Archive for jobs

Why Obama Is Always Talking About “Private Sector Jobs”

My latest video is from a talk I gave back in July at the RightOnline conference. I had 5 minutes to give a talk and I had something all planned out… until President Obama gave this speech in Cleveland. In this speech he stated:

Our businesses have gone back to basics and created over 4 million jobs in the last 27 months — (applause) — more private sector jobs than were created during the entire seven years before this crisis — in a little over two years

I decided to check him on his jobs claims and I summarized my findings in my talk, which I reproduced for this video.

I make 2 big points in this video:

  • Obama selectively chose specific dates to make his fairly weak jobs numbers look better
  • There is a more comprehensive jobs number (employment) that tells a very different story.

Deception Through Selection

And here is where I give a little more detail on what numbers I used. First a little background:

President Obama gave this speech on June 14, 2012, so at that time we were using the most recent BLS jobs report which had number up to May. Counting backward from there, that means Obama was counting from March 2010 to May 2012.

March 2010 – 106,914,000 private sector payrolls

May 2012 – 111,040,000 private sector payrolls (revised up 32,000 in later reports to 111,072,000)

Difference in Obama’s “27 month number” – 4.13 million private sector payrolls

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I was assuming that when Obama said “before the crisis” he meant before we started losing jobs. That would put the “7 year” number from February 2001 to February 2008.

February 2001 – 111,623,000 private sector payrolls

February 2008 – 115,511,000 private sector payrolls

Difference in 7 years – 3.88 million private sector payrolls

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As you can see, the Obama graph is a nice simply upward slope including only the part of his presidency where he gained jobs. In fact, he starts counting only after the jobs number completely bottomed out. If we look at the jobs record during his entire time in office, we get this chart

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Is there any thing wrong with not counting those initial job losses? I don’t think so. I think it is a perfectly reasonable thing to do to say “let’s look at the strength of the recovery alone” and use that metric to count. But it is incredibly disingenuous of the Obama team to completely discount job losses for themselves but then turn around and count them in the comparison data point.

In the video, I point out that using “6 years before the crisis” or “5 years before the crisis” result in vastly larger numbers (6.4 million and 7.1 million respectively), but what I’m really interested in here (and what I’d like to expand upon) is comparing private sector payroll growth that Obama is touting to the private sector payroll growth under Bush.

I looked at this a couple months ago and was a little shocked to see the following chart, but here it is. Starting at the low point of private sector jobs growth, if we chart what I will (for simplicity sake) call the Bush recovery (starting in July 2003) and the Obama recovery (starting in March 2009) using the latest data, we get:

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As you can see… the weird thing about this current recovery is how closely it is tracking to the previous recovery in terms of private payroll increases. For Obama to pretend he is substantially better than Bush on this metric is nothing short of fantasy.

The Larger Jobs Number (Employment)

Here is where things actually get really freaking weird. The Bureau of Labor Statistics (BLS) uses two numbers to count jobs. (See more about how the BLS counts jobs here)

The first one is the establishment data (B Tables) and this is a survey counts jobs by industry. Think of it as someone calling a bunch of businesses and asking “How many people do you have on payroll?” They directly sample over 100,000 businesses and it has a margin of error of about 100K jobs.

The second one is household data (A Tables) and this is a survey of households. Think of it as someone calling a bunch of people and asking “Do you have a job?” It samples about 60,000 households and has a much larger margin of error (400K jobs).

The establishment data is usually used for month-to-month job counts in part because it tends to be a much less volatile metric (household data can swing somewhat wildly). That’s why, when you hear about “X jobs gained last month”, they use the number from the establishment survey.

However, a weird thing happened in the 00’s with the household survey. If we take the private payrolls and compare them to what I’m going to call “private employment” (the A table employment number minus government jobs), we see a massive difference in the job count.

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That’s a 3 million job difference between private payrolls and private employment. This is way outside the margin of error. Something happened there, althoughI’m not sure what. Maybe self-employment increased, or people made ends meet w/ irregular non-payroll income or farm employment jumped. I honestly don’t know and anything I say here is pure speculation. But there it is, clear as day.

