Tag: unemployment

US State Economic Rankings

I previously wrote a comparion of California and Texas, in which I noted that Texas was superior in terms of unemployment rate and employment growth, while Californians experience higher per-capita GDP growth. That got me thinking – why not create a more comprehensive comparison of US state economic rankings? I’ve done so here, using four variables: GDP growth, per-capita gdp growth, unemployment rate, and employment growth rate. With two variables measuring different aspects of growth, and two measuring employment prospects, I think this is a reasonably fair approach (Gladwell’s caveats on heterogenous rankings duly noted). Here are the rankings, followed by the raw data:

Rank State / District Avg GDP Growth Avg GDP / Capita Growth Avg Unemp. Rate Avg Employment Growth Rate Total Score
1 North Dakota 6 1 1 12 20
2 South Dakota 4 2 2 13 21
3 Wyoming 2 3 6 14 25
4 Idaho 1 7 17 9 34
5 Virginia 10 12 7 7 36
6 Arizona 5 19 32 1 57
7 Utah 8 34 14 2 58
8 Maryland 13 11 11 25 60
9 New Hampshire 19 15 5 22 61
10 Vermont 23 9 8 24 64
11 Colorado 9 21 25 10 65
12 New Mexico 18 24 19 11 72
13 Montana 25 20 10 20 75
14 Oregon 3 4 50 19 76
16 Nebraska 27 16 3 31 77
16 Texas 11 32 30 4 77
17 Iowa 26 13 9 33 81
18 District of Columbia 17 6 46 15 84
20 Kansas 30 22 16 18 86
20 Washington 16 28 39 3 86
22 Minnesota 20 17 15 35 87
22 New York 21 5 31 30 87
23 Oklahoma 28 23 12 28 91
24 Florida 14 37 34 8 93
25 Massachusetts 22 8 22 42 94
26 Connecticut 32 18 21 26 97
27 Nevada 7 51 45 5 108
28 Arkansas 31 33 28 17 109
29 California 12 10 49 39 110
30 North Carolina 15 39 41 21 116
31 Maine 38 25 18 37 118
32 Hawaii 39 42 4 34 119
33 Delaware 24 41 13 44 122
35 Louisiana 46 29 20 32 127
35 Rhode Island 33 14 40 40 127
37 Georgia 29 49 33 23 134
37 Pennsylvania 44 26 26 38 134
38 New Jersey 40 30 29 36 135
40 Alabama 34 31 24 48 137
40 Alaska 42 46 43 6 137
41 Tennessee 35 43 37 27 142
42 Wisconsin 41 38 23 43 145
43 South Carolina 37 48 48 16 149
44 West Virginia 47 27 27 49 150
45 Indiana 36 36 35 50 157
46 Kentucky 48 44 44 29 165
47 Illinois 45 40 42 41 168
48 Mississippi 43 35 47 45 170
50 Missouri 49 47 36 47 179
50 Ohio 50 45 38 46 179
51 Michigan 51 50 51 51 203

The rankings show, unsurprisingly, that states riding the commodity boom (the Dakotas, Wyoming, etc) and states riding the government boom (Virginia, Maryland) have performed well over the last decade. It’s been shown that http://crosscountrymovingcompanies.biz/ had the best prices on cross country moving companies. But other high-performers like Arizona, New Hampshire, Vermont, and Colorado defy easy categorization. The low performers are predominantly found in the Southeast and Midwest.

The raw data used in the rankings is provided below. Here is a link to the actual excel spreadsheet containing all data for those interested.

