Obama, Perry And The True Source Of The Texas Jobs Miracle

There's a scramble to claim credit for the Texas miracle, and now President Obama has jumped in with both feet.

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US President Barack Obama speaks with Texas Governor Rick Perry (L) after arriving on Air Force One at Austin-Bergstrom International Airport in Austin, Texas, May 9, 2013.

Here’s a fact: Texas has been a monster job creator over the past ten years, a non-stop, high-rev employment machine. Look at these charts from the Bureau of Labor Statistics, which show steady employment growth despite massive increases in the state’s labor pool and a spike in unemployment in 2009.

Now, since it is an immutable rule of politics that nothing good ever happens except thanks to humble, hardworking politicians, there has been a Texas-size dog-pile over who should get to take credit for the jobs boom. King of the Hill has been Texas Governor Rick Perry, whose truncated run for the White House in 2012 was predicated almost entirely on his job creation claims. Texas is responsible for a large percentage of the jobs created in America since the recession ended in June 2009, and while its unemployment rate has ticked up slightly in recent months to 6.4% thanks to labor market growth, it continues to generate work in everything from construction to manufacturing to financial activities to mining.

It was always somewhat awkward for Perry to stake that claim, since to do so he had to argue that government policy could create jobs, specifically by funneling tens of millions of tax dollars to stimulative public investment funds. And then there was the problem that sizeable chunks of Perry’s funds seemed to have a way of benefitting his campaign contributors.

But that didn’t get in the way of the general scramble to claim credit for the Texas miracle, and now President Obama has jumped in with both feet, traveling yesterday to Texas for the second time in a week to unveil some job-creation proposals that look a bit like Perry’s approach. In particular, Obama announced $200 million in funding from five different agencies for three manufacturing hubs, a proposal that would receive $1 billion under his budget that is languishing on the Hill.

(MORE: Why is Texas Governor Rick Perry in Illinois?)

While Obama deserves credit for a clever bit of political jiujitsu—seeing Perry’s pro-government job creation claims and raising them $200 million—there’s one problem: the Texas jobs miracle has little or nothing to do with the policies implemented by either the state or federal governments, at least not in this country. Rather, they’re the result primarily of three things: geology, demography and geography.

First geology. You’ve heard that Texas has oil and gas. Well, thanks to the technological leaps allowing the extraction of oil and gas from shale formations, Texas has a lot more of both. From 2011-12 its Eagle Ford shale formation tripled its oil output, and oil production statewide could double by 2020.

Next, demography. Texas has benefited from that biggest of political hot potatoes, immigration. Rather than being a drag on the state’s economy, the steady influx of workers has fueled growth–according to economists [pdf] at the Dallas Federal Reserve–giving the state new, eager workers across a variety of employment areas.

Finally, Texas has benefited from geography. With its long land border with Mexico and its port access to the Gulf, Texas is a trade giant with Latin America, which has been on a GDP winning streak  for all but one year of the last decade, per this chart:

Latin America Growth

Trading Economics

True, Texas has low regulatory burdens compared to California, for example, and is a “right to work” state. And it did pass tort reform under Perry, which the head of the Dallas Federal Reserve has argued was crucial for business growth in Texas. But if you think a couple of publicly financed investment funds and some tweaks to the legal code can generate the kind of jobs growth Texas has seen over the years, I have a rugged, inarticulate and somewhat forgetful presidential candidate for you.

The truth is the big drivers of job creation in Texas, and the ultimate source of its miracle, have been beyond the control of government policies, Republican or Democratic. Just don’t expect Governor Perry, or Barack Obama, to admit it.

MORE: America’s Forgotten Economic Challenge

59 comments
wolfp
wolfp

Notice Obama isn't in California discussing jobs with Jerry Brown??  Wouldn't be much point in that, seeing as how California follows in lock-step the entire Obama economic agenda  which has resulted in the nation's highest taxes and second highest unemployment rate. Texas, needless to say does the exact opposite of Obama and thus has virtually no taxes and a booming jobs market. Which explains why Obama is talking jobs with Rick Perry.

