Wednesday, March 14, 2012

The Texas Track Record on Jobs


Anyone who has studied this issue carefully already knows that the small government, conservative fiscal  & economic policies in Texas have produced job growth well above average for the 50 States, during the past 20+ years since Republicans gained control of Texas.    For intellectually honest readers who have studied the statistics carefully, with an open mind, there is no disputing this fact.    Indeed, if not for the excessive brain pollution propagated by the liberal media in America, which has blinded and confused so many voters, it would be totally unnecessary for me to write this piece at all, because the vast majority of voters would've seen the light already.   The liberal media does exist, however, in force.   It spreads brain pollution far and wide in this great nation, necessitating me, and others, to fight back.   


What follows is my attempt to clear the air on this issue, so that all US voters can see clearly how well conservative, small government economics really works, compared to big government economics.

Most popular television analyses of economic issues compare the national economic statistics under one President versus another.    You know how that goes.   Democrats say that times were best under Clinton.  Republicans say that the Reagan years were better.    These can be informative discussions, but they aren't really 'apples-to-apples' comparisons because the times were very different in the 1980's versus the 1990's.     


Under Reagan, we were still in the Cold War with the USSR.  Under Clinton, we had a "peace dividend" that resulted from the end of the Cold War.    In addition, the two Presidents dealt with very different Congresses and State Governments.    And, finally, the stage of development of the internet industry was very different in the 1990's, compared to the 1980s; and that helped produce a great boom in the late 1990's.    These important differences cause distortions in those national comparisons, which can make honest, 'apples- to-apples' comparisons of liberal policies versus conservative policies very difficult.    

In order to overcome these difficulties in comparisons of national statistics from one administration to another and from one decade to another, it is useful to compare the economic performance of two different US States during the same time period and the same administration.    This alleviates all the problems associated with the national comparisons described above.      


Now, in order to really benchmark liberal policies versus conservative policies, an intellectually honest analysis should compare two States that are at the two extremes of the political spectrum.    So, for my analysis, I chose conservative Texas and liberal Massachusetts.

First, I will examine the most recent decade, more specifically, the period from January 2000 - January 2010.     During that ten year period, the number of seasonally adjusted non-farm payroll jobs in Texas grew from 9,305,500 to 10,234,900, according to the US Department of Labor.   That was a total increase of 10.0%.   During that same ten year period, the number of seasonally adjusted, non-farm payroll jobs in Massachusetts actually shrunk from 3,279,400 to 3,181,200, a decline of 3.0%.

When this contrast is highlighted to a Democrat, he/she will typically respond by saying that Texas had an unfair advantage during that decade, because oil prices were high and Texas has a lot of oil production.    That's a fair point.  Texas does benefit from high oil prices.    


So, let's look at a different decade, in order to verify the results.   Let's look at the 1990's.   During the 1990's, oil prices were low, and the computer industry was booming.   Those conditions should've given Massachusetts a big advantage, right?   After all, Boston is one of the top 3 high tech capitols of the country.   

Here's the data from the US Department of Labor for the 1990's.   During the 10-year period from January 1990 to January 2000, the number of seasonally adjusted, non-farm payrolls in Texas grew from 6,980,400 to 9,305,500, an increase of 33.3%.    During that exact same 10-year period, the number of seasonally adjusted non-farm payrolls in liberal Massachusetts grew from 3,049,500 to 3,279,400, an increase of only 7.5%.    


So, we see that even during the low oil, high tech boom of the 1990's, the conservative State of Texas grew its number of jobs considerably faster than the liberal State of Massachusetts.    In fact, the total rate of growth for the decade was more than 4 times faster in Texas, compared to Massachusetts.   That's 300% faster, during a decade that should've favored high tech heavy Massachusetts over Texas. Therefore, it is safe to conclude that Texas' outperformance on job growth is not driven by high oil prices, as the Democrats often contend.    


Table I, below, summarizes this analysis:
At this point, the Democrat on the other side of the debate may begin to use 'ad hominem attacks.'   That's just a fancy  term for 'name calling.'    He/she might lash out and call you a "bigot" or a "meanie" or a "homophobic jerk" or some other name that attempts to create a sense that they are somehow morally superior, even though you have clearly won the debate up to this point.

