery; an oasis of jobs in a devastated US economy.

Yet there is a dark side. It was on stark display in Dove Springs. This is the Texas of a collapsing education system that is failing to educate its children. This is the Texas where millions have no health insurance and a growing low-wage economy means having a job is not enough to provide the basics of life. This is the hungry Texas that the food bank serves.

Sharonda Buckley, 27, was a first-timer at the food handout, arriving at 8am and stunned to find herself 194th in the queue. Buckley has a job at a local technical equipment firm making oxygen canisters, and is also studying for an engineering degree. But her wages are so low, and her student fees so high, that she needed a food parcel to make ends meet.

"I have a job and I have education, but I still can't make it work," she said. "I had to put away my pride. I feel I should not have to stand in line for food." Then she gestured at her smiling three-year-old daughter who stood at her side. "I'm doing this for her," she said.

The low-wage economy is Texas's dirty little secret, and it is easy to ignore in swaths of the state. The sad scene at Dove Springs was unfolding only a few miles from the majestic domed state house in downtown Austin, a city which is famed for its vibrant music venues and world-class restaurants.

Austin is also famous for its growing technology sector and is becoming the Silicon Valley of the Texas hill country. It is in many places a city of well-to-do neighbourhoods, with manicured lawns and plush housing. The same is true of other Texas urban centres, such as Dallas and Houston, helped by an energy industry that has been buoyed by rocketing oil prices. The state also avoided the worst of the housing bubble.

Perry touts all this when he boasts of the legion of Fortune 500 companies that have flocked to make their headquarters here and he boasts that, since June 2009, about 40% of all jobs created in America are in Texas, a state whose economy is growing at twice the national rate.

But the devil is in the detail. Unemployment is stubbornly stuck at about 8%, below the national level but still leaving one million Texans out of work. In 2010 half a million people in the state earned no more than the minimum wage of $7.25 (£4.47) an hour. Texas, for all its glittering metropolises, has the joint highest percentage, along with Mississippi, of hourly paid workers earning the minimum wage or less.

Jim Hightower, a longstanding Texas liberal and radio host, has a simple description of Perry's Texas economic miracle. "It is a hoax. He is telling Perry-tales. You can't make a living off of these jobs," he said.

These are the hungry people waiting for handouts at Dove Springs. "The vast bulk of people we serve are working people," said John Turner, director of marketing at the Capital Area Food Bank. There are a lot of them too. Turner's organisation serves an enormous area several hundred miles wide. It feeds 48,000 people a week, including 20,000 children. These are people like Buckley, whose degree has not earned them a living wage.

Or people like Mendes Crencio, a 58-year-old baker. He smiled as he clutched his box of food and explained he had come on his day off from work to help feed his family. "Every little bit helps," he said.

Perry has not extended a helping hand to the working poor. Instead he has shown himself more likely to offer support to those who would make Texas extremely friendly to big business.

There is little doubt Texas has a working environment that makes corporations very happy. The low-wage economy provides a cheap and willing workforce. The lack of strict regulation, especially in areas such as the environment and construction permits, is extremely attractive to companies looking to slash their bottom line. Or to engage in practices that are frowned on elsewhere.

Perry has even reformed the legal system, drastically limiting the powers of individuals seeking to sue companies over allegations of malpractice or for damages. There is a fierce debate over whether Perry shaped this system or more or less left it as he found it. But either way the results are clear. "The tax and regulatory polices are more business friendly than in other large states," said Roger Meiners, an economics professor at the University of Texas at Arlington.

At the same time, Perry has been eager to provide cash or regulatory help to businesses. His Texas Enterprise Fund has shelled out more than $400m to companies that promised to bring jobs and riches to the state. Yet not all did. One study has showed two thirds of projects failed to meet their job targets.

Major presidential campaign donors have also tapped in to the public money on offer. The Texas Observer reported that 20 companies which received a total of $174m had also contributed to a Perry campaign.

