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It’s The Growth, Stupid

Monday, August 22, 2011


So as not to make the same mistake as my brethren in the press, let me say up front here that there is no "jobs boom" in Texas. It is nothing but an illusion, created by some misleading statistics and pushed by a well-financed press operation and reporters willing to use parts of a press release even while they do a poor job of critiquing it.

That is, I see from the press that Texas is home to more than a third of the jobs created in the entire nation since the recession ended. I read this in the New York Times, the AP reported a similar article (they said "four out of ten"), a Providence Journal editorial repeated it, too (they said, "almost half"). Way down at the bottom of the Times article, it did add the context that the unemployment rate in Texas is 8.4%. Likewise, the Journal editorial and the AP wonder whether the Texas "jobs engine" is worth emulating because of factors like the low level of health insurance coverage, but they both use the phrase.

But let's add some more context to this, shall we? There are 26 states where the unemployment rate is lower than that in Texas. Of the neighboring states, including most of the South, there are four states with higher unemployment rates, and seven with lower. Of the 25 Texas metro areas tracked by the BLS, ten of them have higher unemployment rates than the national average, including a couple south of Corpus Christi where unemployment is worse than anywhere in Michigan. Ranked by unemployment rate, Texas is ninth out of the ten top oil-producing states, behind Oklahoma, North Dakota, and even Louisiana. In other words, there is no Texas "jobs boom" and the state is hardly a "jobs engine." Uncritically repeating these phrases is only doing a service for the Rick Perry campaign for President.

Lots of births, cheap housing

What Texas does have is a population boom, and the employment statistics have risen with the number of people who live there. And why is there a population increase? One reason is that housing is cheap there. Texas, ground zero for the banking crisis of the late 1980s, came out of that episode with fairly strict regulation of the mortgage industry, so they have half the foreclosure rate of Rhode Island and one-seventh the rate of high-flying Florida. The foreclosure rate wouldn't normally be a good measure of housing prices, but it is a good measure of how out-of-control prices got before the crash. Since prices haven't given up all the gains of the last decade, it's not a bad proxy at present. Texas also has very little land-use regulation, which makes the purchase of housing cheap, even if it makes the management of services for the people who live in those houses expensive.

What else does Texas have? Lots of immigration, legal and illegal, and very high birth rates (45% higher than Rhode Island, tied with Alaska, exceeded only by Utah). When population rises, jobs rise, too. But so does population density, demand for services, road congestion and more. So long as the Texas population continues to rise as it has, these added expenses can be paid for with the added tax revenues that will come next year, through the sales tax and property taxes. But when the growth slows, watch out. Florida enjoyed the benefits of explosive growth for decades, but it slowed after the disastrous hurricane season of 2005. They were in the process of discovering that their traditional growth-financed low-tax regime could not be sustained with lower growth when the foreclosure crisis hit them hard, and now they're looking at huge cutbacks at the state level and at every county and city, too. California hit the same thing a generation earlier, where slowing growth rates do more to explain the tax revolt of the late 1970s than any other factor I'm aware of.

Smugness: another risk of growth

Here in Rhode Island, you can see exactly the same dynamic at work. For decades, we have built roads out to the suburbs and subsidized the construction of roads within those suburbs, too. The roads and other subsidies, implicit and explicit, fueled explosive growth in the suburbs. The high growth rates created prosperity there, but it also created a certain smugness about government. Portsmouth and Lincoln residents could feel content that their town governments were being run more efficiently than Providence or Pawtucket. To a small extent, perhaps this actually was true, but to a much larger extent, this was just an artifact of the growth rates.

Expenses grow every year with inflation. But when your revenue is growing every year at 4%, it's pretty easy to balance a budget, even with inflation. But when expenses are going up at 3% and revenues are going down even as slowly as 2%, the gap becomes much harder to fill.

Our state is filled with suburban municipal officials who, like the Governor of Texas, are perfectly willing to take credit for good government when in reality they are little more than the happy beneficiaries of circumstances far beyond their control. If we continue to credit Rick Perry with his state's good fortune, we might make the mistake of giving ourselves another president like George W. Bush, a disaster for our country. If we continue to credit the managers and officials of our suburbs with their good fortune (and blaming the urban leaders for their misfortune) we will never understand why our cities can't seem to make ends meet, a disaster for our state. Me, I worry about both.

Tom Sgouros is the editor of the Rhode Island Policy Reporter, at whatcheer.net and the author of "Ten Things You Don't Know About Rhode Island." Contact him at [email protected].


