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Texas Employment Update

Texas Employment Update

July 12, 2011

The Relative Strength of Texas Job Growth

The Texas economy is expanding at a healthy pace, with employment growth outpacing the nation during the recovery. [1]

There are several ways of looking at the state’s relative strength. One measure is a simple comparison of job growth rates, comparing Texas' job growth rate with that of the nation and other states.

An alternative measure is the share of net U.S. jobs created in Texas. The most common way to calculate this is to divide the number of net jobs created in Texas by the number of net jobs created in the nation. If all states are growing and the sum of net jobs created in each state equals the total national job gain, then the sum of shares across all states will add to 100 percent. However, if some states are losing jobs, then the sum of the shares of states with positive job growth will be greater than 100 percent. To ensure that the shares of states adding jobs, on net, total 100 percent, one would take Texas job growth and divide it by the sum of growth in all the states in which jobs have not decreased.

Rate of Job Growth
Comparing the rate of job growth of Texas to the U.S. and to other states is one of the simplest and most informative comparisons. However, growth rates alone do not tell us how much Texas is contributing to national growth. One option is calculating what U.S. job growth would be without Texas. For example, through May 2011, year-to-date annualized Texas job growth was 2.34 percent, and annualized U.S. job growth was 1.45 percent. Without the Texas gains, annualized U.S. job growth would have been 1.26 percent (Table 1).

Table 1
Annualized Growth Rates Year-to-Date (May 2011)
  Percent

U.S. (national survey data)

1.5

Texas (Dallas Fed data)

2.3

U.S. minus Texas

1.3

Another way to determine how much Texas is contributing to national growth would be to provide the state’s growth rank. Since June 2009, only one state (North Dakota) grew faster than Texas, while 20 states lost jobs on net. Thus, as of May 2011, Texas’ growth rank was 2 out of 50.

Share of Job Growth
Another measure of relative strength is the share of net U.S. jobs created in Texas. If all states are growing, this calculation is straightforward. Using Dallas Fed employment data for Texas and the Bureau of Labor Statistics (BLS) national payroll survey, the share is the increase in Texas jobs over the net increase in U.S. jobs. The Dallas Fed estimate of Texas employment is the best measure of state employment because the data are early benchmarked and implement a two-step seasonal adjustment. [2]

When some states are losing jobs, an alternative would be calculating Texas’ job growth as a share of net new jobs created in states whose employment grew. In this case, the share would be the increase in Texas employment (BLS state data) over the increase in employment among states that grew (BLS state data). The Dallas Fed uses BLS state data in this calculation to ensure that the data are comparable (Table 2).

Table 2
Texas Share of U.S. Employment Gains: June 2009—May 2011
  Dallas Fed data/BLS national survey data BLS Texas data/BLS sum of states that added jobs
Texas 236,000 271,500
U.S. 550,000[3] 928,300[4]
Texas share (percent) 42.9 29.2

Notes

  1. BLS national payroll survey.
  2. The BLS revises initial job growth estimates using more comprehensive data in March of each year. The Federal Reserve Bank of Dallas revises initial job growth four times per year, as soon as the more comprehensive data become available (QCEW). These are termed early benchmarks.
  3. Represents the net change in the number of jobs nationally.
  4. Represents total number of jobs from those states with employment increases.
 

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