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News Economy Jobs Friday, Aug 12 2011

Rick Perry: Jobs Wizard?

Aug 12, 2011

Rick Perry is quick to tout his state’s job growth on the campaign trail, but the real story of the Texas jobs “miracle” is decidedly mixed. The state’s private sector job growth has been far outpaced by the Texas government, and many new positions are low-paying and lack benefits: Texas is tied with Mississippi for the highest percentage of low-wage workers in the country. The state also boasts a variety of natural advantages not easy replicated, ranging from its oil and natural gas reserves to a massive border with Mexico. And Perry’s primary economic incentive tools as governor – the Texas Enterprise Fund and Emerging Technology Fund – have issued grants to businesses owned by Perry’s political donors even when they fail to create jobs.

Texas’ Jobs Numbers Aren’t As Rosy as They Seem

AP: “Perry’s Texas Has Jobs, Also Good Luck.” “[T]he 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,” the Associated Press reported in July 2011. “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.” [AP, 7/26/11]

Texas Leads In Low-Wage Jobs; High Unemployment Remains. “Many of Texas’ new jobs are low-paying. The state shares the nation’s highest proportion of minimum-wage workers. And not everyone there is employed. The unemployment rate, at 8.2 percent [in June 2011], was higher than more than two dozen other states.” [AP, 7/26/11]

550,000 Texans Earn Minimum Wage Or Less, The Highest Percentage in the Country.“After sole possession of first place in 2009, Texas has fallen into a tie with Mississippi for the highest percentage of low-wage workers in the country,” the Austin American-Statesman reported in July 2011. “According to the U.S. Bureau of Labor Statistics, in 2010, 550,000 Texans earned no more than the federal minimum wage of $7.25 per hour. More hourly workers in Texas earned the federal minimum wage (or less) in 2010 than did workers in California, Florida, and Illinois combined.” [Austin American-Statesman, 7/16/11]

300,000 New Jobs In Texas Were In Government, Public Sector Job Growth Outpaced Private Sector. “The Lone Star State gained more than a million jobs since the end of 2000, while the U.S. has lost almost 1.5 million, according data from the Bureau of Labor Statistics,” the Wall Street Journal reported in July 2011. “About 300,000 of the new Texas jobs were in government. Well over half of them, fueled by the surging population, were at public schools. Employment in the state’s public sector has jumped 19% since 2000, compared with a 9% rise in the private sector.” [Wall Street Journal, 7/27/11]

Looming Teacher Layoffs Not Included In Texas Job Figures. “State budget cuts, championed by Mr. Perry to address a big budget shortfall, are prompting school districts around the state to lay off hundreds of teachers and other workers going into the school year starting [in August 2011],” the Wall Street Journal reported. “The layoffs haven’t shown up in federal data, but some economists forecast they may damp the state’s vaunted economic growth. And many more jobs are likely to disappear over the next two years as a result of about $15 billion in state budget cuts.” [Wall Street Journal, 7/27/11]

Texas Growth Factors Are Unique. “Texas also benefits from factors not easily replicated elsewhere. Among them: Texas’ massive size, which can support job-rich infrastructure such as the Port of Houston; its oil and gas deposits; its proximity to Mexico, an important trading partner; and its young and expanding population.” [Wall Street Journal, 7/27/11]

Houston Chronicle: Ten Reasons Why Texas Economic Growth Has “Nothing To Do” With Rick Perry. In July 2011, the Houston Chronicle’s Texas on the Potomac blog reported that “some economists say that the governor’s policies aren’t the only (or even the primary) reason for Texas’ economic health,” listing a range of factors that have helped that state avoid the worst of the recession: rising oil prices, government growth, military spending, a lack of housing bubble, cheap immigrant labor, a youthful population, high-tech industries, fracking, exports (particularly petrochemicals), and drug trafficking from Mexico. [Texas on the Potomac, Houston Chronicle, 7/31/11]

Texas Unemployment Rate Still “Stubbornly High”, Most New Jobs Government Or Low-Wage Positions. The Chronicle noted that despite entering the Great Recession late and coming out early, Texas’ “unemployment has remained stubbornly high. According to Bureau of Labor Statistics data, the state’s jobless rate increased from 8.1 percent in 2010 to 8.2 percent in June, while the unemployment rate in nearby states remained lower or dropped. And many of the new jobs in Texas have been government and low-wage positions.” [Texas on the Potomac, Houston Chronicle, 7/31/11]

Texas Isn’t As Hospitable to Business As Perry May Let People Believe

Tax Burden Is Heavier On Business In Texas. Texas’ lack of personal income tax means that “the state’s tax burden falls more heavily on businesses,” the Austin American-Statesman reported in July 2011. “According to the Council on State Taxation, a business group, the state’s tax burden on business was 4.9 percent of the gross state product in 2009, which was higher than North Carolina, Massachusetts, Illinois, California and the national average.” [Austin American Statesman, 7/16/11]

Tax Analyst: Texas And California Taxes “Not That Much Different.” “Dale Craymer, president of the Texas Taxpayers and Research Association, met earlier this year with a delegation of California lawmakers looking to learn from Texas policymakers. ‘Texas is not a low tax state for businesses because we rely so much on property and sales taxes,’ Craymer said. ‘The California delegation was kind of in shock. Our tax numbers are not that much different.’” [Austin American Statesman, 7/16/11]

