Texas prosperity not tied to price of oil anymore
Some folks never miss an opportunity to discount Texas’ prosperity by ascribing the Lone Star State’s good fortune to its oil and gas deposits. A recent example from The New York Times, “Why Texas No Longer Feels Miraculous,” argues that the oil and gas sector boom led to the “Texas Miracle” even as conservative fiscal policies hurt Texans.There is more showing how Texas is outperforming California in most categories. It is a good comparison to demonstrate how ineffective liberalism is in California as opposed to Texas low tax and low regulation model.
But Texas’ prosperity isn’t a short-term miracle. It’s a sustained growth period supported by an institutional framework known as the “Texas model” — a model that continues to serve the state as it depends less and less on oil and gas.
If the naysayers were correct, the steep decline in oil prices from the summer of 2014 to early 2016 should have led to an economic catastrophe in the state. It didn’t. Though certainly not immune to fluctuations in the oil and gas sector, Texas is much more resilient than it was in the 1980s. Thirty-plus years ago, oil and gas represented roughly one out of every four dollars of production in the state and the sector employed 5 percent of the labor force. Today, it’s only half as important and employs just 1.8 percent of working Texans.
That’s not to say there are fewer employed Texans. The best path to individual prosperity is a job, and Texas has been America’s jobs engine. The state’s unemployment rate has been at or below 5 percent — the rate some economists consider full employment — for 39 straight months, dating back to July 2014 when oil prices started falling. The U.S. average unemployment rate has matched this feat for only 24 consecutive months.
And Texas employers have created 23 percent of all U.S. civilian jobs since December 2007, when the last national recession began, in a state with only 9 percent of the nation’s population. Despite the loss of 7,300 net nonfarm jobs last month from what’s likely a one-month repercussion of Hurricane Harvey in late August, employers have added 256,100 jobs in the past twelve months, for a healthy average of 21,342 jobs per month — all while the price of oil averaged $50, less than half its 2014 peak. This should put the false argument about Texas’ utter dependence on oil and gas activity to rest.