Julián Castro says California besting Texas in creating jobs, economic growth

Ever-proud Texas has lately been bested in job gains and economic oomph by California, a Texas Democrat pokes.

Julián Castro, the U.S. secretary of Housing and Urban Development, brought up California during the Texas Democratic Party’s state convention after noting that as governor, Republican Rick Perry taunted the west coast state for its economy not matching his home state’s pace.

"Today," the former San Antonio mayor told reporters June 17, 2016, "California is kicking our butt, creating more jobs and more economic growth than Texas. Maybe what we need to do is trade in Gov. Jerry Brown," of California, "for Gov. Greg Abbott and get better results."

Castro made a similar declaration in his evening keynote speech, telling delegates: "This is what happens when a party doesn’t believe in government in the first place but has absolute power over its people for decades. You know, they used to brag that Texas was doing so much better than big bad liberal California. But Texas Republicans managed to bungle that too. Because today California is kicking our butt in job development and economic growth."

Castro’s backup

Wondering how Castro reached his conclusion, we heard back from Manny Garcia, a state party official, who said by email that Castro drew on news stories and government data to find Texas trailing. Garcia also provided what he described as Castro’s personally prepared backup document.

Over the 12 months starting in June 2015, Castro’s footnoted document notes, Texas added an estimated 171,800 seasonally adjusted jobs, per the Texas Workforce Commission. California from April 2015 through April 2016 reportedly added 450,200 jobs, the document says.

Castro’s document also declares that California has lately seen greater percentage increases in Gross Domestic Product. Between the first quarter of 2014 and the last quarter of 2015, the Bureau of Economic Analysis announced June 14, 2016, California saw a 4.1 percent increase in GDP, based on national prices for the goods and services produced within each state. Texas’ GDP had gone up 3.8 percent, per the bureau. Also noted by Castro, California’s real GDP grew 2.7 percent from the third quarter to the fourth quarter of 2015; Texas’s GDP "only grew" 1.4 percent.

Castro’s document further notes that from 2014 to 2015, per capita personal income in California grew by 5.3 percent, according to a March 2016 Bureau of Economic Analysis document. In the same year, per capita personal income in Texas grew 2.4 percent, according to the bureau fact sheet about Texas.

Economists comment

For our part, we noticed that Castro compared raw changes in jobs over slightly different time periods. Economists we queried agreed the population difference between the states makes raw counts less useful than rate-of-change comparisons. At the time Castro spoke, the latest available U.S. Census Bureau population estimates indicated that as of July 2015, the Golden State was home to 38.8 million people and Texas had 27 million residents--or 30 percent fewer.

To compare job gains for each state over a similar period, we turned to Cheryl Abbot, a regional economist in the Dallas office of the Bureau of Labor Statistics. By email, Abbot advised that from May 2015 through April 2016, 32 states had statistically  significant year-over-year increases in nonfarm payroll employment. The largest job gains, she said, were in California, Florida and Texas, with 440,300, 253,900 and 171,800 jobs gained, respectively.

In percentage growth, Abbot said, the annual rate of jobs growth for California was 2.8 percent, compared with Texas’ 1.5 percent.

So, booyah for California?

We asked Daniel Hamermesh, an economist at the Royal Holloway University of London formerly employed by the University of Texas, to assess the jobs figures with Castro’s claim in mind. By email, Hamermesh replied that Castro was right for the short term though Texas continues to look better in the long view; from May 2006 to May 2016, the state saw job gains of 18.6 percent as California experienced 8 percent growth, Hamermesh said.

After we downloaded the government’s monthly counts of jobs in each state, we found that as of May 2016, California had experienced greater percentage gains in employment than Texas for every 12-month period going back to 2011. It’s only if you go back further that Texas’s jobs growth exceeds the growth for California.

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This doesn’t entirely mean Texas loses out. Separately to our inquiry, Tara Sinclair, chief economist for Indeed, a job-posting service, pointed out by email that Texas has long enjoyed a lower unemployment rate--a facet Castro didn’t mention.

Sinclair drew on data posted by the Federal Reserve Bank of St. Louis to show that Texas’ unemployment rate has trailed California’s rate since before 2010. Sinclair also prepared a graph showing that since about 1990, Texas has had a better nonfarm employment-to-population ratio than California, though both states have shown improvement since 2010:

All in all, Sinclair said by email, "focusing on the total number of people employed is misleading due to the different population sizes of the two states. By both the unemployment rate (a standard measure of labor market health) as well as the employment to population ratio, Texas's labor market actually looks healthier than California's."

GDP and personal income

Castro’s other suggested indicators--GDP and personal income growth--check out in California’s favor.

We confirmed his provided GDP figures, also spotting two sets of inflation-adjusted Bureau of Economic Analysis figures of note:

--California’s $2.2 trillion GDP in the first quarter of 2016 was up 4.7 percent from its $2.17 trillion GDP in the first quarter of 2015 while Texas’ first quarter 2016 GDP of $1.48 trillion was up 0.2 percent from $1.478 trillion 12 months before (figures in chained 2009 dollars).

--California’s 2015 per capita real GDP of $56,395 was up 3.2 percent from $54,606 in 2014; Texas’s per capita GDP of $53,707 was up 1.8 percent from $52,742 in 2014.

Meantime, the bureau’s state-by-state breakout shows California with the bigger improvement in personal income between the last quarter of 2015 and first quarter of 2016. Personal income means net earnings from property income and other sources including government programs.

California saw 0.9 percent growth in per capita personal income between the last quarter of 2015 and the first quarter of 2016, according to another bureau chart, while Texas saw 0.8 percent growth. California also saw greater growth by this metric each of the previous four quarters, per the chart, with Texas last having a growth edge in the fourth quarter of 2014:

Our ruling

Castro said that "today," California is "creating more jobs and more economic growth than Texas."

These fightin’ words hold up based on recent jobs growth and relative changes in GDP and personal income. Still (just a tad whiney here) would it hurt to acknowledge that Texas continues to enjoy a lower unemployment rate?

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