Or, the Democrat might be more reasonable and respond by saying "OK, I see your point, but the jobs aren't as good in Texas.  They don't pay as much."     Now, it is true that the average salary in Texas is lower than the average salary in Massachusetts.   The average pre-tax salary in Massachusetts is $64,081; and the average salary in Texas is $48,259.    However, after adjusting for housing costs, state taxes, and - in some cases - forced union dues, it becomes very clear that $48,259 in Texas produces a higher living standard, with more disposable income than $64,081 in Massachusetts.

The most important difference in living standards between the two States is housing costs.   According to the real estate website Trulia.com, the average home price in Massachusetts is $450,000; whereas, the average home price in Texas is $250,000.       Since housing is the largest cost for most consumers, this difference in home prices swamps the difference in salaries between the two States.

As the advertisers on TV often say, "That's not all!"  If you really want to compare apples to apples, you should also adjust for other important factors.   


First, there is no State income tax in Texas.    You don't even have to spend any time filling out a form!     On the other hand, Beacon Hill (the colloquial name for the State Government of Massachusetts), takes about 5% of your salary each year.    So, that very attractive looking, pre-tax salary figure of $64,081 is immediately reduced to $60,236 by State taxes.

Massachusetts is also a "Forced Union" state, which means that the Unions have the legal authority to force workers in unionized organizations to pay union dues.    In comparison, Texas is a "Right To Work" state, where unions cannot, by law, force workers to pay dues.    The dues of the forced unions also detract from that income figure by an estimated $2,500 per year.


Furthermore, the low real estate prices filter through the economy, reducing the prices of other goods and services significantly.   When your supermarket pays less for its real estate, you save money on groceries.   When your dentist pays less for his/her real estate, you pay less for a tooth cleaning.    When your insurance agent pays less for his/her office space, then you pay less for your insurance.   And, so on, throughout  the entire economy.   The net result is that all of your non-real estate expenses are lower, as well, by about 20% on average, according to my own anecdotal evidence.

BUT, WAIT, there is STILL MORE (and its not a ginsu knife!)

Texas also has a deregulated utility industry, which produces significantly lower utility prices for homeowners.     Compared to Massachusetts, where the unions and the Beacon Hill bureaucrats control utility prices, utility rates are 40 - 50% lower in Texas.

Finally, the average home size in Texas is approximately two times larger than the average home size in Massachusetts.    In other words, that $250,000 buys you twice as much home in Texas as the $450,000 buys you in Massachusetts.   After adjusting for home size, the comparison of real estate costs is even more striking: $125,000 in Texas versus $450,000 in Massachusetts.

After adjusting for all of these important factors, it becomes clear that the average salary of $48,259 in Texas actually leaves consumers with more discretionary income and a higher living standard than the $64,081 average salary in Massachusetts.  


Table II, below, illustrates this analysis:




































19 comments:

  1. Who were the Governors of Massachusetts in the 90's:

    William Weld 1991-1997 Republican
    Paul Celluci 1997-2001 Republican

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    1. Barring the oil vs. tech argument, this article was using numbers from 2000 to 2010.

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  2. The legislature of Massachusetts has been 70% Democratic, or more, during the 20 year period in question. In most cases, the highly Democratic legislatures had a veto-proof majority. Any Republican Governor in Massachusetts was nearly impotent, in the face of such a strong, liberal majority.

    The policies of Massachusetts, even under Republican Governors, were at the Extreme Left of the political spectrum.

    The slow growth and high living costs of MA during the past 20 years are entirely a function of the Unions and the Extreme Left policies enacted by the Heavy Democratic Majority in that State.

    Don't try to pull an Obama, here, and pass the blame for liberal failures onto Republicans. The readers of this blog are too smart for that!

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  3. One of the biggest drags on the economy of Massachusetts is the unionized, state-run utility industry. Electricity prices are two-times higher in MA, versus TX. Why? because the Liberal legislature does not allow competition in the energy industry. It is state-run monopoly that gouges consumers.

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    1. Once middle class wage-paying jobs return, then we can discuss how bad taxes are.

      Low prices are great, but if your job has been devalued to the point you can't enjoy being middle class...

      And, yes, that might happen to you.

      Looking forward to it, since people like you have tried to be told the FULL truth and you choose to ignore it...

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  4. This comment has been removed by a blog administrator.

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  5. I live in Texas. I used to live in Massatusetts.
    I wouldn't live in Massatusetts if you paid me. Who would live in a place that elects people like Teddie Kennedy, John French Kerry, Barney Frank, and Deval Patrick?

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  6. I am glad you have pointed out how effective Ann Richards was as governor.