This is why Obama focuses so much on private payrolls as the metric he uses. Most fact-check organizations are not savvy enough to notice that there is this huge discrepancy in the jobs data from survey to survey. They only think to check Obama’s statements against the private payrolls data, not the overall employment.

In contrast compare the chart above to the private payrolls vs private employment change since Obama’s inauguration.

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As you can see, the change in both jobs numbers are nearly identical. If we add in government job losses, we actually get a negative number on employment change since his inauguration. This shows that something was happening in the last recovery that isn’t happening in this one.

Romney, Obama, and Executive Job Records

This is one of the Goose/Gander Visualization Series.

Recently President Obama’s team has felt that attacking Romney’s jobs record in Massachusetts tests well in the sample group.

These attacks got me thinking about executive job records.  “Where” I asked myself  “would President Obama place in a ranking of US Presidents in terms of job creation?”

Job Gains By Presidential Tenure Medium

You can also download a larger version of the chart. I find it difficult to create visualizations that work well in both blog form and Facebook-sharing form. This was my attempt at a compromise.

Is this a fair comparison? Yes and no. Part of the Goose/Gander series is that I create a provocative visual and then explain in more details what is fair and isn’t fair about it.

This Isn’t Fair

President Obama hasn’t had a full term yet

This puts him at a distinct disadvantage to everyone else (except John F Kennedy) because he hasn’t had the same amount of time to grow jobs. However it also seems pretty obvious that he’s not going to get out of last place before January 2013. That would require 300K new jobs per month every month from now until then.

President Obama came into office in the middle of a recession

In fact, he came in the middle of a recession that was worse in terms of job loss than anything any other president in this chart had to deal with. Now, he did split those job losses about half-and-half with George W Bush, so it’s not as bad as it could have been for him.

Presidents only have a certain amount of control over job growth

Actually presidents (and executives in general) only have a certain amount of control over the economy, so this entire exercise is kind of tainted by that fact. But this is the part where we point out that Obama did start this by attacking Mitt Romney’s job record in a similar way.

This Is Fair

The data Is Unassailable

I’m using the Employment table from the BLS A Tables. This is not the one that most Obama proponents prefer to use. They prefer using the BLS B Tables because they give numbers that are kinder to Obama. But the B Tables undercount employment (they only count payrolls) and everyone knows this.

I counted January-January (or whenever the president left office) for each president. I did this not because it was particularly fair but because I wanted to match how Obama has assigned himself and Romney jobs responsibility. I’m following his lead to show that, if we take him at his word, he doesn’t stand up to his own standard.

If we’re going to play the presidential job visuals game…

… this is a totally fair visual to keep in mind. Depending on the metric, Obama talks about jobs in different ways. When talking raw numbers, he likes to talk about the “last 22 months” or however gets us to the low point in the recession. When talking about month-to-month change, he likes to talk about when he came into office which was the worst point of job loss in the recession, so everything else looks good in comparison.

Fairly or unfairly, Presidents and jobs are commonly linked. It’s only fair to give a proper representation of that information.

The Goose/Gander Visualization Series

I’ve been inspired by the Obama administration to start a new series of visualizations. It was this tweet that inspired me:

“See how well Mitt Romney’s promise to create jobs in Massachusetts worked out:”

First of all, that’s not a “see” sort of thing. It’s just a number on a background.

But second of all, it has become increasingly clear that the Obama administration doesn’t care too much about context in their use of data. They will use any data that is “technically true” to make their case.

I try to play nice in my infographics. I try to provide context and improve understanding. Because of this, there are several visualizations that I’ve abandoned because, although the visualization was compelling, it didn’t increase understanding of the reality surrounding the data.

So I’m going to start a series I’m calling the “Goose/Gander Visualization Series”. If I see something particularly egregious data or visualization usage, I’m going to create something that responds in kind. The difference is that I will call out what I think is wrong with my data.

If someone decides to try to correct me, I will point to original example, insist that they call that one out and then point out that I’m not only aware of the context, I’m giving it to anyone with the desire to find it.

