Free Markets, Free People

Jobs? What jobs in Texas … the attacks begin

And, of course, leading the parade is none other than liberal economist and New York Times hack, Paul Krugman.  His thesis?  Well, it’s the state of McJobs, of course.  And the reason for all this misunderstanding about the “Texas miracle”.  People don’t understand the impact of population growth.  Paul Krugman stands ready to explain why Texas’ growth is just no big deal and certainly nothing we want to emulate .  Let’s let him explain:

For this much is true about Texas: It has, for many decades, had much faster population growth than the rest of America — about twice as fast since 1990. Several factors underlie this rapid population growth: a high birth rate, immigration from Mexico, and inward migration of Americans from other states, who are attracted to Texas by its warm weather and low cost of living, low housing costs in particular.

And just to be clear, there’s nothing wrong with a low cost of living. In particular, there’s a good case to be made that zoning policies in many states unnecessarily restrict the supply of housing, and that this is one area where Texas does in fact do something right.

But what does population growth have to do with job growth? Well, the high rate of population growth translates into above-average job growth through a couple of channels. Many of the people moving to Texas — retirees in search of warm winters, middle-class Mexicans in search of a safer life — bring purchasing power that leads to greater local employment. At the same time, the rapid growth in the Texas work force keeps wages low — almost 10 percent of Texan workers earn the minimum wage or less, well above the national average — and these low wages give corporations an incentive to move production to the Lone Star State.

So Texas tends, in good years and bad, to have higher job growth than the rest of America. But it needs lots of new jobs just to keep up with its rising population — and as those unemployment comparisons show, recent employment growth has fallen well short of what’s needed.

If this picture doesn’t look very much like the glowing portrait Texas boosters like to paint, there’s a reason: the glowing portrait is false.

Why is it “false”?  Here’s Krugman’s explanation:

What Texas shows is that a state offering cheap labor and, less important, weak regulation can attract jobs from other states. I believe that the appropriate response to this insight is “Well, duh.” The point is that arguing from this experience that depressing wages and dismantling regulation in America as a whole would create more jobs — which is, whatever Mr. Perry may say, what Perrynomics amounts to in practice — involves a fallacy of composition: every state can’t lure jobs away from every other state.

In fact, at a national level lower wages would almost certainly lead to fewer jobs — because they would leave working Americans even less able to cope with the overhang of debt left behind by the housing bubble, an overhang that is at the heart of our economic problem.

While I’d love to take the time to research and tackle the nonsense in Krugman’s column, I don’t have too.  Kevin Williamson at NRO has done so and done so brilliantly.  He does so by comparison … something Krugman intentionally avoids.  For instance:

What, indeed, does population growth have to do with job growth? Professor Krugman is half correct here — but intentionally only half correct: A booming population leads to growth in jobs. But there is another half to that equation: A booming economy, and the jobs that go with it, leads to population growth. Texas has added millions of people and millions of jobs in the past decade; New York, and many other struggling states, added virtually none of either. And it is not about the weather or other non-economic factors: People are not leaving California for Texas because Houston has a more pleasant climate (try it in August), or leaving New York because of the superior cultural amenities to be found in Nacogdoches and Lubbock. People are moving from the collapsing states into the expanding states because there is work to be had, and opportunity.

Think again of the Krugman statement “every state can’t lure jobs away from every other state”.   Then kick it up a level.  “Every nation can’t lure jobs away from every other nation”.  Really?   Isn’t that what we’ve been complaining about for years when the word “outsourcing” is used.  Of course “every state can lure jobs from every other state” … just look at the rust belt and try to say that again with a straight face.   People go where there is economic opportunity and jobs.  That will stabilize when and if other states treat the issue the way Texas is.  That’s why legislators from all over the country are traveling to Texas to learn how they’ve accomplished what they have, despite the unfounded caterwauling of the Krugmans of the world,

Point two from Williamson  about “McJobs”.  Again, the devil is in the details, facts in which Krugman seems to have no interest:

Krugman points out that New York and Massachusetts both have lower unemployment rates than does Texas, and he goes on to parrot the “McJobs” myth: Sure, Texas has lots of jobs, but they’re crappy jobs at low wages. (My summary.) Or, as Professor Krugman puts it, “low wages give corporations an incentive to move production to the Lone Star State.” Are wages low in Texas? There is one question one must always ask when dealing with Paul Krugman’s statements of fact, at least when he’s writing in the New York Times: Is this true? Since he cites New York and Massachusetts, let’s do some comparison shopping between relevant U.S. metros: Harris County (that’s Houston and environs to you), Kings County (Brooklyn), and Suffolk County (Boston).