I wonder how all this squares with the elected California Democrats who ran on the platform' California jobs are my top pirotiy' ??

jiff2123
jiff2123

If you knew anything about economics you would know about the rescource curse. Any country that has an abundant of resources usually does a worste job of being attractive to businesses other than regulatory costs. If you look at singapore which has a 1.8 percent unemployment full time and one of the fastest growing gdp and wealth gain among all classes.  Singapore has no rescources yet they have so much wealth they have no debt literally they match 100 percent of there debt and invest it onto public roads education and defense. They are one of the most free market countries in the world an they have been rewarded.


formerlyjames
formerlyjames

Excellent summary.  Perry had nothing to do with it, and brings only destruction of education and social programs to the table.  Texas public employees also enjoy the best pension program in the world, and Perry would screw with it.  He is not a prepared Boy Scout, he is a lout.  If Texas continues to prosper, it won't be for this idiot, and God forbid he take it to the federal govment with Sarah or some other idiot claiming ownership of economic success.  By the way Sarah, all of America paid for Alaska, and we all deserve to dip into that oil fund.

shepherdwong
shepherdwong

The "Miracle":

"...Texas has also had the nation’s highest number of workplace fatalities — more than 400 annually — for much of the past decade. Fires and explosions at Texas’ more than 1,300 chemical and industrial plants have cost as much in property damage as those in all the other states combined for the five years ending in May 2012. Compared with Illinois, which has the nation’s second-largest number of high-risk sites, more than 950, but tighter fire and safety rules, Texas had more than three times the number of accidents, four times the number of injuries and deaths, and 300 times the property damage costs…"

http://www.nytimes.com/2013/05/10/us/after-plant-explosion-texas-remains-wary-of-regulation.html?pagewanted=all

JustIMHO
JustIMHO

There is SUCH a huge difference between creating an environment conducive to business growth versus trying to pick winners & losers. Government has NO BUSINESS directly funding one enterprise over another, but it can CREATE an environment where businesses WANT to be through issues such as tort reform, tax policy, etc.

If only the Federal gov't would take a page from the Texas example of how to get this RIGHT....



MichaelMurray3
MichaelMurray3

The article makes it seem like the jobs in Texas are family sustaining skilled industry careers.  In truth, about 3/4 of the jobs that Perry takes credit for creating involve skills like being able to say "Would you like fries with that?"

JaredHeath
JaredHeath

Texas has also stolen many jobs from other states.  You aren't "creating" jobs if the same job "created" in Texas was removed in some other place....you are just transferring them to a place where the business can cut corners/save money better.

carotexas
carotexas

Texas has also benefited from funds in the stimulus in solar and wind technology and with funds for updating medical records.

cjensen
cjensen

But for the good luck of having deposits of oil and gas, Texas would just be a hotter version of Alabama, but without the charm.

zimjig
zimjig

Obama can stay out of Texas, we've done fine so far without more federal government regulation. 

KeithGoldstein
KeithGoldstein

Two things you over looked.  Texas is the only state without mandatory workers comp insurance.  And the most lacks in workers safety.  Twice as many workplace deaths as California.

ZapatoRoto
ZapatoRoto

@wolfp Interesting comment. You seem to have overlooked is that Texas has the highest number of people without health coverage in the country, the highest poverty rate in the country, and the highest number of kids with no health coverage. I guess it's fine when you can overlook those minor details. What plans do you have for those people, maybe export them, pretend they don't exist. I'm looking forward to know your explanation.

ZapatoRoto
ZapatoRoto

@jiff2123 Singapore has an individual tax. Here is the chart: http://www.iras.gov.sg/irasHome/page04.aspx?id=1190

They also have a corporate tax rate: http://www.iras.gov.sg/irasHome/page04.aspx?id=14564

The defense budget of Singapore is 9.7 billion. Singapore's estimate GDP is 276 billion. Their defense budget is 3.5% of GDP, the US (not including supplements for Afghanistan and what was spent in Iraq, around 5 trillion between the two wars) 5% of GDP. Singapore's growth of GDP was over 15% for the second quarter of 2013, the US less than 2%. I don't think that Singapore has a Congress that has done nothing for almost 2 years except try to repeal Obamacare for 39 times at a cost to taxpayers of 2 million each time. Find out also how much does it cost to own a car in Singapore. If you like it so much maybe you could move there.