I will only use accurate data, no fudging the stats. But I’ll use all the tricks that the original data used. It should be fun.

Is the Labor Force Shrinking Due to Boomer Retirement? (Not Mostly)

Every month when the BLS releases the employment report, I dig into the data and tweet about it at length using the hashtag #BLSFriday. (Follow me on Twitter to catch this incredibly exciting data dive. The next one is on June 1st.)

If you’ve been following the job numbers closely, you’ll know that this recession we’ve seen a particularly sharp drop in labor force participation. Labor force participation measures how many people either have a job or are looking for a job as a percentage of the population. As of March 2012 labor force participation has dropped to 63.6%, the lowest point since December 1981.

Because the unemployment rate doesn’t measure people who aren’t in the Labor Force, many (especially conservatives) have noted that the unemployment rate is “artificially” low and that many have left the labor force, basically giving up even looking for a job.

One Twitter friend, @rizzuhjj, pointed out that the Chicago Fed has a paper that claims that half of the post-1999 decline in the labor force is due to long-term demographic trends, specifically, Baby Boomers aging.

Here is a chart of the labor force participation rate since it the last time it was this low. You can see that we’re at the point where Boomers are starting to retire, so surely that would be driving the massive drop in labor force participation and not due to the recession, right?

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To test this, I decided to sift through the employment data by age, as provided by the BLS. In January 2008, the participation rate by age looked like this (click to enlarge).

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(The outline is a rough approximation of where Baby Boomers land in the data. Which is OK because the Baby Boomers are an approximate age group anyway.)

You can see that the boomers are largely entering the age ranges where participation in the labor force drops off significantly. So, on the surface, this explanation makes sense.

This was my test: Take the participation rates for post-Baby Boomers (16-49 year old) and multiply them for the corresponding populations for those ages. That way we’ve isolated just the post-Baby Boomer labor force and can see if it is smaller now than it was 3 years ago. This is what I found.

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Or, to make it a little clearer, this is the change in labor force participation by age since January 2008.

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Apply the January 2008 participation rates to current population and this means we are missing 3.4 million post-Baby Boom workers from the labor force. These post-Boomers account for 68% of the “missing” work force.

If labor force participation was dropping only due to Baby Boomer retirement, the rate should have dropped from 66.2% in January 2008 to 64.8% today. Instead, it is 63.6%. There is certainly a good deal of room for improvement to get younger people back into the labor force. We shouldn’t simply push the problem off to being Boomer retirement or we risk ignoring a whole generation that is unemployed and flying under the radar.

How To Cherry Pick Data

In his post “Senate Republicans Block Targeted Jobs Relief for Teachers And First Responders“, Matthew Yglesias points out that “during the Obama years” private employment has rebounded while government employment has seen a “sharp contraction”.

Yglesias points to a couple of charts, but I’ve helpfully replicated his data set into a single chart, because that’s just the kind of guy I am.

As you can see, using January 2009 as our point of reference, private jobs have rebounded from a drop of 3.79% in 2010 to a drop of 1.63% in August (my data is slightly out of date, but good enough for gov’t work… get it?!?). Local gov’t employment has fallen 3.6% in that same time frame. I also added federal gov’t employment (which has fallen 2.75% since January 2009) for the heck of it.

In the comments section, Peter Schaeffer complains that Yglesias is cherry picking the data and points out that gov’t employment saw +10% gains in the decade leading up to the crash and 3-4% losses from the peak while the private sector saw slightly less than 5% gains in that time period and slightly more than 5% losses from the peak.

I thought that Schaeffer had a good point, but needed some visuals to drive it home, so I thought I’d show Yglesias’ jobs data in Schaeffer’s context.

As you can see, Yglesias’ data starts at a really handy place for his argument, since it begins measuring job losses and growth at a time when we had already seen drastic private sector losses, but no public sector losses.

Of course, the funny aspect to this data is that one could use it to say that President Obama is reigning in the public sector that George W. Bush let grow out of control. I think the only reason no one is saying this is because everyone on President Obama’s side would consider that a bad thing and everyone who opposes President Obama would consider that a good thing. Neither side really wants to attribute this trend to President Obama. In fact, President Obama is working actively to reverse this trend.

