BLS Unemployment Rate: What Texas Can Teach the Nation

Impact
By Vance Ginn

According to the Bureau of Labor Statistic's (BLS) August state employment report released last Friday, Texas' entrepreneurs added more jobs over the last year than any other state in the nation. To further solidify the state's job creation success, Texas' unemployment rate has now been lower than the national average, and California's, for 80 consecutive months — longer than President Obama has been in office (see below).

Although there remains work to do to create the best entrepreneurial environment for job growth in Texas, this report is a clear indication that other states, and Washington, D.C., can learn from the Lone Star State where there is no state income tax, low level regulations, and relatively limited government spending.

Figure 1: Texas' Unemployment Rate Lower for 80 Consecutive Months

Note: Shaded area indicates the December 2007 to June 2009 U.S. recession.

Although Texas' net nonfarm employment decreased overall by 6,400 in August (one downside to an otherwise outstanding state report), the total number of private sector jobs added was positive after adjusting for the decline in the public sector. To shed better light on the subject, the average monthly number of new hires over the last three months was 9,000, indicating more Texans are able to find jobs.

The lower unemployment rate in Texas (6.4%) compared with the U.S. average (7.3%) is not from a decline in the state's labor force, as has been the case for the decline in the national average's labor force participation rate. In fact, Texas' labor force increase of 1.4% over the last year is almost three times more than the nationwide increase of 0.5%, making the state's labor market data even more impressive.

Since August 2012, Texas' employers added 274,700 new jobs; this astonishing annual total accounts for about 13% of all jobs added nationwide and is 51,000 more than the next highest state: California. The states with the next highest job growth over the last year were Florida (+131,400) and New York (+92,500). Furthermore, the year-over-year employment-growth rate in Texas was approximately 3% and substantially higher than in California and the U.S. average, which has been the case since at least 2007 (see below). These data are nothing but remarkable.

 

Figure 2: Texas' Annualized Job Growth Shine

   1. Industries with the most growth: Education and Health Services (+6,700); Professional and Business Services (+2,900); and Manufacturing (+2,600).

   2. Industry that shrank the most: Government (-8,800).

   3. Texas’ unemployment rate has declined from 6.8% in August 2012 to 6.4% in August 2013.

   4. There are 661,000 more Texans employed than when the U.S. recession started in December 2007. Comparatively, there are 1.9 million fewer people employed nationally over the same period. 

Vance Ginn, Ph.D., is a policy analyst for the Center for Fiscal Policy with the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin, Texas.