Rick Perry's Impact on Job Growth in Texas: An Analysis

Matthias Shapiro is a software UX designer/developer (whatever that means) who hosts a web log to showcase his affinity for statistical analysis of political and economic positions.  His “fun hobby” exists in contrast to me, who had more academic exposure to political statistical analysis than I ever wanted to know.  Due to that and other reasons, I have a good grounding in the subject, though I clearly don’t relish it to the extent that Mr Shapiro does.  But enthusiasm counts, and Shapiro provides some clear effort at this particular topic of answering complaints about the veracity of the economic growth of Texas, specifically as it applies to Rick Perry.

First, Shapiro states that he is not a fan of Rick Perry, but feels a personal obligation to investigate the data about Perry’s job numbers, and let the chips fall where they may.  My previous admittedly superficial look at the numbers (certainly compared to Shapiro’s efforts) led me to conclude that the claims of Perry supporters were true, but Shapiro digs out facts that put the claims over the top.

The figures for Texas compared to other states are skewed because of the influx of workers from other states (I’ve been saying this for decades), making analysis of the numbers a rather fluid problem, but Shapiro has done an excellent job of trying to control for that.  With that in mind, he demonstrates that Texas, in terms of total job growth, has grown the fastest (at 2.2%), despite the fact that North Dakota (at number two) has the lowest unemployment rate of 3.2% (Texas in June was at 8.2%, compared to the national figures of 9.2%).  The reason is that, as before, people are flocking to Texas to look for work, because that is where they are likely to find it.  To put it in Shapiro’s words, “As you can see, Texas isn't just the fastest growing... it's growing over twice as fast as the second fastest state and three times as fast as the third.  Given that Texas is (to borrow a technical term) f***ing huge, this growth is incredible.”

He next checks the claim that the new jobs are low-paying, but if true, that would show up in the wages data.  Instead, it shows that “since the recession, hourly wages in Texas have increased at the 6th fastest pace in the nation”.

I practically spit out my coffee when I heard Debbie Wasserman-Schultz’ comment about Perry not deserving credit for job growth in Texas due to its dependence on the oil sector, because the rise in gas prices drove that job growth.  (So, Obama takes credit for increasing gas prices – that’s a good thing?)  Shapiro takes that on too:

Increases in jobs in the energy sector (or closely related to it) account for about 25% of the job increases in the last year.  Since the energy sector only makes up 3% of all employment, there is some truth to this claim.

However, take the energy sector completely out of the equation and Texas is still growing faster than any other state.  This indicates to us that the energy sector is not a single sector saving Texas from the same economic fate as the rest of the states.  It's not hurting, but Texas would still be growing like a weed without it.

Shapiro finishes up by returning to the fact that during this recession (and the continuing stagnation, if you insist that we are no longer technically in a recession), some 739,000 people have fled into Texas, and he shows how that skews the numbers.  Without stealing his thunder, Shapiro shows that, controlling for the variable of population increase, unemployment in Texas would likely be 2.3%.

In conclusion, Shapiro is careful to exclude Perry’s impact from the numbers:

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 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.

My advice to anti-Perry advocates is this: Give up talking about Texas jobs.  Texas is an incredible outlier among the states when it comes to jobs.  Not only are they creating them, they're creating ones with higher wages. 

With all due respect to Mr Shapiro, I have to differ about his doubt concerning Governor Perry’s impact on the job climate and the economy.  While his numbers and analysis have the ring of truth, he does not address the economic policy of the period.  I have maintained that government intervention in the market often has a deleterious effect, but basically cannot be a force for good.  Or, to recall the words of the great Adam Smith in his Wealth of Nations, every individual is “led by an invisible hand to promote an end that was not part of his intention”.  The market, if left alone, will provide that opportunity and that invisible hand.  Government intervention, in turn, weighs down the market with an invisible foot.  Smith again: “I have never known much good done by those who affected to trade for the public good.”

Rick Perry has recognised that: he has steered the Texas state government to stay out of the way, particularly in the area of tort reform, and has protected the Texas economy from the stultifying effects of federal interference.  So, hats off to Matthias Shapiro for his analysis, but I believe the numbers reflect the policy that Governor Perry has insisted upon.