Texas versus California

The regional variation in economic performance during this Great Recession has been fascinating to watch, especially here from Texas where the economic slowdown has been relatively mild. This state's economic performance has been especially remarkable compared to other big states like California. In this case, the contrast can be easily seen by comparing total employment in California and Texas. Below are the employment numbers for the two states along with some added commentary. First up is Texas:

Now California:


These striking differences naturally lead to discussions of why so much regional variation? Awhile back, The Economist magazine tackled this question for the two states of California and Texas. Now, Fortune magazine has joined the discussion. It argues that (1) Texas has a more diversified economy than California, (2) Texas has more business friendly environment, (3) Texas has done better relying on sales tax rather than on income and capital gain taxes found in California, and (4) the power of the people has backfired in California. In addition to these structural differences maybe California needs its own monetary policy.

Update: In the comments Muirego wonders if Texas is a net recipient of federal tax dollars and whether this explains the discrepancy.  According to the Tax Foundation the answer is no: between 1981 and 2005 Texas on average received 90 cents of federal expenditure for every federal tax dollar paid. See here for more.

Employment Change Per Industry

With today's employment report showing a gain of 162,000 jobs for March, I thought it would be useful to break these jobs gains down by industry sector. The table below does so and also shows the cumulative change in jobs over the previous three months as well as the December 2007 - December 2009 period. (Click on table to enlarge.)


A couple of things to note. First, it is interesting that the 162,000 jobs gained in March is equal to the total number of jobs gained during the past three months of January, February, and March. Second, it is encouraging to see the four industries hit hardest during the recession--construction, durable goods manufacturing, professional & business services, and retail trade--had jobs gains in March and all but one of them have had job gains over the past three months as well. Third, the financial activities sector (i.e. FIRE in NFP) continues to lose jobs and has done so over the past three months.

For a broader perspective I have graphed below the cumulative percent change in employment since December 2007 per industry sector. (Click to enlarge figures.)

Back to 2004

There have been approximately 7.2 million jobs lost--as measured by total nonfarm payrolls--in the United States since the start of the recession in December 2007. This is same number of jobs the U.S economy had back in March 2004. This staggering reversal in employment can be seen in the figure below (click on figure to enlarge):


The total 7.2 million jobs lost can be broken down into the following industries (click on figure to enlarge):


Note that the education and health care industries have actually gained jobs during this time. Finally, it is useful to take a look at the cumulative % change in jobs over time in this recession (click on figure to enlarge):


Interestingly, the natural resource and mining sector continues to grow through the first quarter of 2009 (though the rate of growth flattens and then begins to decline around mid-2008). After that, however, every industry sector other than education and health care either outright declines in employment growth or, in the case of government, slows down. I may be reading too much in the figure, but what I see is that the recession starts off as an Arnold Kling recalculation event but by mid-to-late 2008 it turns into a Scott Sumner aggregate demand collapse.

[Update: I made some edits to the dates]

What Happened to Private Sector Job Growth?

That is the question I had after reading Michael Mandel's article on the declining private sector job growth over the past decade. Here is the money graph (click on figure to enlarge):


Mandel goes on to show that most of the employment growth came from government or government-supported private sector jobs. Wow!