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Sans Texas, Job Growth Would Still Be Negative
IBD: Aug 22, 2014; Section: Issues & Insights; Page: A15

Few states provide an economic environment that allows everyone an opportunity to succeed as does Texas.

Evidence of this: excluding the 1.1 million jobs added in Texas since the last recession started in December 2007, the rest of the U.S. employs about 350,000 fewer people than its pre-recession level.

Despite Texas’ economic success, critics point to their favorite data suggesting Texas is a poverty-stricken state that creates low-paying jobs. If true, these claims might be catastrophic for Texans’ well-being.

Fortunately for Texans and the large influx of people moving to the Lone Star State, these claims are patently false.

State officials nationwide who seek prosperity-supporting measures to better the lives of their constituents would be wise to consider the abundant evidence favoring the Texas model’s success due to low taxes and a stable regulatory environment.

While policy reforms in Texas could further liberate those who are shackled by poverty, such as effectively limiting total state spending and eliminating the costly business margin tax, let’s consider how well Texas fares relative to critics’ claims.

The U.S. Bureau of Labor Statistics’ recent state employment report for July 2014 provides a clear signal that Texas continues to be the state of opportunity.

Not only did Texas add the most net nonfarm jobs in July, but employers across the state topped the nation in adding almost 400,000 jobs over the last year. They bring the annual job growth rate up to a remarkable 3.5% — almost twice the national average.

Such robust job growth has led to the state’s unemployment rate, lower than the national average for 91 straight months and currently 5.1%.

What about the more recent period, with relatively faster employment gains nationally? Since 2011, Texas — a state with about 8% of country’s population — has added 14% of all U.S. jobs. Clearly, the Texas model supports prosperity, not poverty.

What about the quality of these jobs? A well functioning economy should have jobs for individuals with different experience and education levels, and paying a variety of wages.

According to a report by the Federal Reserve Bank of Dallas, “the data show Texas has experienced far greater growth of ‘good’-paying jobs than the rest of the nation since 2000.”

Texas has added jobs in all wage quartiles over this period — unlike other states — with the top two quartiles accounting for 55% of net new jobs. Texas is adding quality jobs.

With more high-paying jobs, what about the claim that Texas has one of the highest poverty rates in the nation? A casual Internet search will bring up a host of articles discussing this very topic.

What many of these articles, and critics, miss is that the official poverty measure, which suggests a relatively high rate, doesn’t account for key differences among states.

For example, the cost of living is 40% higher in California than it is in Texas. California offers more in government benefits than Texas. The official poverty rate does not account for these important differences, wildly biasing the measure in favor of states such as California.

The Census Bureau’s Supplemental Poverty Measure accounts for some of these differences and finds that Texas’ 16.4% poverty rate is within the margin of error of the national average. California’s 23.8% is the nation’s highest.

We must be cognizant of these factors when making claims about the success or failures of a state. Texas supports prosperity, not poverty.

These facts provide an extraordinary story of an economic miracle that provides an environment where people can thrive among the opportunities available to them. These opportunities include abundant high-paying jobs that help them move up the income ladder.

Founded upon fiscally conservative ideals that have made Texas the place of opportunity, the Texas model provides a blueprint that other states should follow.