JustIMHO
JustIMHO

@formerlyjames The state pension plan in Texas, like most pension plans for public employees, is underfunded and grossly bloated, and may well topple the state's budget (if Medicaid doesn't do it first).
If state employees think that the voters will continue to support a pension plan so unlike what's available for private-sector employees, they will likely be deeply disappointed. Much like Detroit's public union retirees are feeling right now....Voters will force the Legislature to bring public pensions back in line with the marketplace, in time. I know *I* sure wouldn't want to be a Texas state retiree, and counting on the excessive payouts they receive....

JustIMHO
JustIMHO

@shepherdwong OK, so...want to be unemployed and evicted from your house, or have a riskier job? Your choice, but I know which one I would choose (and yes, it IS a choice).
Liberals have failed to come to grips with the inevitable implications of globalization, particularly how it facilitates the transfer of what were once jobs which allowed a middle-class lifestyle in the US. The ability of liberals to simply ignore vast swaths of economic reality never ceases to amaze....

ZapatoRoto
ZapatoRoto

@shepherdwong Perry wanted the tax payer to pay for his buddies accident in Waco, and have the federal government declare it Disaster Area so that the federal government could bail them out. This is the same governor that was talking about secession. You have to love righties, in their book the government is their for them and their friends to suck dry the Treasury, have the middle class pay for their extravangas, outsource the jobs or export them to China, and pay slave salaries to their workers.

ZapatoRoto
ZapatoRoto

@JustIMHO I couldn't agree with you more, I would look you to tell us that you are all in favor of cutting subsidies to oil companies in the billions, cut the defense budget especially when we spend trillions invading oil producing countries for their oil, giving no bid contracts to Halliburton and all the Cheney clan, and cover fracking under the same regulations of the EPA as everybody else. If we stop subsidizing oil companies,  stop using the DOD to protect oil ships out of the Gulf area, and if we do charge them for it, then we will see the real price of oil, not the 3.50 that we pay today, it will then be around 6 or 7 bucks, and that would level the plain field with everybody else. Sounds fair to you?

mantisdragon91
mantisdragon91

@JustIMHO Texas picks winners and losers all the time. What else do you call shielding corporate polluters from law suits and allowing companies to walk away from industrial accidents with minimum liability?

JustIMHO
JustIMHO

@MichaelMurray3The trend of growth in low-wage jobs seen in Texas is not really that different than the national trend - and we're still seeing strong wage growth, even through the teeth of the recession (Dallas Morning News: Texas ranked sixth in the nation in median wage growth for 2008-2011).
I know a lot of people who would jump (who HAVE jumped) at an entry-level construction job at $12 an hour - that's why in Texas those jobs have grown by 35%, while nationally they've declined by 5%.
I think it comes down to, do you want people to have a chance to earn a paycheck, or not? 
"The best social program is a J-O-B." (RR)



RobZom
RobZom

Wasn't aware that oil field and cdl drivers were no classified food service.....typical.

JustIMHO
JustIMHO

@JaredHeath Huh? What do you use for logic where you come from? By your logic, jobs don't go away when they are "removed" to India or China then, right?
It ain't stealing if we just offer a better deal than another state does....

RobZom
RobZom

Stealing? Lol thats what the companies that moved here felt their govts were doing to their profits where they came from.

Texas created a better business environment......how dare we :D

ZapatoRoto
ZapatoRoto

@cjensen Ask Perry what services he provides to his citizens. ZERO. He has changed history books to leave out slavery, if you have 1/10 of an inch of snow the whole state comes to a halt. It is no different than any other state in the south. And to make matters even more interesting reps in TX now that they are in countdown, they are losing the state to Hispanics, and instead of being smart they gerrymander districts trying to leave them out. In a decade or more Hispanics will be a majority and they will take over the government putting it in the blue column, and right wing nuts like Cruz will be history. Maybe Perry will go back to being a democrat as he was in a previous life.

