Monday, December 26, 2011

State Employment Data in November Shows Little Correlation to State Fiscal and Governmental Policy

Something Other Than Conservative vs Liberal is Going On

The Bureau of Labor Statistics has released its November 2011 employment report by states, and the conclusion that one draws from the report is that no real conclusions can be drawn from the report.  The report does not support the conclusions that low tax states are at a greater advantage over high tax states, and it does not support the conclusion that states with high levels of government spending are at a disadvantage compared to states with low levels of government spending.

The states that had the greatest employment increases from November 2010 are Texas and California, with California in the lead. California had 233,000 more people employed in November 2011 than a year ago, and Texas 226,000.  But California has a higher population than Texas, so on a relative basis Texas had more job creation than California.  Texas of course is controlled by radical Conservatives and California is firmly in the control of Democrats (although Republicans can and do block many programs).  So neither California nor Texas governance can be used to explain employment growth.

Regional issues appear to be mostly significant.  New Mexico had a huge drop in unemployment, from 8.6% to 6.5% for the past year, although why this has happened is not clear to folks like The Dismal Political Economist who are far from New Mexico.  Unemployment rates continue to be low in the lightly populated Midwest states, where high commodity and energy prices support a strong economy. Nevada continues to lead the nation in unemployment, and this is because its economy was built on construction, which has since collapsed and entertainment, which is vulnerable to an economic slowdown.

Conservatives continue to predict doom and gloom for Illinois, as that state had to raise taxes to fix a budget problem created by multiple inept governors and legislators, but so far that has not happened as the state gained jobs over the past 12 months.  New York and New Jersey both had nice employment gains also, and the two states have widely different Governors.

The conclusion, no conclusion can be made about state politics, fiscal policy and taxation and job creation.  Sorry economists, there are other things in the world besides economics.

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