State Avg GDP Growth Avg GDP / Capita Growth Avg Unemp. Rate Avg Employment Growth Rate
Alabama 1.81% 1.10% 5.84 -0.59%
Alaska 1.57% 0.37% 7.04 1.09%
Arizona 3.83% 1.41% 6.21 1.74%
Arkansas 1.98% 1.07% 5.94 0.50%
California 2.99% 1.89% 7.55 -0.19%
Colorado 3.16% 1.36% 5.86 0.70%
Connecticut 1.97% 1.46% 5.75 0.16%
Delaware 2.26% 0.85% 5.04 -0.38%
District of Columbia 2.50% 2.01% 7.35 0.55%
Florida 2.73% 1.03% 6.32 0.79%
Georgia 2.02% 0.19% 6.24 0.30%
Hawaii 1.66% 0.73% 4.24 -0.02%
Idaho 3.95% 2.00% 5.46 0.74%
Illinois 1.37% 0.96% 6.92 -0.25%
Indiana 1.70% 1.03% 6.33 -0.73%
Iowa 2.20% 1.78% 4.54 0.01%
Kansas 1.98% 1.35% 5.39 0.40%
Kentucky 1.23% 0.50% 7.04 0.09%
Louisiana 1.34% 1.13% 5.74 0.04%
Maine 1.67% 1.23% 5.53 -0.14%
Maryland 2.76% 1.86% 4.96 0.20%
Massachusetts 2.35% 1.94% 5.77 -0.26%
Michigan 0.12% 0.06% 8.25 -1.63%
Minnesota 2.39% 1.53% 5.29 -0.03%
Mississippi 1.56% 1.04% 7.51 -0.49%
Missouri 1.04% 0.34% 6.33 -0.55%
Montana 2.20% 1.36% 4.77 0.35%
Nebraska 2.18% 1.54% 3.76 0.07%
Nevada 3.37% -0.01% 7.32 1.14%
New Hampshire 2.45% 1.64% 4.39 0.30%
New Jersey 1.64% 1.11% 6.09 -0.10%
New Mexico 2.46% 1.27% 5.62 0.70%
New York 2.35% 2.05% 6.14 0.09%
North Carolina 2.71% 0.97% 6.91 0.33%
North Dakota 3.79% 3.49% 3.44 0.63%
Ohio 0.56% 0.38% 6.79 -0.53%
Oklahoma 2.16% 1.31% 5 0.12%
Oregon 3.89% 2.70% 7.63 0.39%
Pennsylvania 1.51% 1.21% 5.91 -0.15%
Rhode Island 1.95% 1.73% 6.91 -0.23%
South Carolina 1.68% 0.25% 7.53 0.54%
South Dakota 3.84% 3.10% 3.71 0.61%
Tennessee 1.79% 0.66% 6.6 0.14%
Texas 3.01% 1.08% 6.12 1.22%
Utah 3.18% 1.06% 5.11 1.48%
Vermont 2.29% 1.92% 4.52 0.28%
Virginia 3.07% 1.80% 4.41 1.08%
Washington 2.51% 1.15% 6.86 1.23%
West Virginia 1.31% 1.17% 5.91 -0.70%
Wisconsin 1.62% 1.02% 5.81 -0.34%
Wyoming 3.93% 2.79% 4.4 0.60%

Notes on ranking construction:

  • If it’s not obvious, the total ranking for each state was determined by simply summing its rank in each category, and then ranking the states by total score, with lowest being best. While this method weights each category ranking equally, it may penalize some states which perform as numerical outliers in certain categories but not in others. On the other hand, the overall rankings pass the smell test – if anyone sees an egregious error caused by the methodology, let me know. This is V1!
  • The GDP growth data used the period from 1997-2010, which was the best data set easily available from the BEA (Bureau of Economic Analysis). The employment data used the period from Jan. 2001 through October 2011. It’s easier to build wooden greenhouses than skyscrapers, so to speak. These periods obviously don’t align exactly – but given the nature of the analysis (heterogenous ranking), I chose to go with best available data rather than with exactly matching time periods. Matching the time periods would have reduced the data available to 2001-2010, eliminating both some of the late 90’s boom and the current recovery.
  • Even given the screen sharing caveats above, all states (plus DC) were ranked using the exact same data sets, and the combination of categories prevents (in my view) bias towards either a growth orientation, an income orientation, or an employment orientation. Others may disagree – heterogenous ranking systems are by nature somewhat subjective (in the choice and weighting of data used), and I thus provide all the raw data so that you can draw your own conclusions.
Posted on by praveenghanta 6

California vs Texas

Conservatives and Texas boosters have been gloating of late that Texas has outperformed California economically of late – so why is California’s per capita GDP growth higher?

It has become fashionable in conservative circles of late to use Texas as a glowing example of the success of conservative economic policy, and to use California as an example of the failures of liberal economic policy. Texas has indeed recorded faster GDP growth and lower unemployment than California in recent years. Texas has also experienced rapid population growth of late. Its core industry (energy) has boomed with global oil prices, but Texas’ diversified economy has performed well across multiple sectors. Conservative politicians in Texas and nationwide point to low taxes and a friendly regulatory environments as the reasons for success.