Bartonious
Bartonious

 @cjensen You clearly know nothing of Texas if you consider Alabama to be more endearing...

mantisdragon91
mantisdragon91

@zimjig Tell that to the dead, injured and homeless from the West Texas explosion. Are they doing fine as well?

RobZom
RobZom

We have twice as many employed.

Goes with the territory.

JustIMHO
JustIMHO

You overlook WHY some people don't have health care coverage:
1) if you're rich enough, why pay premiums, just buy what you need - I mean, you don't think premiums are higher than the expected amount of medical spending you'll incur, do you?
2) if you're poor enough, you couldn't afford health care coverage anyway - you don't think all those illegals with no job skills can earn enough to pay for healthcare premiums, do you? I mean, healthcare IS something you buy, it's not dropped from heaven by the magic genie (I mean Obama's Federal gov't).

See #2 above for the poverty rate, as well as for why there's so many kids without healthcare coverage.
It might be great for a lot of the illegals to "self-deport" their way off the welfare rolls - my taxes could come down. Sure, their kids were born here - easy solution to the "break up the family" argument against deporting the illegal parents:  let the kids go with their parents, simple solution, everybody's happy!


obamacares
obamacares

@ZapatoRoto @wolfp  Let's just gloss over the fact that from 2003 to 2011 California has been taking a nose dive under Republican leadership AKA Swartzenegger.  Jerry has only been there a short time. 

JustIMHO
JustIMHO

@ZapatoRoto @jiff2123 The House has helped save the country from Obamanization (like "balkanization' only worse, economically) by resisting the lunacy of his "economic" proposals. Why people continue to think that more gov't spending is a GOOD thing for an economy (in the long run) is really hard to fathom....

JustIMHO
JustIMHO

@mantisdragon91 @JustIMHO Still a BIG difference between the gov't determining what economic activity gets "shielded" - regardless of which FIRM is doing that activity - and actually trying to pick INDIVIDUAL FIRMS to get governmental largesse (a la Solyndra).
You, too, can be "shielded" by the same regulatory environment, and have the same benefits as any other firm similarly situated. Not everybody gets >$400 million in governmental handouts, however...

RobZom
RobZom

About as well as the crew and passengers

of Extortion 17 :P

Never mind that the West plant explosion

is looking more and more like a missile strike.

Monsanto losing a legal fight to West.

Nah nothing unseemly here.....move along.

shepherdwong
shepherdwong

@RobZom "We have twice as many employed."

You're entitled to your own (stupid) opinion but not your own (ignorant) facts:

2012 California labor force = 18,115,600 / 2012 Texas labor force 12,317,200

California also has the 12th largest economy in the world and is 11th in the nation in per capita income.

"Texas would be the 14th largest economy in the world by GDP (ahead of South Korea and the Netherlands).[10] Texas is also one of the impoverished states in the United States."


Ohiolib
Ohiolib

@RobZom Are you really implying that more worker deaths is an acceptable price for for employment? It sure looks like it. 

JacobbChapman1
JacobbChapman1

Jerry brown just signed a balanced budget, the state's first balanced budget in decades.

JustIMHO
JustIMHO

Anybody forget that there was this thing called the Great Recession? And CA has suffered worse than TX because of their arrogant expectations that businesses can still grow despite crippling regulations (check on the last time a refinery was built in this country - think demand for gasoline hasn't gone up significantly since then? This is called "NIMBY" or "Not In My Back Yard" - i.e., let someone else deal with the costs, I want the benefit but I'm not willing to pay for it).

And Gov. Brown has been in office for over 2 1/2 years - long enough to do SOMEthing, I think, certainly long enough to start being accountable for the legal and regulatory environment - especially since he (and his father) helped CREATE the monstrosity that is CA business regulations in their previous incarnations as governor of CA....

mantisdragon91
mantisdragon91

@RobZom A missile strike? You think the Fertilizer plant explosion was a missile strike? Based on what evidence to what purpose?

