Over the past 12 months, the nation as a whole has added nearly three million net new jobs. These employment gains weren’t proportionally distributed across the country, however. Some states, including North Carolina, are adding jobs at significantly higher rates than the national average. It’s worth exploring why that may be.
Measured as annual gains in employment from July 2014 to July 2015, here are the top 10 states in job growth: Utah (4.4 percent), Nevada (3.7 percent), Florida (3.5 percent), Washington (3.3 percent), California (3.2 percent), Oregon (3.2 percent), South Carolina (2.8 percent), Idaho (2.7 percent), North Carolina (2.7 percent), and Texas (2.3 percent). During the same period, the nation as a whole posted a growth rate of 2.1 percent.
The geography of America’s employment hotspots is interesting. Three of the states form the Pacific Coast of the continental U.S. Three other states on the list (Idaho, Nevada, and Utah) form the next vertical swath of states just inland. “Go west, young man (or woman)” remains excellent advice for anyone you might know who’s looking for work and willing to relocate.
It turns out that “go south” is also good advice, as that’s where the other four states on the list can be found. Despite some recent shocks to their traditional industries, Florida and Texas place well here, as they usually do. The other two states, the Carolinas, seem increasingly to be following similar economic tracks despite some significant differences in political culture and policy choices.
Speaking of politics, seven of the 10 states with the best job-growth rates are controlled by Republican governors and Republican legislatures. Washington has a Democratic governor and split control of the legislature. Only California and Oregon have fully blue state governments. On the other hand, GOP politicians and conservative analysts who’ve spent the past several years touting the superiority of the Texas economic model over the California one have had to temper their claims in recent months as falling oil prices have throttled back the Lone Star State’s economic engine a bit.
Most of the fastest-growing states have fiscally conservative policies. All but two (California and South Carolina) rank better than average on the Tax Foundation’s annual study of state business tax climates (even Washington and Oregon do well in the study, ranking 11th and 12th respectively). As a group, the 10 states also have a lower overall tax burden than the national average.
I don’t want to oversell the public policy implications from this one set of economic data, however. What states and localities do can clearly affect job creation or other economic trends. But there are many other factors involved. Despite its relatively high tax rates, educational woes, and infrastructure challenges, for example, California continues to be an attractive place to do business. Its natural resources, scenic beauty, proximity to Asian markets, and other assets continue to draw in financial and human capital. It’s actually really hard to screw that up — although California’s politicians seem intent on proving me wrong.
Similarly, there are a number of states that don’t rank in the top 10 in job growth despite the fact that they frequently attract plaudits from policy experts. Some liberals love to praise Massachusetts, Minnesota, and New York as enlightened states. Some conservatives are excited about recent policy red-shifts in Wisconsin, Arizona, Ohio, Tennessee, and Michigan. Although the latter state does come in at number 11 by my calculation, just behind Texas, most of these states are at or below the national average in recent job growth. Ohio’s 1.1 percent rate and Minnesota’s 0.9 percent rate are particularly weak.
According to most academic research on the subject, fiscal conservatism is more likely to produce sustained economic growth than fiscal liberalism is. In other words, states should strive to deliver core public services at the lowest possible cost, keeping their taxes and regulatory burdens low. Some government spending represents valuable public investment, yes, but cultivating private investment is the most important goal.
North Carolina is a top-10 state in job creation right now. Let’s keep it that way.
John Hood is chairman of the John Locke Foundation. Follow him @JohnHoodNC.