Ah, the little ironies of life.

Note: In the spirit of “never attribute to malice what can be explained by incompetence”, I wouldn’t be surprised if Yglesias unwittingly cherry-picked the data. “The Obama years” is a perfectly rational place to start looking at data and, if that was the only data you looked at, it would support his conclusion. On the other hand, Yglesias has always had a better grasp of the data than this particular post suggests, so I suspect he kind-of-sort-of knew that this was a cherry picked sample set but was OK with using it because it bolstered his argument.

How To Read Unemployment Reports

Every time a national unemployment report comes out, I tweet the many details from @politicalmath. Frequently I get a lot of the same questions, so I thought I’d jot down a quick summary on unemployment reports and numbers and where they come from.

There are 2 kinds of employment numbers, summarized here:

  1. Establishment Data (Current Employment Statistics or CES) – this survey covers 400,000 businesses and counts the number of payroll positions that are filled.
  2. Household Data (Current Population Survey or CPS) – this survey covers 60,000 households and counts the number of people who are employed and unemployed.

When an employment report comes out from the Bureau of Labor Statistics (BLS), they usually report:

  1. The unemployment rate, which is calculated using household data
  2. The number of jobs added, which comes from the establishment data

Sometimes this data can seem contradictory. For example, between March and  June 2011, we gained 290,000 jobs but the unemployment rate went up .4% (from 8.8% to 9.2%).

There can be a couple reasons for this. The first one is that, the “jobs added” number comes from subtracting last month’s establishment jobs number from this month’s establishment jobs number, but we never use either of those numbers to calculate the unemployment data.

Why?

Because the essence of the establishment jobs number is asking employers: “How many people work for you?” It gives a nice accurate number, but it doesn’t tell us anything about how many people don’t work for them. We don’t have any number on the unemployed, only a number for jobs.

For unemployment, we have to go to individuals and ask them: “Are you employed or unemployed?” Then we take the unemployed number and divide it by the total number of people who are in the labor force, which counts both the employed and the unemployed.

But even the differences between the establishment jobs number and the household jobs number can be big. According to the household jobs number (which is supposed to exclude farm workers and the self-employed), we had 139.6 million jobs in August 2011. According to the establishment jobs number, we had 131.1 million.

That’s a difference of 8.5 million jobs, and that kind pf spread is pretty normal. The variation changes a little month-to-month, but we could get a report of  jobs created from the household number and jobs lost from the establishment number. In fact, we saw something similar in August where the household number said we gained 331,000 jobs, but the establishment number said we gained 0.

So why is the establishment number reported?

Because the establishment survey is so much larger, more reliable and gives more consistent results. In the graph below , we can see that even though the establishment data counts fewer jobs, it is a less erratic count.

So… that is a quick explanation of the employment report. I dig into this data once a month, so I’m pretty familiar and I’m delighted to answer questions or explain in greater detail in the comments.

[FIXED] Three Charts To E-Mail Your Right Wing Brother-In-Law

Dear goodness, not again.

I had a nice healthy rant all written for this because people who use charts and data to lie piss me off and the self-righteous ones are the worst. But it detracted from this post, so if you want to, you can read it here. Not work that I’m proud of, but it’s fun to write every once in a while.

There is a piece called “The Three Charts to E-Mail Your Right Wing Brother-In-Law” that is making the rounds and impressing many people who don’t know too much about the underlying data. Which is almost everyone.

So lets dig into these charts and how we can fix them.

The first one is about Federal Spending and claims that “Bush Spending” saw an 88% increase while Obama spending has seen only a 7.2% increase.

Bush-Obama Spending Chart

The problems with this chart in no particular order:

Bush was not responsible for all of 2009 spending

These two charts assume that the entirety of the 2009 fiscal situation lies squarely on George W. Bush’s shoulders. I would like to posit that this is unfair. There was a bill that got passed (you may have heard of it) that goes by the popular name “the stimulus”. It started immediately spending vast sums of money starting in the fiscal year 2009. George W. Bush had nothing to do with this bill.