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Worsening your plight is that the IRS applies any payments or refunds to interest and penalties first, causing the "principle" of your tax debt to be reduced more slowly. Search online for "Free Tax Settlement" or "IRS Settlement"

Comment #1 by tyrone wilhite on 2011 08 22

Don't forget to mention that the "jobs" he created were mostly public sector jobs....you know the dastardly government jobs that people like Rick Perry constantly say we need to eliminate? In fact, Rick Perry is responsible for 50% of the public sector jobs created in the entire country. The rest of the jobs he created were low wage jobs.

You would think the hypocrisy in the previous statement would be enough for conservative republicans to think twice about voting for Rick Perry, but it gets better.....

Rick Perry claims he balanced Texas' budget two years in a row. That may be true, yes, but what the Texas Governor fails to mention is that the only reason he was able to balance Texas' budget was by taking stimulus money (which he came out against publicly) and plugging the hole. It had nothing to do with his governing, nor his leadership. He took federal money (which under President Perry would cease to exist) and used it to enhance his personal resume.

With Rick Perry, hypocrisy runs deep. He constantly trashes the federal government, but ends up taking any help he can get from the federal government. He wants to shrink the size of government, but created half the public sector jobs in the country over the last 2 years. He wants the federal government out of the way of states, but wants a federal immigration policy.

Comment #2 by Steve Krieger on 2011 08 22

I am skeptical of any bandwagon, including the "if only we could be just like Texas" bandwagon. However we should envy the growth. But we need that growth to go into our older urban and urban ring areas where we have existing infrastructure. Those areas are unattractive because of chaotic conditions. Graffiti idiots ruin Washington park. The "that's not my job" population has to be forced to recycle and took the larger trash cans the city of Providence gave them as an extra week before taking their trash to the curb. Public investment should be less subsidy and more law and order and better public transport. Our District courts are like accomplices allowing tenants to move from place to place skipping the last months rent and leaving their housing battered and broken. The Housing Authorities leave the onus on the landlord even though just months earlier, the unit passed inspection. Our building codes allow the cheesiest go-over renovation to make obsolete housing even more unattractive and smaller and still and drafty as ever. Law and order, better regulation, and accountability for residents who think littering and jaywalking are a fundamental right is will make cities and older suburban areas cleaner, less chaotic and more attractive more diverse, more economically balanced. this will pay dividend in education. We cannot decree such things, but we can lead toward them. We need to govern like we weren't born yesterday. Graffiti should be captured on camera and the offenders put on scrubbing and clean up details in coveralls and hats that offer only anonymity and no glory, and should pay for the rental of coveralls too. If they are allowed to keep them they will be turned into a celebration of stupidity like pants on the ground. Start requiring order n the schools too and require the pledge of allegiance. Freedom has it's obligations.

Comment #3 by Michael Gardiner on 2011 08 22

I'm no Perry fan but responsible for 50% of the public sector jobs created in the entire country? Can you cite a source for that figure?

Comment #4 by Max Diesel on 2011 08 22

Rhode Island will have no impact on the Presidential election because all of its voters will behave like the sheep they are and elect BHO. Anybody but Obama is the best choice for Rhode Island.

Comment #5 by Rob Rhule on 2011 08 22

I have lived in the DFW area for four years now and The job growth is infact a big old lie. Texas has been losing jobs like everyone else, the state is so freaking big that it is not as noticeable. Want proof? During his re-election campaign, Perry boasted of a balanced budget, when he was elected, the Texas senate cut $2 BILLION from the states education fund, costing hundreds of jobs ( in a non union state). All you need to do is talk to Texas republicans who says " I want him elected so he can get the hell out of Texas"
If you elected, god speed

Comment #6 by Terrence Barrettee on 2011 08 23



It shows pretty conclusively that the recession cost Texas 178,000 private sector jobs -- a fairly small share for a populous state, when you consider that crisis cost the country many millions. But in the same period, it added 125,000 public sector jobs -- nearly half of all government jobs created in this period nationwide. Put together, the Texas has only lost 53,000 jobs total during the downturn.

Comment #7 by Steve Krieger on 2011 08 23

Pretty disappointing that your only cite is a progressive blog that is regurgitating Jared Bernstein aka fiscal policy expert at the Center on Budget and Policy Priorities, and former chief economist to Vice President Joe Biden.

Comment #8 by Max Diesel on 2011 08 23

Figures, when you don't like the argument being made with the FACTS being presented, you attack the source.

Don't worry, there are plenty more sources to back up my claim. It doesn't take a rocket scientist to figure out the guy created a TON of public sector jobs.




http://online.wsj.com/article/SB10001424053111903999904576470232177476242.html --- Note this is from the Wall Street Journal, not a "liberal" source.

Comment #9 by Steve Krieger on 2011 08 24

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