12:08 pm CST - August 19, 2011
Posted under The Scoop
The Wall Street Journal
Liberals try to discredit the Lone Star State’s economic success.
Rick Perry is not the subtlest politician, but he looks like Pericles next to the liberals falling over themselves to discredit job creation in Texas. We’d have thought any new jobs would be a blessing when 25 million Americans are looking for full-time work, but apparently new jobs aren’t valuable jobs if they’re created in a state that rejects Obamanomics.
Let’s dissect the Texas record. The Federal Reserve Bank of Dallas reported this summer that Texas created 37% of all net new American jobs since the recovery began in June 2009. Texas by far outpaced every other state, including those with large populations like New York and California and those with faster-growing economies, like North Dakota. Other states have lower unemployment rates than Texas’s 8.2%, though that is below the national average and the state is also adding jobs faster than any other.
Texas is also among the three states and the District of Columbia that are home to more jobs today than when the recession began in December 2007. Without the Texas gains, according to the Dallas Fed, annual U.S. job growth would have been 0.97% instead of 1.17%. Over the past five years, Texas has added more net new jobs than all other states combined.
The critics claim demography is destiny, and of course jobs and population tend to rise and fall in tandem. The number of Texans is booming: According to the Census Bureau, the population grew 20.6% between 2000 and 2010, behind only Nevada, Arizona, Utah and Arizona. According to the Bureau of Labor Statistics (BLS), the seasonally adjusted size of the Texas labor force has increased by 5% since December 2007, faster than any state other than North Carolina at 5.4%, though the Tar Heel State has declined 0.4% over the last year. The labor force has shrunk in 28 states since December 2007.
Some of this Texas growth is due to high birth rates, some to immigration. But it also reflects the flight of people from other states. People and capital are mobile and move where the opportunities are greatest. Texas is attractive to workers and employers alike because of its low costs of living and doing business. The government in Austin is small, taxes are low, regulation is stable, and the litigation system is more predictable after Mr. Perry’s tort reforms—all of which is a magnet for private investment and hiring.
As for the critics, well, one of their explanations is that Americans are moving to Texas because of the nice weather. The temperature in Fort Worth this week reached 108 degrees.
The critics also claim that Texas’s new jobs somehow don’t count because the wages are supposedly low and the benefits stingy. Yet BLS pegs the median hourly wage in Texas at $15.14, 93% of the national average, and wages have increased at a good clip: in fact, the 10th fastest state in 2010 at 3.4%.
The Texas skeptics often invoke high energy prices, as if Texas were some sheikdom next to Mexico. But according to the Dallas Fed study, energy jobs accounted for only 10.6% of the new positions. The state economy today is far more broadly based than it was before the early-1980s oil-and-gas bust. For the last nine years, Texas has led the states in exports.
To put a finer point on it, the energy industry isn’t expanding merely because of rising oil prices or new natural resources. Technological innovation is also driving the business, such as the horizontal drilling that has enabled shale oil and gas fracking. New ideas are how an economy expands.
Nearly 31% of the new Texas jobs are in health care, many of which are no doubt the product of federal entitlements that go to every state. But the state is also making progress filling in historical access gaps in west and south Texas and the panhandle, where Mr. Perry’s 2003 malpractice caps have led to an influx of doctors, especially high-risk specialists. The Texas Public Policy Foundation estimates that the state has netted 26,000 new physicians in the wake of reform, most from out of state.
Liberals do have a point that Texas avoided the worst of the housing boom and bust, in part because of regulations imposed in the S&L backwash that limit mortgage borrowing to 80% of the appraised value of a home. But isn’t this smart regulation? These same liberals promoted rules that kept down payments much lower than 20% at federal agencies, and they’re now encouraging the Administration to prop up housing to prevent foreclosures and thus prevent the market from finding a bottom.
Mr. Perry’s Texas record is far from perfect, as Charles Dameron recently showed on these pages with his reporting on the Governor’s politicized venture-capital fund. But the larger story is that Mr. Perry inherited a well-functioning economy and has managed it well, mainly by avoiding the kind of policy disruptions that his liberal critics favor in the name of this or that social or political goal. This achievement may not earn a Nobel prize in economics, but it does help explain why Texas is outperforming the nation.