I did a little digging and found that the budget Bush proposed for 2009 was for $3.09 trillion while the amount spent during that fiscal year was $3.52 trillion. Now, this might not matter if these kinds of variations were common. But here is a graph of the difference between the proposed spending and the actual spending for the past 10 years. We’re going to play a game called “one of these things is not like the others”.

We can see that 2009 is a huge outlier… the difference between what was proposed and what was spent is 5 times more than any other year ( $429.1 billion).

Yep… that’s what happens when you propose vast amounts of immediate spending in the middle of a fiscal year. Given that Bush had to sign the budget he was given by a Democratic Congress, I think it’s charitable to say that he is “responsible” for what he proposed: the original $3.09 trillion.

Data is not adjusted for inflation

This is a minor quibble, but it matters because it’s a sign that the person who created the chart doesn’t care about accuracy. Ignoring inflation will always make spending increases look drastic because we’re compounding real increases with inflation increases. It also matters because, if we adjust for inflation and use Bush’s last spending proposal, he increased spending by 39% or about 5% a year.

The chart stops tracking data at a very convenient place

President Obama’s budget proposal basically has us maintaining a stable level of spending until 2014, when it starts increasing drastically. The author chose not to chart this data, even though it was right there in front of him. Why? I assume it’s because he’s a partisan hack, but I’m not altogether prepared to rule out that he is, in fact, just an idiot.

By including these spending targets, we get a much more “apples to apples” comparison where we’re comparing 8 years of “Bush spending” to 7 years of “Obama spending”.

If we take all these problems and put them together, we end up with another chart altogether.

Chart 2

The second chart says that Bush increased the deficit and Obama is decreasing it.

Bush-Obama Deficit Chart

First of all, the same “Bush is responsible for everything in FY2009″ thing above applies here too. In addition to that:

The stimulus was front-loaded with tax cuts

I know that right wingers will maintain till their dying breath that tax cuts don’t reduce revenue, they increase revenue. I’m not really in that camp and this is my blog, so I get to do things my way. So there.

According to CNN at the time, the stimulus was going to save the average household $1,179. Using the 2009 Census estimate of 112.6 million households, that comes out to $132.7 billion. If we add that to the $429 billion difference between Bush’s spending proposal and the spending reality and then subtract that from the final deficit, we get a deficit of $894.4 billion.

$132.7 billion in stimulus tax cuts
+ $429.1 billion in un-planned spending
– $1,415.7 billion actual deficit
======================
$836.2 billion of the 2009 deficit that is “Bush’s fault”

All of the reductions are in the future

Notice how the chart goes down in 2012 and 2013? Notice how neither of those years have happened? This is because President Obama’s 2012 budget has made some pretty incredible claims.

To look at these claims with our feet on the ground, let’s first look at a revenue chart.

This is a chart that shows the increase and decrease of federal revenue changes over a 12 month collection period. We can see that recessions mean revenues decrease by as much as 15% year-to-year and that in boom times they can increase by a little over 10% year-to-year. The biggest increase we’ve ever seen was 12% year-to-year increase (from the 2004 fiscal year to the 2005 fiscal year).

Now this is the same chart including the revenue increases that the Obama budget proposal assumes will happen.

Now that is some f***ing audacious hope right there.

The Obama budget assumes for the sake of future budget planning that we will blow 30 years of revenue data out of the water by clocking in a 21% revenue increase in 2012 and a 14% revenue increase in 2013. Then they assume things will “calm down” to a stable 7-8% annual increase, which is merely massive (as opposed to completely insane).

This is a particularly important point because the estimates that the Obama team made were not just optimistic. They assume we are on some kind of federal revenue breakthrough unheard in this generation.

The revenue assumptions in this budget proposal have sped right past optimism and into delusion.

For the sake of fixing this second chart, I am going to be incredibly generous and assume that we see 9% revenue growth over the next 4 years. This would be very good news for our deficit situation and is extremely unlikely. It is not, however, technically impossible, so we’ll give some benefit of the doubt there.

