POLITICS

State unemployment numbers: Texas is doing something right

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Politics,Beltway Confidential,Michael Barone

The Bureau of Labor Statistics has released the January 2013 unemployment numbers for the states, and it makes for some interesting reading.

Observations: California has the nation’s highest unemployment rate, 9.8%, tied with Rhode Island. Nevada at 9.7% is just behind. These are pretty terrible numbers. Note that the Illinois legislature increased the state’s income tax rate from 3% to 5% in spring 2011 and California voters, persuaded by Governor Jerry Brown, with a drive to register young Latinos, raised the top rate to 13.3% in November 2013. Were those policies ill-advised? Have they had a negative effect on job creation? The high unemployment numbers suggest the answer is yes.

In addition unemployment is high in New Jersey and North Carolina (9.5%), Mississippi (9.3%), Michigan (8.9%), Georgia and South Carolina (8.7%), Indiana (8.6%) and New York and Oregon (8.4%). Multiple causes likely here. The South Atlantic states have had above-national-average population growth for a long time now, and they haven’t been generating enough jobs to absorb a growing labor force. Auto-heavy Michigan is actually doing better vis a vis the national average than it has been for some time. I confess I do not understand why New Jersey and Mississippi have sky-high rates out of line with their neighbors.

Where do you find low unemployment? The Great Plains and Rocky Mountain states: shale-rich North Dakota (3.3%), Nebraska (3.8%), South Dakota (4.4%), Wyoming (4.9%), Iowa (5.0%) Oklahoma (5.1%), Utah (5.4%), Montana (5.7%). Also, tiny Vermont (4.7%). Most of these states have had slow population growth for a long time and started the century with relatively old populations. (Utah, with its 1950s demographics—lots of children and intact families, is the obvious exception; Idaho, with a large Mormon population, is similar.) They don’t need to generate a lot of new jobs to have low unemployment rates. These states have what economists consider full employment, with North Dakota and Nebraska clearly have labor shortages. In general these are states with relatively low levels of taxation and government spending.

Finally it’s always worth looking at Texas. Despite vast population growth and domestic in-migration, despite a population that was in the 2010 Census (like California) 38% Hispanic, Texas has a near-full-employment unemployment rate of 6.3%. That’s a considerable achievement. When he was running for president, Governor Rick Perry liked to say that Texas has been creating a majority of the nation’s new jobs. That’s true if you cherry pick the months you’re comparing, because you can pick months when most states were losing jobs. If I’m reading the Texas numbers correctly, Texas has only had what look like short pauses in job creation and from the start of the recession in December 2007 to January 2013 had 875,000 new jobs. During that time, according to these figures, the nation lost 3,794,000 jobs. Texas is clearly doing something right.

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