A huge irony of Perry's reign is that one of the biggest engines of job growth has been the public sector. Yet Perry has decided to try to plug a massive budget hole by slashing the state education budget. Four billion dollars is being cut from education, scrapping programmes aimed at helping some of the state's most disadvantaged.

Ian Grayson, 34, a history and economics teacher at Austin high school, has already seen his class sizes jump by almost 50%. Some of his colleagues have left or lost their jobs. Grayson was dismayed at the attitude behind the Perry cuts. "They don't see education as of value," he said.

Cutting education severs a traditional route out of poverty in a state where 20% of people above the age of 25 do not graduate from high school – the highest rate in the country. "They are rationing opportunity. The long-term consequences are really serious," said Don Baylor, an analyst at the Centre for Public Policy Priorities in Austin.

Texas – rich in so many things – is overflowing with poverty. One in seven Texans are on food stamps. Latest census bureau figures show more than one in six Texans are living below the poverty line. The state also has the sixth-highest rate of child poverty in America, at almost one in four children. In healthcare the figures are also shocking. More than a quarter of Texans are uninsured, partly because so many of the state's employers do not offer, or are not required to offer, coverage to their workers.

Critics say Perry has presided over the establishment of an economy whose growing inequality resembles some in the developing world, not a 21st century America. For people like Hightower, it is distressing that Perry claims to want to expand this model to the rest of the country. "When Perry says he can do for America what he has done for Texas it is no idle threat," Hightower said.

It is a vow Perry might fulfil. On Friday the US reeled from the release of a dreadful set of job figures, showing that the national economy is steadily grinding to a halt and may soon be back in recession. Poll after poll shows President Barack Obama's approval ratings plunging to fresh lows. Perry, should he win the Republican nomination race he currently leads, could easily be in reach of the White House. His simple clarion call of job creation, mixed with his easy charm, could be a winning combination. "If things continue the way they are now, I think anybody could beat Obama," said Meiners.

In some ways that should not be a surprise. Pop culture experts often tout California as the ground-breaking laboratory of the great American experiment. But in recent years in US politics, it is Texas that has often led the way. After all, for 17 of the past 48 years, a Texan (if you count the Bushes, although both were born on the east coast) has occupied the White House.

In 2012 Perry would only be taking the same path to the Oval Office that George W Bush followed. He would also be doing it against a president stuck in a rut, whose own supporters are deeply disillusioned. While some labour unions already plan boycotts of the Democratic convention next year, a Perry candidacy would be supercharged by the activist zeal of the rightwing Tea Party faction he has wooed so assiduously.

At Dove Springs there is little talk of such high politics. That belongs to a different world than that of the daily grind of making ends meet. There is just a patient queue for food, under a brutal sun that has already sent the mercury soaring above 100F. One of those waiting was Ellen Tucker, 60. She wore a broad-brimmed straw hat to keep her cool, but the toll of the wait was clear in the sweat that poured down her face. But she needed the food; just some vegetables and fruit to put in her kitchen.

Recent events had not been kind to Tucker. She works for the local schools system as a sign-language interpreter for the deaf. But a struggle with tendonitis in her hands meant she had to go part-time. Her wages were cut in half. Suddenly the bills mounted, credit-card debts accumulated and she feared she might fail to make payments on her house. Some money from her elderly mother helped out, but it was not really enough. "I worry that we are going to go bankrupt. I barely get by," she said.

She cannot look for another job because she needs the medical insurance her current post brings. A bit of free food would help, though, allowing Tucker to spend her grocery budget on other bills. But she was 175th in the queue and it was already close to 10am. She had a shift to do in a school nearby that started in a few minutes.

With a worried expression she approached an organiser and asked how long it would be for her turn to come. There were still 30 people ahead of her in the line. "People come here to start waiting at 6am," the organiser said.

Tucker nodded, sadly, saying: "I will bear that in mind next time," and walked off to her car empty-handed. She was grim-faced. She could not wait any longer for the food handout. She had to go to work instead.