Texas jobs data

[Surlethe]

I saw in this thread that Mike, Nitram, Broomstick, and Zentei jabbing at jobs in Texas. (I'm naming names to be specific, not to be an ass.) I thought a new thread might be in order to discuss it.

This guy dug through BLS job statistics to check claims about jobs in Texas. The specific claims he tries to verify are:

1. The unemployment rate is not low;
2. Most of the new jobs are low-wage jobs;
3. The energy boom is responsible for most of the new jobs;
4. Most of the new jobs are public-sector.

Here are his conclusions in a nutshell:

1. That's only because so many people have migrated to Texas looking for jobs. If you crudely control for migration by comparing Texas' jobs to its workforce in 2007, its unemployment rate would be the lowest in the country, 2.3%.
2. Not true: the median wage in Texas is average as far as the US goes, and the average wage has risen sixth-fastest of all states since the recession.
3. Partly true: the energy sector accounts for 25% of jobs added, but only 3% of total employment. However, even if the energy sector had added no jobs, Texas would still be growing faster than any other state.
4. Since the beginning of the recession, Texas has created about 70,000 public sector jobs. This helps, but (by my eyeballs) this is just about 10% of the total number of jobs created. The vast majority of job created have been private sector.

Since this guy gives very precisely how he found his data, and the analysis indicates that some of the liberal claims floating around are bullshit, it's worth a discussion. It's also worth discussing whether the analysis can be explain or be reconciled with other claims (for example, I saw one discussion of federal jobs data take annual averages for 2008, 2009, 2010, which of course includes the Census spike).

[Surlethe]

For reference, here is Politifact on various claims about Texas' economy. That's a summary page; I don't have time to write individual summaries based on my reading of the articles.

[Lord Zentei]

Partly true: the energy sector accounts for 25% of jobs added, but only 3% of total employment. However, even if the energy sector had added no jobs, Texas would still be growing faster than any other state.

So booming energy is only 25% of new jobs - that's less than I expected, so fair props to Perry on that score.

Though there's still the issue of jobs being poached from neighbouring states.

[Surlethe]

What's the evidence for that? (And is "poached" in the sense of "Texas has a more business-friendly environment so businesses are moving shop there" or in the sense of "Texas is not inherently better for business, but it offered subsidies to businesses moving there from out of state"?)

[kaeneth]

The only real issue I have with this is:

During that time, 739,000 people fled into Texas. Anyone who takes that data and pretends that this is somehow bad news for Texas is simply not being honest. At the worst, I'd call it a good problem to have.

That is ~3% of Texas's population. Honestly, the assertion immigration = equal to local population, is a bad one. A large fraction of people move because they were hired. Oh, and its people that moved...just fyi only about 60% of the population in the US is 'part of the workforce'. So that makes the next bit even more suspect as it drops that 3% number below 2%.

That's only because so many people have migrated to Texas looking for jobs. If you crudely control for migration by comparing Texas' jobs to its workforce in 2007, its unemployment rate would be the lowest in the country, 2.3%.

Which makes that bullshit since he is failing to account for local growth of the workforce via normal demographic and population changes. He is claiming immigration is the reason for the 'high unemployment numbers' but 3% != 6%.

25% of new jobs being Energy sector...I suspect that plus choosing to ignore the fact the local population does indeed grow, accounts for most of that 2.3% number. I also honestly suspect that if you adjust for service sector growth for that 25%, the jobs related to that 25% moving into the state, and the fact Texas is adding public sector jobs when most others are laying off (nearly another 10% of the total job growth!). Ya, I'm not seeing the Texas miracle being anything to do with Perry and more to do with factors outside of a politicians control.

[Surlethe]

The only real issue I have with this is:

During that time, 739,000 people fled into Texas. Anyone who takes that data and pretends that this is somehow bad news for Texas is simply not being honest. At the worst, I'd call it a good problem to have.

That is ~3% of Texas's population. Honestly, the assertion immigration = equal to local population, is a bad one. A large fraction of people move because they were hired. Oh, and its people that moved...just fyi only about 60% of the population in the US is 'part of the workforce'. So that makes the next bit even more suspect as it drops that 3% number below 2%.

Eyeballing the first chart on the page, it looks like about 750,000 net jobs were created in Texas between 1/2008 and now (4/2011?). That means that about as many people moved to Texas as there were new net jobs. When you include demographic changes, it seems to me that you'd expect Texas to have a higher-than-you'd-expect unemployment rate, even though it's creating new jobs left and right. (In addition, since there were as many immigrants as new jobs, it's probably unlikely that they moved there just because they were hired and lends credence to the idea that people are moving there for other reasons, like that Texas is creating jobs and that land is really cheap.)

That's only because so many people have migrated to Texas looking for jobs. If you crudely control for migration by comparing Texas' jobs to its workforce in 2007, its unemployment rate would be the lowest in the country, 2.3%.

Which makes that bullshit since he is failing to account for local growth of the workforce via normal demographic and population changes. He is claiming immigration is the reason for the 'high unemployment numbers' but 3% != 6%.

