Monday, December 19, 2011

More On The Texas "Miracle"

Alex Madrigal at The Atlantic:
But even before these cuts take place, Texas' strongest cities are showing signs of weakness. Despite leading the nation in employment resilience for the last two years, they're among the worst performing cities in the country right now, according to the Brookings report, which focused on data from the third quarter of 2011.
What's happening? Once again, it comes back to government spending, which is tightening at every level. In order to understand why shrinking total government would hurt some Texas cities' growth, you have to understand what was behind their resilience in the first place.
One out of every five jobs were created in Texas in 2011. Some of this was, no doubt, the result of the state's business climate. Regulations are lax. Unions are non-existent. Land is plentiful, and office space is relatively cheap. But when you drill down into the jobs-added figures by sector, you see something surprising. Most of the jobs added aren't in the private/services sector. They're in government and government-supported industries like education and health services.
Population increase leads to government (and health care) employment increase, but austerity leads to government employment decrease.  Really, I think the Texas growth is similar to the post-war growth in California, and the turn-of-the-century Industrial Midwest.  Hopefully, the economy will recover, and employment will pick up, but things aren't looking so rosy for Texas right now.

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