Houston, like Brooklyn and Boston, is a mixed bag: wealthy enclaves, immigrant communities rich and poor, students, government workers — your usual big urban confluence. In Harris County, the median household income is $50,577. In Brooklyn, it is $42,932, and in Suffolk County (which includes Boston and some nearby communities) it was $53,751. So, Boston has a median household income about 6 percent higher than Houston’s, while Brooklyn’s is about 15 percent lower than Houston’s.

Brooklyn is not the poorest part of New York, by a long shot (the Bronx is), and, looking at those income numbers above, you may think of something Professor Krugman mentions but does not really take properly into account: New York and Boston have a significantly higher cost of living than does Houston, or the rest of Texas. Even though Houston has a higher median income than does Brooklyn, and nearly equals that of Boston, comparing money wages does not tell us anything like the whole story: $50,000 a year in Houston is a very different thing from $50,000 a year in Boston or Brooklyn.

So obviously purchasing power, not wages, is the key.  If you make less money than someone in NY but can buy twice the stuff with what you earn, who has the low paying job in terms of purchasing power?  Which would you rather have?

Case in point:

In spite of the fact that Texas did not have a housing crash like the rest of the country, housing remains quite inexpensive there. The typical owner-occupied home in Brooklyn costs well over a half-million dollars. In Suffolk County it’s nearly $400,000. In Houston? A whopping $130,100. Put another way: In Houston, the median household income is 39 percent of the cost of a typical house. In Brooklyn, the median household income is 8 percent of the cost of the median home, and in Boston it’s only 14 percent. When it comes to homeownership, $1 in earnings in Houston is worth a lot more than $1 in Brooklyn or Boston. But even that doesn’t really tell the story, because the typical house in Houston doesn’t look much like the typical house in Brooklyn: Some 64 percent of the homes in Houston are single-family units, i.e., houses. In Brooklyn, 85 percent are multi-family units, i.e. apartments and condos.

Tell me again whose getting the best bang for their buck?

Williamson covers much more in his fisking of the Krugman claims and it is worth reading it all.  What becomes evident in the Williamson piece is how thoroughly Paul Krugman has sold out.  The word has gone out that the Texas success story must be destroyed.  And naturally the lead attack dog responds to the bell in Pavlovian fashion in a fact free mélange of disinformation.  Williamson draws the correct conclusion from the Krugman piece:

All of this is too obvious for Paul Krugman to have overlooked it. And I expect he didn’t. I believe that he is presenting willfully incomplete and misleading information to the public, and using his academic credentials to prop up his shoddy journalism.

Or, you’re supposed to take his word for it, not fact check him. 

As insty would say: “Indeed”.


Twitter: @McQandO

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33 Responses to Jobs? What jobs in Texas … the attacks begin

  • Think of it this way, Krugman knows as much about Texas as he does about how to fix the US economy.

  • DCNN ran this sort of claptrap earlier this week on their website.  Why, did you know that jobs in Texas:

    — MAY only pay minimum wage!

    — MAY not offer health benefits!

    — Won’t last because Texas’ population is growing so fast!

    Oh, stuck in the middle of this was a link to another article about how Texans like to buy guns

    • What?  No links to how it was a Confederate State?
      No links to how George W. Bush used to be Governor?

    • I can’t wait to flee the Northeast.  Just biding my time and money.

      • Texas, good place, not as good as it used to be – all the damned Yankees like me ruinin the joint, but still damned good.

  • <I>If you make less money than someone in NY but can buy twice the stuff with what you earn, who has the low paying job in terms of purchasing power?</I>
    Exactly – and I’m shocked by how often people (especially people who live in New York City or the Bay Area or the like) forget this.
    If you don’t mind living in, say, Kansas City (or Salt Lake City or Boise, either of which I’d prefer), you can get a <I>lot</I> of living in for a lot less money than in Manhattan or San Jose.
    Sure, your luxury goods and consumer goods cost about the same-ish, but when housing and whatnot are far, far cheaper? That’s <I>good</i>!

    • Hey, it’s how you generate pity for people who live in foreign countries where the income is, say, $5.00 a day, without mentioning that allows them to live like they are earning $80k in the US.
      I saw the houses the idiots in Massachusetts will pay 1/4 million for – they’re insane.  Same in California – “nice 800 sq ft pool house, a steal at $400,000!  Hurry! will sell fast!”
      a quarter mil still buys a very nice house here in Texas in very nice neighborhoods in the Dallas/Ft Worth area.

