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How Rick Perry Created Jobs in Texas
By Rick Newman
Posted: August 16, 2011
It sounds like an outsized Texas boast, but the numbers support Rick Perry when he claims that Texas has created more than one-third of the jobs in the United States since the economic recovery began in 2009.
There's an important caveat, however, that the Texas governor is unlikely to volunteer: Virtually all of those new jobs are in the government sector, not in private enterprise.
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Perry, who recently joined the Republican race for the 2012 presidential nomination, is touting the "Texas Miracle" as a template for the rest of America, which is stuck in a rut of high unemployment and could certainly use some fresh ideas for how to create jobs. Texas has clearly fared better than most other states since the recession began at the end of 2007. Its unemployment rate is 8.2 percent, a full point lower than the national average. The housing bust in Texas was far milder than it was in other places. A strong energy sector kept state tax revenues from plunging the way they did in other states, which forestalled layoffs in state and local government.
But Perry's performance is also controversial, with critics such as New York Times columnist Paul Krugman calling the Texas Miracle a "myth" that "offers no useful lessons on how to restore national full employment." So to figure out why the Texas economy has outperformed the nation's, I analyzed data from the government's Bureau of Labor Statistics to determine what kinds of jobs have been created and destroyed in Texas since the beginning of 2008. Then I compared that to national data. (BLS's statewide data only go through the end of 2010, so I used national data for the same timeframe.) The numbers confirm that the job picture in Texas is much brighter than elsewhere. But they also show that Texas has benefited disproportionally from growth at all levels of government. Here's a detailed breakdown:
Total jobs. Texas: Up 0.7 percent since the beginning of 2008. U.S: Down 5.6 percent. Since the recession began, Texas has added about 75,000 jobs, one of the few states with any job creation at all. Overall, the U.S. economy has lost about 5.6 million jobs since then. But net job gains in Texas have come entirely from government hiring, which accounts for 115,000 new jobs over the past three years. The private sector in Texas shed about 40,000 jobs during that time.
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Federal government jobs. Texas: Up 7 percent. U.S.: Up 4.3 percent. Nationwide, the federal government has been a steady source of job growth over the last three years, and Texas has gotten more than its share, thanks to several big Army bases and a heavy NASA presence. Texas is one of the biggest beneficiaries of Washington spending, which pumps more than $200 billion per year into the state economy, according to the New York Times. That reliance on federal money could backfire if there are cutbacks in military and space spending in coming years, as many analysts expect.
State government jobs. Texas: Up 8.4 percent. U.S.: Down 0.1 percent. While other states were furloughing workers, Austin was hiring. The prominence of the energy sector, which accounts for about 10 percent of the Texas economy, is one reason, since taxes paid by the booming oil and gas industry have generally drifted upward over the last decade. Texas also accepted $6.4 billion in stimulus money from Washington, according to the Washington Post, which helped support employment in education, health care and various parts of government. This trend, too, could reverse soon: The stimulus money is all but spent, and Perry recently signed a state budget that will cut spending by $15 billion, or 8 percent, over the next year, with the biggest cuts coming in education and healthcare. That seems sure to kill some jobs.
Local government jobs. Texas: Up 6.1 percent. U.S.: Down 1.7 percent. Local government jobs in Texas have been protected by many of the same factors that have buoyed state government payrolls, such as strong business tax receipts and federal stimulus money. Local governments will probably start to downsize as stimulus funds dwindle and state spending falls.
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Private-sector jobs. Texas: Down 0.5 percent. U.S.: Down 6.6 percent. Though it has performed better, Texas has not been immune to the recession or its aftermath. Private companies shed about 40,000 jobs between the beginning of 2008 and the end of 2010, though in nearly every category the Texas economy has held up better than the national one. Here's a breakdown of some key industries:
Healthcare jobs. Texas: up 12.6 percent. U.S.: Up 6.2 percent. The healthcare industry has been the single biggest source of new jobs throughout the U.S. economy over the past three years. As with other industries, Texas has snagged more than its share.
Private education jobs. Texas: Up 17.4 percent. U.S.: Up 6.5 percent. Demand for education is up—especially with the job market so weak—which means that private colleges, universities and K-12 schools, plus technical schools and training academies, have been hiring. More so in Texas than elsewhere.
Oil and gas jobs. Texas: Up 6.7 percent. U.S.: Up 4.5 percent. After the punishing energy bust of the 1980s, Texas diversified, and energy declined as a percentage of the state's economic output. It's still an important source of jobs and tax revenue, however, and the recent boom in energy prices has helped keep Texas flush.
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Retail jobs. Texas: Up 1.9 percent. U.S.: Down 7.2 percent. This sector is a good example of how a relatively strong core economy has helped prop up the fringes. Consumer spending and growth in the state's retail industry is hardly sizzling, but at least it hasn't been a net drag on the Texas economy, as it has been in most other states. The trend is similar in finance, hotels, restaurants, administration and professional services: Job growth is relatively flat, but that's a lot better than the sharp declines elsewhere.
Information jobs. Texas: Down 10.9 percent. U.S.: Down 10.9 percent. This industry, which includes publishers, broadcasters, Internet firms and software developers, is one of the few in which a bleak job outlook in Texas mirrors the national trend.
Manufacturing jobs. Texas: Down 11.6 percent. U.S.: Down 15.8 percent. A lot of manufacturing in Texas involves energy products, which has helped keep job losses below the national average.
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Construction jobs. Texas: Down 14.5 percent. U.S.: Down 26.4 percent. Construction is weak everywhere, but with a muted real-estate bust, Texas has lost fewer of these blue-collar jobs than other states. Even when it's bad, it's better in Texas.
http://www.usnews.com/news/blogs/rick-newman/2011/08/16/how-rick-perry-created-jobs-in-texas
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