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  7. I'm glad you pointed out the really bad performance of Mass under Romney's one-term in the Governor's seat. We certainly don't need that on a national level. I hope the convention will be brokered so we can get a viable Republican candidate to unseat the black muslim who wasn't even born in the USA.

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  8. A lot of your analysis rests on differences in housing costs. What that means to you depends on your priorities. My sister lives in a high-housing-cost community outside of D.C. while I live in a low-cost small town in Michigan. She envies my ability to afford foreign travel and save for my kids' educations. But she is taking her kids to free community pools, free museums, national events, etc. while we are swatting mosquitos and planning our next escape. Ironically, we might be happier trading homes. A larger house in Texas would not tempt me as long as it were in Texas!

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  10. I was raised in Massachusetts and have now lived in Texas for nearly 5 years.

    Texas gets a really bad rap in the media, most of which is undeserved. I have found that the arts & culture scene in DFW is actually more rich and deep than the arts & culture scene in Boston. When people have more disposable income, and lower taxes, that stimulates the recreation, arts, & culture industries better than any government program can do.

    With 4 children, the larger home sizes in Texas are most welcome. In addition to a larger home, our development also has a "mini-country club" which is available to all residents. Pool, splashpark, walking/biking trails, soccer fields, clubhouse. All included with our oversized home at a price that can't be beat.

    Most people who look down their nose at Texas have never even been to Texas, or researched it carefully. They just watch liberal media and jump on the anti-Texas bandwagon, because the liberal media makes it "cool" to hate Texas. Hating Texas is one of those media trends that is not based on reality, just on liberal media bashing.

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  12. Still you forget several factors. For example, Massachusetts has the lowest number of uninsured Americans at 5% while Texas has the highest at 25%. 3% of children are uninsured in Mass compared to 17% in Texas. Also Massachusetts has the best education. Full disclosure: I live in Boston and went to college here but as an NJ boy I hate the state. Working in the financial district I can tell you I don't pay any "union tax" nor does any of the "high tech" jobs. Also you overstated property tax by almost double. Source: http://www.statehealthfacts.org/comparecat.jsp?cat=3

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  13. The best way to help the uninsured is for the economy to grow, so that they can get their own job and their own insurance.

    Further, the reason that Mass. has a low level of uninsured (and unemployed) is that People have been leaving the State in droves.

    Texas, on the other hand, has absorbed MILLIONS of new immigrants, both from other U.S. States, and also from Mexico/Latin America.

    When poor, new immigrants come flooding in like that, you are bound to have high levels of uninsured, while they get settled, and the best way to help them is JOB GROWTH, an indicator on which Texas absolutely trounces Massachusetts, hands down.

    Any state can demonstrate low rates of poverty, when it exports its poor and unemployed, as Massachusetts does; but the true mark of a compassionate State is one that absorbs MILLIONS of poor and unemployed, giving them jobs and opportunity.

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  14. When you consider the difference in rates of immigration and emigration between the two States, Texas' unemployment rate is all-the-more-impressive. We have maintained a relatively low unemployment rate, even though we have absorbed MILLIONS of new unemployed People.

    For example, during the past 5 years, we have absorbed a lot of new immigrants from California, where the unemployment rate remains well above 10%.

    Even after absorbing all of those job seekers, Texas' unemployment rate is STILL below 8%.

    If no new immigrants had come here at all, during the past 5 years, the Texas unemployment rate would probably be below 6%, or even 5%.

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  15. Many of the comments which attempt to dispute this article seem to rest on the obvious differences between states (i.e. there are indeed more uninsured individuals in Texas, but this is of course due to wildly different demographics). I wonder if there are two other states which could be held closer to each other's living standards, demographics, etc. which still show the republican/democrat split in governance?

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  16. Correlation does not imply causation. The differences in unemployment are statistically insignificant and easily explainable by the regional nature of job losses and energy reserves. America is in deep shit because the population is even more indoctrinated by emotionally potent propaganda than even the Soviets were -- flailing away at the Left/Right strawman. The average American's simplistic analysis of history is always amusing though.

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  17. So, you say, "its too complicated for the average voter to understand".

    That is the typical elitist argument, which usually points to the conclusion that taxes must be raised and freedoms must be reduced. And, it is 100% Hog-Wash!

    It doesn't take a PhD to understand that when taxes are reduced, then people have more money to spend, and that stimulates the economy. It's "Common Sense", and it is backed up by economic analysis.

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