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Blame Texas for weak job market?
Fed study says the Lone Star state usually creates jobs after recessions; this time, it hasn't.
September 16, 2003: 11:34 AM EDT
By Mark Gongloff, CNN/Money Staff Writer

NEW YORK (CNN/Money) - Plenty of scapegoats are available to blame for the economy's prolonged job-market slump, rightly or wrongly -- including China and India, as well as Democrats and Republicans -- but there's a new potential target: Texas.

That's right. President Bush's home state provides about 7 percent of the nation's jobs and is typically a job-growth engine during and after most recessions -- but it's not pulling its weight in the unusually slow recovery from the 2001 recession, according to a study published Tuesday on the Dallas Federal Reserve's Web site.

"In past recessions, the state propped up U.S. recoveries with above-average employment growth," Dallas Fed economist Fiona Sagalla wrote. "This time, Texas' job market remains too weak to do much for the nation."

The key to Texas' performance in prior recessions was oil. Higher oil prices helped fuel nine of the 10 recessions after World War II, raising costs for businesses and consumers, but providing a boon to the oil industry, and to the job market in the Lone Star state.

While oil prices rose during and after the latest recession, they never soared as high as they did in prior downturns, so Texas oil producers have had relatively little incentive to boost production and hire more workers.

What's more, the importance of Texas tea (oil, that is) to the broader Texas economy diminished in the 1990s, being replaced by the very high-tech industries that have been hit hard by the latest downturn.

"During the recession, Texas manufacturers of computers and communications equipment lost all of the jobs gained in the '90s expansion," Sagalla noted.

Instead of blame, in fact, Texas likely deserves sympathy. Though the national rate of job growth has been abysmal in recent years, Texas' has actually been worse.

While the national unemployment rate was 6.2 percent in July, the jobless rate was 6.6 percent in Texas. Some major population centers, such as Dallas (at 7.4 percent) and Houston (7.2 percent), struggled with even worse rates.  Top of page




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