JustIMHO
JustIMHO

@dunedweller @JustIMHO @mantisdragon91 @zimjig Small price to pay - right. Let's see....just saw an ad for a home for sale near my client in the Bay area:  $500K for a 1,600 sq ft townhouse in a run-down neighborhood that's 1.5 hours away from downtown San Francisco...that's 2.5 x the price of my 2,100 sq ft brick home with a pool in Texas. Wonder what ELSE the people who live there have to give up in order to have a roof over their heads - maybe healthcare, or retirement savings? Certainly can't afford vacations or dining out. And I'm working less than a mile from the Bay, pal - I am SURE that water is NOT what most people would call "clean."

JustIMHO
JustIMHO

@mantisdragon91 @zimjig That the GOV'T isn't making changes does not mean that PEOPLE aren't more informed. Just as a Federal court told NYC to stop "regulating" soft drink sizes, there ARE plenty of things where the gov't doesn't belong, butting in and telling people how to live.
BTW, that plant was there BEFORE the town grew up around it - people CHOSE to live there, KNOWING the plant was there and what they stored there. Not saying the plant didn't make mistakes, but...hard to blame them for where people choose to buy land & build.

ZapatoRoto
ZapatoRoto

@zimjig @mantisdragon91 So you say that regulation does not matter, then why did Nixon create the EPA and pass the Clean Air and Clean Water Act? Why do you use a seat belt? Just as an FYI the best paid blue collar workers are not in TX they are in Germany, and they have 4 weeks vacation from day one, health care coverage, and I don't see them moving to TX to save money.

dunedweller
dunedweller

@JustIMHO @mantisdragon91 @zimjig

"Please consider that high-regulation California hasn't opened a new oil refinery since 1979....and people wonder why gasoline prices are so high there...."

a small price to pay for high property values, clean air and water, marine sanctuaries, alternative energy and transportation, etc...

Ohiolib
Ohiolib

@JustIMHO @cjensen @zimjig @mantisdragon91 We already have that. It's called zoning. And, of course, we're all wondering WHY it exploded in the first place. But hey, it's just a few bodies. That's just the price of doing business, right?. 

JustIMHO
JustIMHO

@cjensen@zimjig@mantisdragon91There is little that can be done to make ammonium nitrate anything but dangerous - a lot like any explosive, you can be more or less careful, but it WILL go "bang" if the wrong conditions apply....kinda like a nuclear power plant:  you can be as careful as you like, but that won't help you if something ever does go wrong.
And please read the reports:  they didn't build the plant in the middle of the town, the town grew up around the plant. What materials the plant handled was well known, the issue was people not wanting to live far from the jobs it provided.
Regulation in this case would have stopped the town from being built in a dangerous place. Want the Fed gov't to tell YOU where to live?

JustIMHO
JustIMHO

@mantisdragon91 @zimjig What changes would YOU make?
Please consider that high-regulation California hasn't opened a new oil refinery since 1979....and people wonder why gasoline prices are so high there....

cjensen
cjensen

@zimjig @mantisdragon91 

What?  The danger of ammonium nitrate has long been known, but was apparently ignored in West, Texas, to the detriment of 14 people and millions of dollars of property.  Lack of regulations, inspection and enforcement results in everyone have to learn the same old lesson, time and again.  Unfortunately, the learning curve is terminal for too many people.

Will regulations, inspection and enforcement prevent every incident?  Of course not, but they will sharply reduce the number and severity of incidents, which is good.

tommyudo
tommyudo

@zimjig @mantisdragon91 


"Sh** happens man." Ah, pearls of  pontificating wisdom from the men's room of a sports bar. Your statement explains why Texas became a state. Except for oil and air conditioning there would be nothing. It's too bad that the citizens of Austin, Dallas, Houston and San Antonio have to be saddled with yahoos like you that give your state a bad name.

mantisdragon91
mantisdragon91

@zimjig @mantisdragon91 Have they? According to Perry no changes will be made in how those plants are regulated or the amount of insurance they need to carry.

zimjig
zimjig

@mantisdragon91 @zimjigSh** happens man. No matter how much money you throw at it or how much regulation "red tape" there is, accidents will happen. I live 2 hours away from West and I know people have learned from this. People are now more familiar with the  term "ammonium nitrate" and how unstable that stuff can be.