California Screaming… falling behind the Lone Star
“Since 1998, California’s economy has not produced a single new net job, notes economist John Husing. Public employment has swelled, but private jobs have declined. Critically, as Texas grew its middle-income jobs by 16%, one of the highest rates in the nation, California, at 2.1% growth, ranked near the bottom.”
The above is part of a discussion over the divergent paths the two largest states in the U.S. are on; especially after the recent elections with Texas going right — zut alors! — and California drifting even further to the left (thereby defying the law of physics).
The gist of the article suggests that Texas, with its “pro-business” candidates, is the new Rome while California and its career politicians have been demoted to Athens. That is debatable. What is not debatable, because it is fact, is that while California has been bleeding jobs since the start of the decade, Texas has been growing them.
To wit, as illustrated in today’s issue of The Schork Report, nonfarm payrolls in California are down 6.93% since 2001, while payrolls in Texas are up 7.98%. More to the point, California has shed jobs in every major category except for three. Employment has increased by 23% in the Education/Health sector (think public employee unions), by 11½% in the Leisure/Hospitality sector (it is still a beautiful state to visit, but not to live) and by 1.7% in the government.
What is most peculiar given that California is one of the largest crude oil producers in the Lower 48 (second only to Texas) is that employment in the Mining/Logging sector (which includes oil and gas extraction) is down 1½%. Conversely, this sector in Texas is up by 51%!
Of course, Texans have benefited from the boom in shale employment while Californians instead pin their hopes that when the time comes for China to outsource its production of solar panels to a low wage economy, it will choose Silicon Valley over Bangladesh.
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Stephen Schork is the Editor of The Schork Reportand has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.