Thursday, August 18, 2011

Getting Texas Wrong

Yesterday on #utpol a discussion errupted about TX Gov. Rick Perry's jobs "miracle," with several people were pointing to Irrational Optimist's Matthias Shapiro's breakdown of the numbers at PoliticalMath as proof of Perry's claims.  While Matthias deserves credit for pointing out Perry (or any governor for that matter) had little to do with Texas job markets, he first serves up a very lazy and incomplete analysis to say that everything is, indeed, rosy in Texas. 

His four main conclusions, and why they're wrong...

Unemployment Rate. Matthias: Even at 8.2%, Texas has performed better than other states, and in fact has a ballooned unemployment rate due to increased migration.  The Whole Story: Actually, he got this one.  But his analysis goes downhill from here.  Read on.  Also worth noting: Massachusetts and New York mirror the Texas rate and pre/post recession trend, and Nevada is seeing the complete opposite effect due to exodus.

Low wages? Matthias: No. Median income $15 (28th, nationally), and fast wage growth post recession, so everything's super.  The Whole Story: Median income isn't an accurate indicator, especially in "top heavy" Texas. Median income in Texas is skewed by a uniquely large gap between high skill workers (oil engineers, for example) with salaries well above national averages, and hourly wage workers (service industry, retail, etc) well below.  According to the US Bureau of Labor Statistics -- the same place Matthias gets his median numbers -- service industry salaries in Texas fall 10.3 - 13% below the national average, and nearly 10% of these workers are at or below minimum wage.  That leaves Texas tied for the top spot in the nation for population making nothing more than minimum wage.  While this may attract business chasing cheap labor to the state, it hardly positions Texas as a solid wage mecca as Matthias concludes.

Unique Energy Sector "Boost"? Matthias: No. Even if you take the energy sector out, Texas job market is growing fast.  The Whole Story:  What?  Matthias displays here the ancient axiom that being a (self professed) whiz at math doesn't give you an edge in common sense. The energy sector in Texas has dwindled greatly since the 1980's, but it still brings with it supporting sub-sectors that are themselves substantial chunks of the market makeup of the state.  Short:  Energy sector employees eat lunch, buy toothpaste, get their cars fixed, go to movies, shop at malls... you know, all the things that you do in your average day with your money.  Even Shorter: Vernal, UT, without an energy industry, is a road sign and a porta-potty (some will argue it's not much more than that now, but you get my point).  It's impossible to conclude that without the energy industry there would be the same rate of growth in Texas.  Im.  Poss. Ible.  To use an example Matthias himself will understand:  Say you have a two foot tall column of pennies that represent your state's job market, each penny dependent on the one below and above for stability.  You decide to grab a fistful in the middle of the column and just yank them out.  The result?  Pennies everywhere.  You simply wouldn't see the same productivity in Texas without the energy sector, and in mid-recession Texas this sector was booming.

Texas Jobs # Inflated by Public Sector?  Matthias: Nope. Public sector grown 70,000.  High but not off the charts.  The Whole Story:  Texas workforce commission reports:
Dec 2007 - 1,781,000 jobs
May 2010 - 1,920,000 jobs
Net increase: 140,000.  While Matthias is right +70,000 public sector jobs is the number now, why ignore the much higher number just one year earlier? Well, my friends, because that number is off the charts.  And in the end it has to do with those tangential job market relationships again.  Just as energy jobs have their supporting industries, so too the public sector.  With the loss of 1/2 of these public sector jobs in just the last year, it's likely that supporting industries are -- as is typical -- slow to respond, but sure to respond (in fact, they're already seeing it), but Matthias would have you believe reaching this high water mark had no effect on the job market then and ongoing.  He's wrong.

And there's one final glaring omission from the Political Math post: $11 billion of stimulus spending in 2009 alone, in addition to federal $ for infrastructure projects.  I'm sure he just forgot to mention it.

Finally, relish Gov. Perry touting the notion which Republicans and teabaggers have labored against for oh so long: government does, indeed, create jobs.  Texas -- though obviously not the jobs "miracle" Matthias, Gov. Perry, Erickson, and NRO would have you believe -- is sitting in a better spot than all but two other states.  How?  Immigration, consumer protection (housing), and government spending.  They balanced the budget with fed money, spent fed money, and cut taxes amidst that government optimized spending, while taking nothing away from the people, at least at the same time (Texas has a few health care and education funding challenges... but that's another post).  Yay, Keynes!  And Perry will be campaigning against all of this while seeking the TeaGOP nomination.  

Some other great reads on this:  Kevin Drum, Yglesias, Wall Street Journal, and David Dayden.


  1. The biggest problem with your analysis is that you're attacking things Matthias never said. In other words, you missed the point. To wit:

    "Low Wages"
    - The critique Matthias set out to refute was originally that the new jobs were all low paying, minimum wage jobs. If this were true, the median income would have dropped over time. However, the opposite is true. Wages have increased. Increased faster than all but 5 other states.

    "Oil Country Boost"
    - Again, the critique was that the NEW jobs were just a product of oil prices. You fail to show how this is true. Interestingly, it was Matthias who wrote, "there is some truth to this claim". Weird how you left that out. What you also left out was an analysis of your own of how much of a role the energy sector plays in the state economy.

    "Public Sector"
    Hold up, I thought it was the oil that created all those jobs, now we're saying it was the feds? Let's try to not be so schizophrenic about to whom we're giving the credit.

    Why would you want to use year old data for your post? Because it fits your agenda. Matthias used current numbers because all the other numbers he's using are current. In other words, Matthias did an honest apples to apples comparison, while you cherry picked the data. Congratulations.

    And again, his post is responding to the critique that the current high jobs numbers contain an inordinate amount of public sector jobs - jobs which are temporary and therefor are misleadingly propping up that awesome job number everyone is touting. The claim then is that once those jobs go away so will the jobs "miracle". The post showed the problem with that claim is that Texas is already shaving those jobs, and that is included in the CURRENT jobs numbers.

    As to your final point,

    "relish Gov. Perry touting the notion which Republicans and teabaggers have labored against for oh so long: government does, indeed, create jobs."

    Once again, you missed the point. Or you just didn't read Matthias's post. Here's how he summed it up,

    "You may have noticed that I don't mention Rick Perry very much here. That is because Rick Perry is, in my opinion, ancillary to this entire discussion. He was governor while these these numbers happened, so good for him. Maybe that means these jobs are his "fault". Maybe the job situation is the result of his policies. Or maybe Texas is simply the least bad option in a search for a favorable economic climate. That is not an argument I'm having at this exact moment. My point is to show that most of the "excuses" you will hear about Texas' job statistics are based in nothing more than a hope that Rick Perry had nothing to do with them and not on a sound understanding of the data."

    He's not saying government created jobs. He's making a fact based rebuttal of others' specific critiques. You might try to follow suit.

  2. median wage increase does not mean that the new jobs are high paying.

    as for the energy jobs, showing that the energy sector hasn't increased doesn't mean that the new jobs aren't tied to the energy sector in a supporting way.

    the government jobs have a similar affect, thus pointing out that the jobs were higher a year ago is relevant (the money was paid, and presumably spent in the state).

    i agree he's attempting to make fact based rebuttals, but he's skipping some steps, the same steps you've skipped in this comment.