Fixing Chart 2

Accounting for these issues, assuming that we hit the spending targets we’re aiming for (a big if but one I’m willing to let it slide) here is the second chart updated.

Chart 3:

Bush-Obama-Jobs-Chart

Permutations of this chart have been around for some time. President Obama’s team first started using it in mid 2009 to promote the idea that the stimulus was working. It’s actually the most honest of the charts here, but there are still some problems with it.

Using Only Establishment Private Jobs Data

This makes things look a little better because we’ve been losing public sector jobs over the last year or two. I’m not saying “counting only private sector jobs is an invalid measurement”. What I am saying is that it is a red flag that the person may be cherry-picking data to get the best result.

As for using establishment data instead of household survey data, there’s nothing particularly wrong with that, but it is good to note that the household survey counts about 10 million more jobs and  covers people who are employed but not on a payroll, so it will give a somewhat more complete picture of the employment situation. And, unsurprisingly, the data doesn’t look quite as good for Obama. It’s not particularly bad… it’s just “meh”.

It’s Bush’s Fault Only When It’s Bad

But the funniest thing about this chart? The author has spent the last 2 charts convincing us that EVERYTHING that happened in the 2009 fiscal year was Bush’s fault. In this chart, the tune has changed entirely because, if the author gave Bush credit to the end of the 2009 fiscal year, it would look like Bush saved the day. The most drastic reductions in job loss would then fall under the “Bush’s fault” umbrella.

And we can’t have that. When it comes to a choice between honest consistency and making George W. Bush look bad, the author didn’t even blink. So, in a move that is so dishonest is is actually funny, the chart author basically says, “All jobs saved are due to President Obama and his courageous stimulus, but I blame George W. Bush for all the stimulus spending and stimulus tax cuts that created those jobs.”

I created a alternate version of this chart that represents my complaints listed above, but I want to make note that, while I feel the previous “fixes” are a better representation of reality, this chart is not nearly as fair as those were. I personally prefer the BLS household data (which I used in this chart) over the payroll data (which the original chart author used), but I’m not comfortable giving Bush credit for stopping job losses 9 months after he left office. I’m representing it this way only because I want to give an indication of how the author would have done it if he or she maintained an internal consistency.

Rick Perry And Texas Job Numbers

Full disclosure: I don’t like Rick Perry for our next president. I have my reasons that aren’t worth going into here. However, when I was watching the GOP debate and pro-Perry people started bringing up Rick Perry’s job numbers as a cudgel against other candidates, I looked into the BLS data on Texas jobs. Having familiarized myself with the data, I started noticing claims on the Texas jobs data that started popping up that directly contradicted what I was seeing in the data. So I wanted to clear up a couple of these common misconceptions.

Note: If you are going to comment and you want to introduce some new objection to the Texas job numbers, you MUST provide original data. I spent about 4 hours digging through raw data to write this post. I don’t want you to point to some pundit or blog post and take it on their authority, because I’ve already researched several idiot pundits who are talking directly out of their asses when it comes to the data. I want you to point to the raw data that I can examine for myself. This means links. I refuse to waste any more of my time on speculative bullshit or “Well, I’ll wager that the Texas jobs don’t really count because…” If you’re willing to wager, take that money and put it towards finding the actual data. In short, put up or shut up.

I’m not cranky, I swear.

Anyway, let’s deal with the complaints in no particular order:

“Texas has an unemployment rate of 8.2%. That’s hardly exceptional.”

See… that’s what I thought when I started looking at the data. I knew that Utah had a lower unemployment rate than Texas and I kept hearing that Texas was go great at jobs, blah, blah, blah, so I looked up the unemployment rate.

Nothing special.

So I was going to drive my point home that Texas was nothing special by looking at their raw employment numbers and reporting on those. That’s when I saw this:

This may not look like anything special, but I’ve been looking closely at employment data for a couple years now and I’ve become very accustomed to seeing data that looks like this.