You clearly did not read the gigantic paragraph of disclaimers right after he made that comparison. He's illustrating the point that immigration will help inflate unemployment numbers, when in fact people voting with their feet is a signal that the state has a very healthy economy. Besides, whether through immigration or through normal demographic changes, Texas' workforce has grown by 6%. Contrast that with the overall picture of workforce collapse in the US. Texas has high unemployment because people there are looking for jobs. He's NOT saying that in the absence of immigration, Texas' unemployment rate would be 2.3%. In fact, he's very explicitly not saying that.

25% of new jobs being Energy sector...I suspect that plus choosing to ignore the fact the local population does indeed grow, accounts for most of that 2.3% number. I also honestly suspect that if you adjust for service sector growth for that 25%, the jobs related to that 25% moving into the state, and the fact Texas is adding public sector jobs when most others are laying off (nearly another 10% of the total job growth!). Ya, I'm not seeing the Texas miracle being anything to do with Perry and more to do with factors outside of a politicians control.

That's quite a penetrating statistical analysis. Can you cook up some charts to go with it?

I can also tell you didn't bother reading the blog post, which at the end does not attributes the "Texas miracle" to Perry. Nobody's talking here about whether Perry is responsible for the job growth; the question is whether Perry is lying when he claims that job growth occurred on his watch and whether counter-claims about the Texas labor market are accurate.

[Lord Zentei]

Regardless of population growth and public sector jobs, the job creation in Texas is still higher than elsewhere, as are the number of workers migrating there.

Surlethe: yes, the "poaching" was a reference to the fact that Texas is more business friendly than other states (link). I put it in rather disparaging terms because it's going to be hard to replicate the same kind of job growth for the US overall, since many of these new jobs is due to people crossing state lines (as your article suggests). And in any case, the difference in business conditions between states is up to the states, and movement of jobs between states isn't the same as changes in job creation on the federal level. Nonetheless, fair's fair - Texas is more business friendly than other states.

[Surlethe]

Surlethe: yes, the "poaching" was a reference to the fact that Texas is more business friendly than other states (link). I put it in rather disparaging terms because it's going to be hard to replicate the same kind of job growth for the US overall, since many of these new jobs is due to people crossing state lines (as your article suggests).

Are you attributing high job growth to high immigration or high immigration to high job growth? There's also the question of how many marginal firms has Texas' business-friendly environment saved (because they moved there instead of going out of business, say): I don't see how you can argue that jobs created in Texas would necessarily have been created elsewhere if Texas were less business-friendly.

I'd describe the comparably "business-friendly" environment as one in which the marginal firm is more profitable than the marginal firm in other states, hence (the supposed) flow of jobs from other states to Texas. This would indicate, supposing the entire US becomes more like Texas, that marginal firms would become more profitable in every region, leading to some net job creation everywhere.

[Darth Wong]

Well, you learn something new every day. I stand corrected on the Texas job growth phenomenon. It does appear to be real, and not just Wal-Mart jobs.

Having said that, I do think he's being unfair to dismiss the energy-sector argument so quickly. You can't look at the economic impact of a sector by counting only the people employed directly by that sector. Any economic surge in any particular industry can produce a variety of ancillary benefits which spill over into other industries. He points out that the energy sector only employed 3% of the Texas workforce, but the auto industry (including its parts suppliers) only employed 10% of Michigan's workforce, yet no one disputes that it utterly dominated Michigan's economy, or that a decline in its health could (and did) devastate Michigan's employment picture.

[Coop D'etat]

Well, you learn something new every day. I stand corrected on the Texas job growth phenomenon. It does appear to be real, and not just Wal-Mart jobs.

Having said that, I do think he's being unfair to dismiss the energy-sector argument so quickly. You can't look at the economic impact of a sector by counting only the people employed directly by that sector. Any economic surge in any particular industry can produce a variety of ancillary benefits which spill over into other industries. He points out that the energy sector only employed 3% of the Texas workforce, but the auto industry (including its parts suppliers) only employed 10% of Michigan's workforce, yet no one disputes that it utterly dominated Michigan's economy, or that a decline in its health could (and did) devastate Michigan's employment picture.

I also thought that was the weakest part of the argument. A more direct analogy is Alberta where a small fraction of people are employed in the energy sector but the ripple effect it has on the rest of the economy results in such high per capita income and low unemployment.

[Mr Bean]

Well, you learn something new every day. I stand corrected on the Texas job growth phenomenon. It does appear to be real, and not just Wal-Mart jobs.

Sounds like a great story except there's one final factor you have to take into consideration. Job Stealing P3
First heard about this on TAL, there is a question of how many jobs being created in Texas were taken from other states, where companies who were going to create jobs in Nevada or Washington were conviced to move the plant near Dallas or elsewhere in the state via specific enticements like five years of free of state taxes and the like. Texas is infamous for this and there are dozens of major companies who live and work inside the state without paying a dime into the states coffers because of these sweet-heart deals. True if you move to Texas without one of those deals the Tax rate is above average but a serious issue in America in our day and age is if your tax rate is to high you can simply shop around the other lower 48 until you find a town or city will to let you move operations there for five years tax free then stay there for six or seven years then shop around for another five years somewhere else.

