WSJ lauds Texas economy, marked by jobs (including a lot of low-paying ones)

Posted on: June 15th, 2011 by Patrick Brendel 6 Comments

Keying off a statistic cited by the president of the Federal Reserve Bank of Dallas, the Wall Street Journal editorial board recently issued a glowing opinion of the Texas economy, attributing the state’s success to “its free market and business-friendly climate.”

According to Dallas Fed president Richard Fisher, the Lone Star State accounted for 37 percent of net U.S. job creation since the recession officially ended in June 2009 (45 percent going by nonfarm payroll employment). That piece of data is impressive — and dovetails neatly with Gov. Rick Perry’s political messaging as he ponders a White House Run — but doesn’t paint the whole picture of the job market in Texas. While employment in Texas has been slightly more plentiful than in other states during the recession, the number of the lowest-paying jobs has also risen sharply in Texas.

For example, as of April 2011, Texas had an unemployment rate of 7.7 percent, one point below the U.S. as a whole, according to the U.S. Bureau of Labor Statistics, but exactly the same as the state of New York, the site of Perry’s recent speech before Manhattan Republicans.

When the U.S. entered the recession in December 2007, Texas’ unemployment rate was 4.3 percent, compared to 4.7 percent in New York and 4.8 percent for the nation as a whole. By comparison, the unemployment rate in California, which has been conservatives’ popinjay in recent years, stood at 5.8 percent in December 2007 and 11.7 percent in April 2011.

After consulting with economists, Fort Worth Star-Telegram columnist Mitchell Schnurman concluded that the explanation for the relative health of Texas’ economy “is not that simple.” He wrote:

“The state also has immense natural resources, which benefit greatly from rising energy prices and breakthroughs in natural gas production. Exports are exploding.

“As for taxes, the state actually raised taxes almost 25 years ago to invest in education. Rather than hurt the state, that set the table for job expansion.”

According to The Economist, Texas’ gross domestic product grew by 2.8 percent in 2010, compared to national growth of 2.6 percent. (New York’s GDP grew 5.1 percent, and California’s grew 1.8 percent.)

While Texas’ unemployment rate has generally trended with New York’s and has been much lower than California’s since the recession started, wages in Texas lag behind its large counterparts, according to BLS data. (Caveat: The numbers do not take into account differences in cost of living, which can vary widely among different regions in states and among individual states.)

In December 2007, the average weekly wage for Texas workers was $790 (about $41,000 per year), compared to $870 for New Yorkers ($45,000) and $850 for Californians ($44,000). The U.S. average was $750 ($39,000).

During the recession, average weekly wages stayed fairly stable in New York, California and the U.S. as a whole, while Texas’ dropped to $750 per week, a drop of about 5.5 percent. Since the end of the recession, wages have generally risen in all of those regions. From December 2007 to April 2011, weekly wages in Texas increased 0.6 percent, compared to 2.5 percent in New York, 9.3 percent in California and 5.0 percent in the U.S.

As of April 2011, the average weekly wage was $790 in Texas ($41,000), $900 in New York ($47,000), $930 in California ($48,000) and $790 in the U.S. ($41,000).

Additionally, Texas has by far the largest number of employees working at or below the federal minimum wage ($7.25 per hour in 2010) compared to any state, according to a BLS report.

In 2010, about 550,000 Texans were working at or below minimum wage, or about 9.5 percent of all workers paid by the hour in the state. Texas tied with Mississippi for the greatest percentage of minimum wage workers, while California had among the fewest (less than 2 percent).

The state with the second-highest number of minimum wage workers was New York, with 264,000 (or 6.4 percent of all hourly workers in the state).

From 2007 to 2010, the number of minimum wage workers in Texas rose from 221,000 to 550,000, an increase of nearly 150 percent.

The federal minimum wage rose from $5.15 per hour to $5.85 in July 2007, to $6.55 in July 2008 and to $7.25 in July 2009. That certainly contributed to the sharp increase minimum wage earners; however, even though the minimum wage remained unchanged in 2010, the number of Texans making minimum wage or less rose from 474,000 to 550,000 that year, an increase of 16 percent.

The median hourly earnings for all Texas workers was $11.20 per hour in 2010, compared to the national median of $12.50 per hour.

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