Wednesday, August 17, 2011

The fallacy of Perry's "Texas Miracle"


Governor Rick Perry launched his campaign Saturday, and he seems to be focusing his campaign on job creation…or as Perry put it, “The Texas Miracle.”

“Since June of 2009, Texas is responsible for more than 40 percent of all of the new jobs created in America,” Perry said.

By the way, the Bureau of Labor Statistics have reported 37%...but I digress.

While the Dallas Federal Reserve Bank has acknowledged this number, it also “acknowledges that the number comes out different depending on whether one compares Texas to all states or just to states that are adding jobs,” said Glenn Kessler of The News Tribune.

Texas has been adding jobs while many other states have lost jobs, ballooning this statistic.

 “Texas, as a state rich in oil and natural gas, also has benefited from increases in energy prices that have slowed the economy elsewhere,” Kessler said.  “Higher energy prices have meant more jobs in Texas.”

Nobel Prize winner Paul Krugman has stated that the Lone Star State also experienced rapid population growth, increasing its labor force.

“Several factors underlie [Texas'] rapid population growth: a high birth rate, immigration from Mexico, and inward migration of Americans from other states, who are attracted to Texas by its warm weather and low cost of living, low housing costs in particular,” Krugman said.

Ironically, not only do these factors have little to do with Perry’s policies, but they also have a lot to do with the heavy immigration in Texas which many of its citizens loathe.  Texas also benefits from trade with Latin America due to its ports.

So what does this mean?

Well, as Massimo Calabresi of Time points out, Texas has actually faired pretty poorly compared to the rest of the nation.

“[Unemployment] has gone up from 7.7% to 8.0% over that same period. And by that measure, Texas has done worse than the rest of the country since the peak of national unemployment in October 2009: that month the U.S. rate was 10.1% and Texas was 8.2%,” Calabresi said.  “Texas peaked at 8.3% last December, dropping to 8.0% in April, while the national rate has dropped a point since its peak to 9.1%.”

By only looking at job creation, you completely miss the context of what is actually going on…something conservatives and Fox News headlines do all the time.

But if I didn’t have the facts on my side, I would resort to public ignorance as well.

The fact is, when you take into account the above factors and apply them to Perry’s statistic, you get something that, not only doesn’t look impressive, but looks downright awful.

As always, ThinkProgress is on top of it with the graphs.  Take a look:

That doesn’t look very pretty, does it?  But you won’t see the main-stream-media or Fox report on this.

Thing is, while 126,000 net jobs were created in Texas over the last few years, the labor force expanded to over 437,000.  This shows that Texas has added well over 300,000 unemployed workers…a rate much faster than its job creation.

Texas can't seem to keep up with their population growth.

Check out this graph posted by Krugman to give you a better idea of how Texas' unemployment is fairing compared to other states Perry has compared the Lone Star State to:

As you can see, no miracle here.

In addition, the rapid population growth of Texas helps companies keep wages low.  Almost 10 percent of the Texas work force earns minimum wage or less…a statistic well above the national average.  This gives corporations more incentive to move to the state.

“What Texas shows is that a state offering cheap labor and, less important, weak regulation can attract jobs from other states. I believe that the appropriate response to this insight is ‘Well, duh,’ Krugman said.  “The point is that arguing from this experience that depressing wages and dismantling regulation in America as a whole would create more jobs — which is, whatever Mr. Perry may say, what Perrynomics amounts to in practice — involves a fallacy of composition: every state can’t lure jobs away from every other state.”

Being a governor and being the president are two different jobs, Mr. Perry.

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