Testing The “Texas Miracle”

Aug 16 2011 @ 10:07am

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Brad Plumer breaks down the state's employment surge into various possible sources. His takeaway:

The Texas miracle is a complicated story. Some of the state’s successes – in attracting low-wage workers and doctors and businesses from other states – are difficult or impossible to replicate on a national level. On the other hand, Perry could conceivably speak out on housing policy and the need to reform local zoning restrictions. Or he could propose a massive new federal stimulus program, of the sort that has kept Texas afloat over the last two years. Though, for some odd reason, that latter idea hasn’t made its way into his stump speech yet.

Krugman focuses primarily on the state's high population growth:

But what does population growth have to do with job growth? Well, the high rate of population growth translates into above-average job growth through a couple of channels. Many of the people moving to Texas — retirees in search of warm winters, middle-class Mexicans in search of a safer life — bring purchasing power that leads to greater local employment. At the same time, the rapid growth in the Texas work force keeps wages low — almost 10 percent of Texan workers earn the minimum wage or less, well above the national average — and these low wages give corporations an incentive to move production to the Lone Star State.

So Texas tends, in good years and bad, to have higher job growth than the rest of America. But it needs lots of new jobs just to keep up with its rising population — and as those unemployment comparisons show, recent employment growth has fallen well short of what’s needed.

The above map is a snapshot of job growth in April 2011. It was taken from a fascinating timelapse starting in 2004. It dramatically illustrates how, starting in late 2008, "unemployment soared in Texas, just as it did almost everywhere else," notes Krugman.