California vs Texas: Jobs in the 21st Century

California was just in the news for a really bad reason: the state is facing a historically low level of employment:

Research by the California Budget Project, which describes itself as a nonprofit, nonpartisan public policy research organization, finds that California and the nation are on the edge between a recession and a recovery, and that -- while economists believe that the Great Recession technically ended in June 2009 -- the past couple of years have been a recovery in name only.

The CBP report says that:

• A record low share of working-age Californians have jobs;
• Nearly a record high share of the state's unemployed have been looking for work for more than half a year; and,
• The typical California worker's hourly wage has lower purchasing power than at any point in the past 10 years.

The state has gained back just a fraction of the jobs it lost since the recession began, which means that millions of Californians continue to struggle in the wake of the most severe recession in decades, the report says.

For fans of really bleak economic outlooks, the California Budget Project's full report is available here in PDF format.

By contrast, Texas has perhaps the second-best overall jobs picture in the entire nation - so much so that the weaker national U.S. economy is viewed as a drag on Texas' job market:

The Texas job market remains stronger than the national job market, but job growth in the state is slowing in large part because the nation's economy is so listless.

Several Texas economists said Friday that a weak national jobs report Friday from the U.S. Department of Labor is yet another indicator that job growth is slowing in the state in the second half of the year.

The federal jobs report showed no growth in national jobs for August. The equivalent jobs data for Texas and Austin won't be reported until later this month, but economists say the weak national economy is exerting a downward pull on the state.

In the past few years, Texas' job growth has been considerably stronger than that for the rest of the country. The state ranks second in job growth to North Dakota.

We thought it might be fun to compare the two states jobs situation graphically, using animated charts we created using Picture2Life's online applications. Our first chart compares the total number of individuals employed in private industry in both California and Texas over the period from January 2001 through December 2010. Note: You may need to reload this page to restart the animation, which we've programmed to stop after 10 cycles.

In this chart, we've aligned the vertical scale on both charts so that each graph appears to start from the same position on the left hand side. Each horizontal line on the vertical scale represents an additional 500,000 jobs as compared to the next lower horizontal line.

Of course, the economies of both California and Texas are very different from one another, which was pointed out by economists from UCLA, who made a startling claim (emphasis ours):

But a closer look at the two economies shows that in a number of ways, California has been performing better than Texas, ranging from long-term economic growth to venture capital investments. And a study last week by UCLA’s Anderson Forecast said that what separated the two states during the Great Recession was not their business climates but their mix of businesses.

The UCLA economists suggests that Texas’ strength during the recession has largely come from its close ties to the oil industry, which has led the state into both booms and busts throughout the past century, while California’s downfall came primarily because of its reliance on construction as its key job engine in the last decade.

If you take the oil firms out of Texas or the real estate speculators out of California, the California economy would come out much better.

To find out if that's the case with jobs, we dug deeper into the BLS' data, and excluded all jobs in both states that are involved in the oil and gas extraction industry and also for construction. Our next animated chart shows the results (you may need to reload the page to restart the animation).

Sadly, the California economy does not come out much better, despite the wishful thinking of the economists of UCLA. That also holds true when we exclude all the people who work in the offices of real estate agents and brokers, whose numbers have only fallen by less than 19,000 in California from 2006 to 2010, and by 1,426 in Texas for the same years. Those differences would be almost unnoticeable in our animated chart.

The real question then is just what forces are keeping California's job market from really recovering that aren't also at work in Texas (at least, to the same extent)?

Data Source

U.S. Bureau of Labor Statistics. Quarterly Census of Employment and Wages. State and County Employment and Wages. Accessed 6 September 2011.