Paul Krugman is quite given to beating up on the state of Texas; if you don’t believe me, see here. Commensurately, Krugman seems bound and determined to ignore any and all good news about the Lone Star State, which is why I am confident that he will have little–if anything–to write about this:
Richard Fisher, the president of the Federal Reserve Bank of Dallas, dropped by our offices this week and relayed a remarkable fact: Some 37% of all net new American jobs since the recovery began were created in Texas. Mr. Fisher’s study is a lesson in what works in economic policy—and it is worth pondering in the current 1.8% growth moment.
Using Bureau of Labor Statistics (BLS) data, Dallas Fed economists looked at state-by-state employment changes since June 2009, when the recession ended. Texas added 265,300 net jobs, out of the 722,200 nationwide, and by far outpaced every other state. New York was second with 98,200, Pennsylvania added 93,000, and it falls off from there. Nine states created fewer than 10,000 jobs, while Maine, Hawaii, Delaware and Wyoming created fewer than 1,000. Eighteen states have lost jobs since the recovery began.
The data are even more notable because they’re calculated on a “sum of states” basis, which the BLS does not use because they can have sampling errors. Using straight nonfarm payroll employment, Texas accounts for 45% of net U.S. job creation. Modesty is not typically considered a Texas virtue, but the results speak for themselves.
Texas is also among the few states that are home to more jobs than when the recession began in December 2007. The others are North Dakota, Alaska and the District of Columbia. If that last one sounds like an outlier at first, remember the government boom of the Obama era, which has helped loft D.C. payrolls 18,000 jobs above the pre-crisis status quo. Even so, Texas is up 30,800.
What explains this Lone Star success? Texas is a big state, but its population of 24.7 million isn’t that much bigger than the Empire State, about 19.5 million. California is a large state too—36.9 million—and yet it’s down 11,400 jobs. Mr. Fisher argues that Texas is doing so well relative to other states precisely because it has rejected the economic model that now prevails in Washington, and we’ll second that notion.
Mr. Fisher notes that all states labor under the same Fed monetary policy and interest rates and federal regulation, but all states have not performed equally well. Texas stands out for its free market and business-friendly climate.
I anticipate that any reply Krugman will deign to write will be along these lines, but such replies ignore the very real reasons why Texas is doing so well in a down economy. Note that while Krugman is ready, and willing to attribute employment gains to “O-I-L, which was cheap last time but stayed very high this time,” the Opinion Journal editorial makes clear that “[p]rofessional and business services accounted for 22.9% of the total jobs added, health care for 30.5% and trade and energy for 10.6%.”
It’s probably time to acknowledge that Texas is doing a lot right when it comes to creating jobs, and fighting off the worst effects of the Great Recession. But since Texas is filled with Republicans, and since one of them–Governor Rick Perry–is making noises about running for President, people like Paul Krugman will continue to offer commentary about Texas’s economy that is anything but reality-based.