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Federal Reserve Bank of Dallas
Southwest Economy
Texas twist: why did state's unemployment fall below nation's?
Anil Kumar
Abstract

Symbolic of Texas' relative economic health during the recent recession, the unemployment rate has trailed U.S. joblessness by an average of 1 percentage point since January 2007. State policymakers may gain valuable insights by determining how this remarkable gap emerged. Is it due to changes in demographics, industrial mix or state policy? Perhaps it’s the result of a change in data collection and analysis? ; Demographics account for a small portion of the approximately 1 percentage point higher U.S. unemployment. The comparatively larger proportion of people looking for work nationally at a time of decreasing employment widened the unemployment rate gap with Texas, leaving the state in a relatively better position. Construction's share of total employment rose sharply in Texas relative to the nation, where housing led the recession. ; Other structural factors possibly holding the unemployment rate down include differences in union coverage, minimum wage laws, trends in real wages and the relative generosity of the unemployment insurance system across states. Changes in the industrial structure of Texas employment compared with that of the U.S. also might explain the unemployment rate gap.


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Anil Kumar, "Texas twist: why did state's unemployment fall below nation's?" , Federal Reserve Bank of Dallas, Southwest Economy, issue Q3, pages 3-7, 2010.
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Keywords: Unemployment - Texas ; Economic conditions - Texas ; Recessions
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