[Darth Wong]

Well, you learn something new every day. I stand corrected on the Texas job growth phenomenon. It does appear to be real, and not just Wal-Mart jobs.

Sounds like a great story except there's one final factor you have to take into consideration. Job Stealing P3
First heard about this on TAL, there is a question of how many jobs being created in Texas were taken from other states, where companies who were going to create jobs in Nevada or Washington were conviced to move the plant near Dallas or elsewhere in the state via specific enticements like five years of free of state taxes and the like. Texas is infamous for this and there are dozens of major companies who live and work inside the state without paying a dime into the states coffers because of these sweet-heart deals. True if you move to Texas without one of those deals the Tax rate is above average but a serious issue in America in our day and age is if your tax rate is to high you can simply shop around the other lower 48 until you find a town or city will to let you move operations there for five years tax free then stay there for six or seven years then shop around for another five years somewhere else.

Well yes, that's a separate issue: the fact that this job growth mechanism, while real, could not scale up to the national level and is arguably bad for society. In a race to the bottom, the winners will be Mexico, China, and India, not the United States. It's a foolish idea to think that America's future lies in trying to win that race. But the author didn't have much to say about that issue, whereas he seemed to think he had demolished the energy-sector argument by quoting direct employment figures.

[D.Turtle]

Well, the most disingenuous thing about those charts is that he only looks at he explains the entire population growth by people moving to Texas from other places to get jobs. He ignores that Texas has had a higher growth rate for a long, long time. The reason for that is due in a large part to immigration fro Mexico, as evidenced by the huge growth in the number of Hispanics in Texas.

During the recession, the population growth has not spiked, instead it has stayed it pretty flat:


At the same time, the emplyoment-to-population ratio has reacted pretty much exactly like the rest of the US: By going down:
.

In the end, Texas has done better than the rest of the US purely through higher population growth. Population growth that has been there for a long, long time.

[Surlethe]

D. Turtle, what about the fact that immigration from Mexico to the United States has been sharply declining over the last decade, and has been negligible since 2009? (source: http://www.nytimes.com/interactive/2011 ... ation.html)

[Lord Zentei]

Are you attributing high job growth to high immigration or high immigration to high job growth? There's also the question of how many marginal firms has Texas' business-friendly environment saved (because they moved there instead of going out of business, say): I don't see how you can argue that jobs created in Texas would necessarily have been created elsewhere if Texas were less business-friendly.

They might not necessarily have been created elsewhere, but some of the jobs that moved to Texas might well have stayed there. To be sure, Texas increased jobs due to marginal firms moving there instead of going out of business, but not all of these new jobs are due to marginal firms as non-marginal workers go there too. This inflates the apparent success of Perry's model.

Also, as I mentioned before, a fair number of the jobs created in Texas were due to the energy boom - less than I expected (only 25%), but this figure is not insignificant, especially since there will have been service sector jobs to support the productive jobs. I'm not entirely sure whether the author in the OP link includes those in his statistic.

But again, I have to give him fair props: based on this data Texas is indeed doing better than other states, at least in jobs.

I'd describe the comparably "business-friendly" environment as one in which the marginal firm is more profitable than the marginal firm in other states, hence (the supposed) flow of jobs from other states to Texas. This would indicate, supposing the entire US becomes more like Texas, that marginal firms would become more profitable in every region, leading to some net job creation everywhere.

Well, as I said, the federal government doesn't have that much to do with the conditions that Perry created for Texas vis-a-vis other states. So I'm not entirely sure what he'd do; federal taxes on business are already very low, for example - de facto if not on paper. Obama inherited a federal government with very business friendly conditions, and he hasn't exactly rolled that back as some in the GOP feared he would.

Moreover, I looked around and it seems that Texas has been using subsidies for businesses after all, for example through the Texas Enterprise Fund (though to be fair, that seems not to have created quite as many jobs than Perry is boasting).

[D.Turtle]

D. Turtle, what about the fact that immigration from Mexico to the United States has been sharply declining over the last decade, and has been negligible since 2009? (source: http://www.nytimes.com/interactive/2011 ... ation.html)

Well, I tried looking into this, but it seems quite difficult to get state level data.

What is clear from the census, is that about 2/3 of the population growth in Texas since 2000 was from Hispanics. This article cites a sociologist citing data from the 2010 census that most of the growth in Texas was through natural increases, and not through immigration. Unfortunately I can't find the direct data itself supporting that claim.

However, if this claim is true - and I don't see any reason it shouldn't - the decrease in total net immigration would not be that important for understanding the Texas situation.

Since the claim being made is that the decrease in the employment to population ratio is due to a drastic increase in cross-state immigration - which is a positive claim - I would really love to see some data supporting that statement.

Otherwise, the situation in Texas is quite easy: Even though the job situation in Texas is just as bad as in the rest of the US, the inherent population growth in Texas still leads to a net increase of the number of jobs.

[Surlethe]

Turtle, that is an excellent point. I am going to look into it.