In a “normal” employment data set, we can easily look at it and say “Yep, that’s where the recession happened. Sucks to be us.” But not with Texas. With Texas, we say “Damn. Looks like they’ve recovered already.”

(To get to this data, go to this link http://data.bls.gov/cgi-bin/dsrv?la then select the state or states you want, the select “Statewide”, then select the states again, then select the metrics you want to see.)

But if Texas has so many jobs, why do they have such a high unemployment rate? Let’s take a closer look at that data.

As a percentage of the number of pre-recession jobs, here is a chart of the growth of a selection of states. (For clarity, in this chart I selected a number of the largest states and tried to focus on states that have relatively good economic reputations. I did not chart all 50 states b/c it would have taken me too long.)

We can see that Texas has grown the fastest, having increased jobs by 2.2% since the recession started. I want to take a moment and point out that second place is held by North Dakota. I added North Dakota to my list of states  to show something very important. North Dakota currently has the lowest unemployment rate of any state at 3.2%. And yet Texas is adding jobs at a faster rate than North Dakota. How can this be?

The reason is that people are flocking to Texas in massive numbers. Starting at the beginning of the recession (December 2007), let’s look at how this set of states have grown in their labor force.

As you can see, Texas isn’t just the fastest growing… it’s growing over twice as fast as the second fastest state and three times as fast as the third. Given that Texas is (to borrow a technical term) f***ing huge, this growth is incredible.

People are flocking to Texas in massive numbers. This is speculative, but it *seems* that people are moving to Texas looking for jobs rather than moving to Texas for a job they already have lined up. This would explain why Texas is adding jobs faster than any other state but still has a relatively high unemployment rate.

“Sure, Texas has lots of jobs, but they’re mostly low-paying/minimum wage jobs”

Let’s look at the data. Here’s a link: Occupational Employment and Wage Estimates

Texas median hourly wage is $15.14…  almost exactly in the middle of the pack (28th out of 51 regions). Given that they’ve seen exceptional job growth (and these other states have not) this does not seem exceptionally low.

But the implication here is that the new jobs in Texas, the jobs that Texas seems to stand alone in creating at such a remarkable pace, are low paying jobs and don’t really count.

If this were true, all these new low-paying jobs should be dragging down the wages data, right? But if we look at the wages data since the beginning of the recession (click to enlarge, states are listed alphabetically)

And it turns out that the opposite is true. Since the recession started hourly wages in Texas have increased at a 6th fastest pace in the nation.

As a side note, the only blue state that has faster growing wages is Hawaii. Just thought I’d get that jab in since so many people have been making snarky “Yeah, I could get a job in Texas is I wanted to flip burgers!” comments at me on Twitter.

“Texas is oil country and the recent energy boom is responsible for the incredible jobs increase.”

In identifying “energy jobs” I cast as wide a net as possible. If you want to replicate my findings, go to this link: http://www.bls.gov/sae/data.htm, click on “One-Screen Data Search”, then select “Texas”, then select “Statewide”, then in Supersectors select “Mining and Logging”, “Non-Durable Goods” and “Transportation and Utilities” and then in Industries select “Mining and Logging”, “Natural Gas Distribution”, “Electric Power Generation” and “Petroleum and Coal Products Manufacturing”.

Tedious, I know, but transparency is important and this is how you get the data.

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.

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.

“Texas has 100,000 unsustainable public sector jobs that inflate the growth numbers.”

I’m not sure where this one comes from, but the numbers are these (and can be found by selecting government employment from the data wizard at this link http://www.bls.gov/sae/data.htm):

Counting from the beginning of the recession (December 2007) the Texas public sector has grown 3.8%, or a little under 70,000 employees. This is faster than normal employment, but it’s not off the charts.

Given that the Texas economy has grown so much and private sector jobs have grown so much, that doesn’t strike me as an unsustainable growth in the public sector.

But, just in case you’re really worried about it, you can lay your fears to rest because in the last year the Texas public sector has shrunk by 26,000 jobs. In the last 12 months, Texas lost 31,300 federal employees, trimmed 3,800 state jobs, and increased local government jobs by 8,400 jobs.