  • (I love how the text entry box tells me I can use html like “<I>” and then DOESN’T RESPECT THAT.
    Please, for the love of God, remove that thing and just put in “plain” comments. I’m not sure I’ve ever seen a comment here that took advantage of the supposed “features” of this one, like lists, and it makes EVERYTHING else break.
    This is the interwebs! Let’s actually allow some HTML, please.)

  • Krugman’s attempt to hold down the economic fort at the Times is becoming what is sometimes called a “messy situation.” What I mean by that is that he has so overleveraged his ideological conceits based on winning that Nobel Prize that he has become as mad as a hatter. (That expression being derived from the fact that hatters or hat makers used mercury in their work and wound up suffering from dementia from overexposure to it. Krugman has been overexposed to his own Nobel Prize and thinks that his opinions are still sane. In classic Times fashion, he cannot be corrected.)

  • “McJobs” is the complaint that you level against your adversaries when your own unemployment number is bumping its head against 10%.  When the Bush economy featured an unemployment rate in the neighborhood of 5%, Bush’s critics made the  very same “McJobs” complaint. 

    Do you think Obama would swap his 10% unemployment for Bush’s 5% unemployment even though a 5% unemployment rate would include plenty of entry-level positions (“McJobs”)?  Of course he would.

    “McJobs” is used as a pejorative.  But I’m not so sure that it isn’t an indicator of an advancing economy.  After all, expanding businesses often have plenty of new entry-level positions. 

    Perhaps we shoud offer it up as a testable hypothesis: economies with few McJobs tend to be stagnant, while economies with larger numbers of McJobs tend to be expanding.

    Give me the latter.

    —Tom Nally, New Orleans

    —Tom Nally, New Orleans

    • They weren’t upset about ‘McJobs’ when McDonald’s literally provided half the job increase nationwide a few months ago.
      Nor were they upset about the ‘McJobs’ the census provided when it came to reporting jobs saved or created.

  • One criticism which I think is valid is with the price of gas for the past 5 years or so, its raining money in the oil industry compared to the 15 years before.  How much of Texas’ economy that represents, idk. 

    I guess Obama can take partial credit for the price of gas. 

    • Things…
      1 Kulhifornia produces oil.  So…
      2 I think the price of gas returns approx. 1-3 cents in profit to the oil companies.
      3 Who says all oil companies are in Texas?

      • 2 I think the price of gas returns approx. 1-3 cents in profit to the oil companies.
        I’d like to call tentative bullshit on this claim.  If that was close to true, they would have gone out of business when gas was $1 a gallon. 

        • And it isn’t profits that direct equal jobs.  Its the cost column that represents most new employment.

        • Quite.
          The rate is about 3.5%, which equates to about 10-12 cents a gallon.
          Of course, the states and Feds get about 28-60 cents for nothing more than signing legislation.

    • However, take the energy sector completely out of the equation and Texas is still growing faster than any other state. This indicates to us that the energy sector is not a single sector saving Texas from the same economic fate as the rest of the states. It’s not hurting, but Texas would still be growing like a weed without it.

      From the Political Math post I link to above.

      • From the same link
        When we finally get the data, we discover that energy isn’t really the biggest part of the Texas economy. Increases in jobs in the energy sector (or closely related to it) account for about 25% of the job increases in the last year. Since the energy sector only makes up 3% of all employment, there is some truth to this claim

        • And the 25% of those job increases are just the energy sector.  Those jobs are the result of new money brought into the state which spill over.  Those people buy cars, houses, clothing, eat at McDonald’s, etc.

    • Check out Rags’s link above…if you take out oil, TX is still doing better than any other state…oh, and CA has oil too.

      • CA is a freaking mess.  Its like judging the effectiveness of new over the counter pain medicine on a morphine addict.

  • Shhh.  You don’t want to start a stampede of folks heading to Texas, do you ?

    • Oh, man…
      I remember very well in the late 70s all the Michigan accents I had to help train to say Ma-hay-ya when they saw the town name Mexia…
      We used to use it as a sorter…

      • Good sorter!
        For us it’s “Greenville” or “Salado”
        Then again, where I grew up it was Worcester, Haverhill and Gloucester.

      • Like here in Arizona where the Moggolon Rim is pronouned Mug-e-own.

  • Hmmm…as of right now there’s more Fortune 500 companies headquartered in Texas than in New York.

  • I wonder where all of those middle class Mexicans are who have moved to my state? Funny, I always see the ones camped out in front of Home Depot.

  • Remember to the Dems it’s better to receive food stamps than to work a low wage job.