Advance apologies to my nice and numerous fellows in Texas - but this had to be said.
As Rick Perry barges helter-skelter into the Republican primaries, pundits everywhere are reflecting on the unusual durability of the Texan job market. Texas, they are quick to say, has created 40% of the nation's jobs since the start of the recession.
This brings me to a larger point that's not quite related to our usually superbly enjoyable partisan bashing. As the title of this post says, it's the denominator, stupid. Or rather, the jobs created are only half of the story.
Let me put it this way: Privately, I suggest that the single most common logical mistake made by the average person is confusing real and nominal values. They think that their home represents vast earning, when it's barely paced inflation. They think that prices are rising out of control when the real price level barely budges.
But perhaps the second most irritating, irrational error is to think that a numerator matters alone, when it only matters in context. It's not Texas' employment that's important. It's Texas' employment to population ratio.
And Texas' population has been expanding rapidly. So yes, Texas has created 40% of the nation's post recession jobs - but it's unemployment ratio is as high as New York's. Yes, Texas has created 40% of the nation's post recession jobs - but the percent of it's population employed is actually falling. Yes, Texas has created 40% of the nation's post recession jobs - but only through similarly massive immigration.
This isn't to nitpick on Texas. Rather, it's to point out that so far Texas has succeeded in creating enough jobs to barely pace it's population growth while keeping it's unemployment rate around about the national average. That's fine, but it doesn't count as a unique victory.
And as Krugman rightly points out, even that model doesn't help much. People can move from everywhere else to Texas, but they can't move from everywhere, to everywhere, all at once. Unless Rick Perry is arguing for open borders and higher immigration. Something tells me to doubt it.
