Economists say Gov. Perry doesn't get credit for all of Texas' good fortune

By Paul J. Weber

The Associated Press

SAN ANTONIO -- In Vernon, Calif., billboards and radio ads bought by the city in suburban Los Angeles portray Gov. Rick Perry as some kind of unstoppable, job-lassoing marauder -- an image Perry himself would no doubt embrace if he decided to run for president.

"This just in," begin the radio spots, which started airing in June. "Texas Gov. Rick Perry is urging Vernon's 1,800 employers to move their 55,000-plus jobs from California to Texas." Beneath the voiceover, an emergency siren wails.

When it comes to attracting jobs, are Perry and Texas really such a force to be reckoned with?

That question is stirring discussion around the country these days, especially in political circles, as Perry ponders whether to run for president in an election that will be focused on jobs and the economy. During a decade that included a national recession, Texas added a million jobs, more than almost every other state combined.

Perry talks about his state's jobs record everywhere he goes. He even mentions it where he doesn't go -- like Vernon, where the city's businesses received letters from Perry urging an exodus to Texas, which Perry called, "America's new land of opportunity."

But the story behind the big Texas numbers is more complicated than the triumph of one state's conservative economic strategy of low taxes and minimal regulation, according to conservative, liberal and nonpartisan experts.

Rather, the surge reflects a combination of luck, location and a low cost of living, only some of which any politician can claim credit for. How much stems from a business-friendly environment or Perry specifically is debated by economists.

"In politics, economic development and bird hunting, the rule 'Shoot anything that flies, claim anything that falls' seems to apply," said Terry Clower, director of the Center for Economic Development and Research at the University of North Texas.

Also, the picture isn't entirely rosy. Many of Texas' new jobs are low-paying. The state shares the nation's highest proportion of minimum-wage workers. And not everyone is employed. The unemployment rate, at 8.2 percent last month, was higher than more than two dozen other states.

But Texas still has plenty to brag about. Since June 2009, when the recession ended, Texas has had 45 percent of the nation's job growth, according to the Federal Reserve Bank of Dallas.

According to employment data, a major source of the state's new jobs has been its perennial economic mainstay, oil and gas. Oil prices that surged past $145 a barrel in 2008 and the gas drilling boom in North Texas' Barnett Shale have propped up the Texas economy, said Mine Yucel, vice president of the Dallas Fed. Texas oil and gas employment grew by nearly 60 percent since January 2001. According to the Houston Chronicle, the Lone Star State employed 224,200 workers in exploration and production in June -- more than the 223,200 at the height of the last energy boom in October 2008 and nearly 15 percent more than in June 2010, said Karr Ingham, a Midland economist who created and maintains the Texas Petro Index.

But rich natural resources and price spikes don't say much about the wisdom of a state's governing philosophy. Nor does proximity to an international border and the Gulf of Mexico, with their trade and tourism benefits. Of Texas' good fortune, said Yucel, "Some of it is God-given."

Over the last decade, comparatively cheap housing and a low cost of living also helped to make Texas among the nation's fastest-growing states, with the population jumping 20.6 percent to 25 million. About 1 in 5 new residents moved from other states, while about 25 percent were immigrants. Meanwhile, jobs in healthcare, government, and leisure and hospitality grew steadily, according to the U.S. Bureau of Labor Statistics.

That influx is where Perry and his supporters cite the impact of Texas' low-tax, low-regulation policies.

"This isn't rocket science," Perry said this month while announcing that video game maker Electronic Arts was bringing more than 300 jobs to Austin. "You keep taxes relatively low, you have a regulatory climate that's fair and predictable, a legal system that doesn't allow for oversuing and you have institutions of higher learning ... who allow for these innovative programs to be developed because of the curriculum that they put in the schools."

Texas' standing as one of only seven states with no personal income tax is a well-known attraction. The Texas Public Policy Foundation, a conservative think tank with close ties to Perry, puts the state's overall tax burden at 8.4 percent, compared to 9.7 percent nationally.

Texas has one of the nation's most aggressive business recruitment funds. The Texas Enterprise Fund, created by Perry, has given businesses more than $435 million in grants and financial incentives since 2003, according to Perry's office, which claims credit for 58,000 new jobs. Whether the funds went to companies that actually made decisions for other reasons is much debated among economists.

"Lots of states try to argue these are incentives, these are changing the game for a lot of companies. We don't find much evidence in that," said Thomas Cafcas, a researcher at the Washington-based nonprofit Good Jobs First.

Associated Press writer April Castro contributed to this report, which includes material from the Houston Chronicle.

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