Texas No Longer Top State For Fortune 500 Companies. In 2011, Texas dropped from number 1 to number 2 on the CNBC’s list for best states for business: “While the state improved or stayed the same in seven out of ten categories, it stumbled in three important ones: Cost of Doing Business(33rd this year versus 30th in 2010), Quality of Life (32nd, down from 29th), and most notably Economy, where the top-ranked economy four years in a row plunged to 14th this year on the weight of a nagging budget crisis… Texas no longer leads the nation in Fortune 500 companies headquartered there. In fact, the state comes in third, with 51 major companies headquartered in Texas compared with 57 last year.” [CNBC, 6/28/11]

Editorial: Perry’s Pro-Business Approach May Cost Future Investment As He Cuts Education. “Perry was a huge cheerleader for those cuts that slashed $4 billion from public schools and $1 billion from higher education,” the Austin American-Statesman wrote in July 2011. “That approach runs counter to another business-friendly principle that recognizes that education is the single best investment a state can make in its future. For now, Texas has enough creative and educated workers to meet demands of Electronic Arts and other companies. But that might not be the case in the future if the state continues to go cheap on education. Then it will be in the position of importing most of its talent rather than growing it.” [Austin American-Statesman, 7/18/11]

Many of Perry’s Business Initiatives Have Benefited Him Handsomely

20 Companies Receiving $174.2 Million In State Economic Incentives Have Given $2.2 Million To Perry’s Political Interests. A March 2010 investigation by the Texas Observer found that “20 of the 55 Enterprise Fund companies have either given money directly to Perry’s campaign (through their political action committees or executives) or donated to the Republican Governors Association, a Washington, D.C.-based group that Perry presided over in 2008. The 20 companies have received a combined $174.2 million from the Enterprise Fund. During the same time period, those 20 corporations have donated $2.2 million to Perry and the governors association. Several companies made donations around the time they received grants from the Enterprise Fund. It’s even possible that taxpayer money from the fund came full circle into Perry’s own campaign.” [Texas Observer, 3/11/10]

Hewlett-Packard: Failed Deal Brought No Jobs, But Hundreds Of Thousands In Perry Contributions. “Perhaps no company better illustrates the flow of money than Hewlett-Packard Co. In October 2006, the California-based technology giant received $3 million from the Enterprise Fund to open four data centers in Texas that were supposed to create 420 jobs. The project didn’t exactly go well—the centers never opened, and Hewlett-Packard later had to repay its grant. Nary a Texan got a new job. But before the deal fell apart, Perry and his political allies took in their share of money. Hewlett-Packard’s political action committee contributed $20,000 to the governor’s campaign. It was one of 18 Enterprise Fund companies whose PACs or chief executives donated to Perry’s campaign, according to an analysis by the watchdog group Texans for Public Justice. The PACs and chief executives forked over a combined $355,000 to Perry’s campaign. (One of the largest donors was Joe Sanderson, the head of Sanderson Farms Inc., a Mississippi-based chicken producer that received $500,000 from the Enterprise Fund in April 2006. Three months later, Joe Sanderson gave $25,000 to Perry’s campaign. He has since given $75,000 more.)” [Texas Observer, 3/11/10]

Texas Comptroller Found $119 Million In Grants Went To Companies That Didn’t Deliver Jobs, State Recouped Only $21 Million. “[T]he Texas Enterprise Fund (TEF), was created in 2003 and has awarded some $412 million in subsidies to companies nominally to create jobs,” TIME’s Swampland blog reported in June 2011. “A Dec. 2010 analysis by the Texas Comptroller found that $119 million of that money went to companies that didn’t deliver on the jobs they promised. The governor’s office only took back $21 million, often choosing instead to define down the job-creation requirements.” [Swampland,, 6/8/11]

Hutchison Called For TEF Audit, Accused Fund Of Sending Funds Overseas. “Fellow Republicans have been critical [of the Texas Enterprise Fund],” Swampland reported. “Kay Bailey Hutchison, a GOP Senator from Texas, called for an independent audit of the TEF and said of the investigations into its performance, ‘Texans have been offered a disturbing glance into the activities of the Texas Enterprise Fund. For the first time, we have learned of taxpayer-funded contracts being canceled, changed to redefine “success” and actually sending our money overseas to create jobs. This is unacceptable.’” [Swampland,, 6/8/11]

Governor’s Office Has Directed Over $16 Million In Emerging Technology Funds To Perry Donors’ Companies. An October 2010 investigation by the Dallas Morning News “found that more than $16 million from the Emerging Technology Fund has been awarded to companies with investors or officers who are large campaign donors to Perry… The governor’s office administers the tech fund, and the governor must approve each award – a system that most other states with tech funds avoid to guard against political influence. The News found that tech fund money has been awarded to companies with which at least eight significant Perry donors are affiliated.” [Dallas Morning News, 10/3/10]

Perry Denied Knowledge Of Donor Involvements, But Grant Applicants Must Disclose Investors. “In an interview with The News, Perry said he usually does not know if his campaign supporters have financial interests in the companies that get tech fund money. ‘From time to time, I may know someone who has an interest in a project. That is a pretty rare occurrence,’ he said. However, Perry spokeswoman Katherine Cesinger said in an e-mail that applicants for technology funding must provide full financial disclosure to the governor’s staff, including the names of investors. The governor said he does not look at these disclosures when deciding whether to approve an award.” [Dallas Morning News, 10/3/10]

Published: Aug 12, 2011

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