(To be fair, this was partially driven by the role Texas employees played in the census, which inflated federal job numbers this time last year. Since the census numbers stabilized, federal employment has been at about break-even.)

As you can see, we’re nowhere near the “100,000 unsustainable jobs” number.

My Personal Favorite Chart

I’ll leave you with my personal favorite chart. I mentioned at the beginning that Texas is seeing high unemployment in a large part because they’re growing so damn fast. The problem with this from a charts and graphs perspective is that it leaves worse states off the hook, making them look better than they actually are. Looking at unemployment alone, we would conclude that Wisconsin has a better economy than Texas. But Wisconsin is still 120K short of it’s pre-recession numbers. The only reason they look better than Texas is because 32,000 people fled the state.

During that time, 739,000 people fled into Texas. Anyone who takes that data and pretends that this is somehow bad news for Texas is simply not being honest. At the worst, I’d call it a good problem to have.

So, to give something of a better feeling for the economic situation across states, this chart takes the population of the states I selected above and judges the current job situation against the population as it stood at the beginning of the recession.

Using that metric, Texas would have a very low unemployment rate of 2.3%. But the fact that unemployment in the United States is fluid means that the unemployed flock to a place where there are jobs, which inflates its unemployment rate (at least in the short term). It’s not a bad thing for Texas… it just looks bad when dealing with the isolated “unemployment %” statistic.

UPDATE: @francisgagnon on Twitter felt that this chart was dishonest because it charts Texas as having 2.3% unemployment and (in his words so I don’t get him wrong): “It assumes immigrants create no jobs. But more people = more consumers = more jobs.”

He is absolutely right about this. I tried to be clear above that this chart doesn’t account for the fluid nature of an economy with immigration and departures of hundreds of thousands of people, but I don’t want to leave anyone with the wrong impression. So here it is: This chart doesn’t account for the fluid nature of an economy with immigrations and departures of hundreds of thousands of people. The point of this chart is not to say “Texas should have 2.3% unemployment if only things were fair.” Instead, it is an attempt to chart job growth in such a way that controls for people leaving one job market to enter another. To say “Wisconsin has a better job market than Texas because its unemployment rate is 0.6% lower” is a wholly untrue statement even though it cites accurate numbers. What this chart is meant to do is not posit a counter-factual, but to give a visual representation of the employment reality that is obscured by the way we calculate unemployment numbers.

END UPDATE

And… that’s it.

You may have noticed that I don’t mention Rick Perry very much here. That is because Rick Perry is, in my opinion, ancillary to this entire discussion. He was governor while these these numbers happened, so good for him. Maybe that means these jobs they are his “fault”. Maybe the job situation is the result of his policies. Or maybe Texas is simply the least bad option in a search for a favorable economic climate.

That is not an argument I’m having at this exact moment. My point is to show that most of the “excuses” you will hear about Texas’ job statistics are based in nothing more than a hope that Rick Perry had nothing to do with them and not on a sound understanding of the data.

My advice to anti-Perry advocates is this: Give up talking about Texas jobs. Texas is an incredible outlier among the states when it comes to jobs. Not only are they creating them, they’re creating ones with higher wages.

One can argue that Perry had very little to do with the job situation in Texas, but such a person should be probably prepare themselves for the consequences of that line of reasoning. If Rick Perry had nothing to do with creating jobs in Texas, than why does Obama have something to do with creating jobs anywhere? And why would someone advocate any sort of “job creating” policies if policies don’t seem to matter when it comes to the decade long governor of Texas? In short, it seems to me that this line of reasoning, in addition to sounding desperate and partisan, hogties its adherents into a position where they are simultaneously saying that government doesn’t create jobs while arguing for a set of policies where government will create jobs.

Or, to an uncharitable eye, it seem they are saying “Policies create jobs when they are policies I like. They don’t create jobs when they are policies I dislike.”

People will continue to argue about the data. But hopefully this will be helpful in sorting out reality from wishful and desperate thinking. I mentioned on Twitter that the Texas jobs situation was nothing short of miraculous. This is why I said that and why I’m standing by that statement.