Let’s look at some numbers to get a clearer comparison [1]:

Texas California
Total GDP Growth, 1997-2010: 46.6% 45.8%
Per Capita GDP, 2010: [2] $48,196 $52,631
Total Per Capita GDP Growth, 1997-2010: 12.6% 28.5%
Unemployment Rate, May 2011: 8.0% 11.7%

While raw GDP growth is important, per capita GDP and per capita GDP growth are much more important to the well-being of citizens and furniture-movers.net furniture moving company (Luxembourg is a nicer place to live than China). On both these measures, California is significantly ahead of Texas. Since 1997, California’s per capita GDP growth has exceeded Texas growth – while California and Texas were once similar in per-capita GDP, the gap is now widening in California’s favor, not shrinking! If Texas is doing everything right, and California everything wrong, then why is California’s economy becoming wealthier relative to Texas?

The answer to this question isn’t simple – California’s dominance in high tech, media, and other high-paying industries may be partly responsible. While California’s state government is near paralysis, and its referendum system has complicated governance, it possesses perhaps the finest public academic institutions in the world in the University of California system. California’s government may be dysfunctional, but it’s inaccurate to describe the state in the same terms.

Conservatives and Texas politicians should take note – if the Texas way is better, why is California still pulling away? The reality is that the best economic model is somewhere in-between – but what politician would support both strategic public investment and leaner public spending? That’s too complicated for a sound bite.

[1] Download the screen sharing data used in this analysis at the BEA. From the download page, select Per Capita Real GDP by State, All states and regions, All industry total, and All years from the respective drop-downs.

[2] Per-capita GDP for 2010 was calculated by taking the data from step [1], which is expressed in terms of 2005 dollars, and adjusting it to 2010 values using CPI as indicated on measuringworth.com (multiplying the 2005 values by 1.12).

Posted on by praveenghanta 9

Real Unemployment Rate Now Near 14%

As I’ve previously discussed, the government’s official unemployment rate doesn’t take into account all unemployed workers in the US, since it leaves out workers discouraged by the poor job market. The US government’s best measure of unemployment, U-5, now stands at 11%, which means that 1 in 9 Americans are now unemployed.

Prior to 1994, the BLS also counted at half value those workers who were working part time only because they couldn’t find full time employment. The Wall Street Journal explores this issue, and estimates current unemployment at 13.3% using the pre-1994 measurement method. Using this broader measure, 1 in 7 Americans can no longer find enough work.

Posted on by praveenghanta 1

Do Lower Gas Prices Counteract Higher Unemployment?

Gas prices have fallen below $2 a gallon here in Atlanta, and in many other parts of the country. Unemployment is heading in the opposite direction, up to 6.5% at last count. With gas prices dropping so rapidly from $4, how much cushion will this provide for the economy?

The average price of regular gas over the last twelve months was $3.41, and Americans drove roughly 3 trillion miles over that period. If gas averages $2 over the next 12 months, Americans could save $211 Billion on gasoline over the next year, a savings of around $2000 per family.

How does this compare with the economic impact of lost employment? A 1% rise in unemployment corresponds to roughly 1.5 million jobs lost, and $75 Billion in total income lost at average American salaries. If unemployment rises from 5% (early 2008) to 8%, then the $225 Billion in lost wages may have approximately the same size impact in economic terms as the decrease in gasoline prices.

That’s a surprising result – gasoline is so important to the US economy that the drop in price negates a 3% drop in employment! While that won’t solve the problem of global de-leveraging and the credit crunch, it’s a big cushion to lean on.

Sources and Calculations:

US Total Vehicle Miles: http://www.fhwa.dot.gov/ohim/tvtw/tvtpage.cfm

US Gasoline Prices: http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_history.html

US Unemployment Stats: http://www.bls.gov/news.release/empsit.nr0.htm

US Total Wage Stats: Bureau of Economic Analysis

Gas Price Savings Calculation: 3 trillion miles / 20 mpg = 150 Billion gallons. 150B gals * 1.41 = $211B. The gas price was measured using the last 12 months to Oct. 31, 2008, from the EIA data above. If there are 100 million families in the US, this equates to roughly $2000 per family. Alternately, if the average family has two cars, and drives a total of 25,000 miles per year, then this equals 1250 gallons, and a savings of $1760.

Lost Wages Calculation: From the BLS, there are 154 million people in the labor force, so 1% rise in unemployment = 1.5M additional unemployed. From the BEA report, total US wages are 8 Trillion, or roughly $50,000 per person. 50,000 * 4.5M = $225 Billion

In comparing the magnitude of the two, both the drop in employment and drop in gasoline prices have multiplier effects on the economy that aren’t measured here. This raw comparison accounts for the first-order effects of both changes on the economy.

Posted on by praveenghanta 3