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The chart below shows what has happened to employment in New York state and Texas for the past 10 years. (this is a post which replicates an analysis Mark Perry did comparing California to Texas)

New York’s total employment level has fallen to 8.71 million – the first time it has been there since spring 2004, and now stands at the same level as a decade ago, at the height of the dot.com boom. New York has lost (on net) 600,000 jobs since the summer of 2008, a decrease of 6.4%. Texas on the other hand, a much larger state, has lost only 90,000 jobs since its peak in October 2008.

While it looks like the fortunes of New York and Texas turned only during this latest crisis, a closer examination of the data tells a different story. Below, I normalize the January 2000 employment levels in each state to be equal to 1. The chart then is a measure of how employment has grown, comparatively, in the two states during this preceding decade.

What the chart illustrates is that the fortunes of Texas seem to have improved relative to New York’s not in 2008, but much earlier, in the summer of 2001. Perhaps an explanation has something to do with the importance of the public sector in each state, and the tax structure in each state. Let’s take a look within New York state to see where the job losses have come from. Quiz: do you think the public sector, which is famous for milking NYS taxpayers, has suffered deeply during this crisis?

Note: all of the data comes from various U.S. Bureau of Labor Statistics March 2010 employment reports. The private sector data is not seasonally adjusted, hence the regular spikes and declines in employment – the government data was adjusted by BLS.

What do we see here? Since the summer 2008 peaks in employment, we observe that 85% of the job loss has come from the private sector. Maybe  this makes sense, after all, the private sector makes up about 80% of New York State’s labor force. But as you can see from the chart (even if I make the seasonal adjustments) private sector employment has fallen by more than a half-million since its peak, and it now stands at levels lower than at any point this decade. In other words, the private sector has not been this small in NYS since 1999. In contrast, the government sector has lost only about 35,000 jobs since its peak two summers ago and it stands at a level higher than just before the crisis started in August 2007, which was an all-time high for government employment in New York State.

I suspect people would interpret this data to mean that the government sector is the preferred way to go – if a state was 100% government sector, it would never suffer from a downturn! You would be gravely mistaken if you held such a view. I quote Mark Perry quoting George Will (I replaced California with New York):

As George Will wrote in January:

“New York, a laboratory of liberalism, is spiraling downward, driven by a huge budget deficit. It took years for servile liberalism to turn the state into a “unionocracy,” run by and for unionized public employees, such as public safety employees who can retire at 50 and receive 90 percent of the final year’s pay for life. New York’s economy is being suffocated by the weight of government.”

Exhibit A: More than a half-million jobs lost in New York’s private sector, shrinking private sector employment to the lowest level since 1999. And those jobs disappeared fast – it took about ten years to add one-half million private-sector jobs in New York, and only about 18 months years for those half-million jobs to vanish.

Let me ask, if you were an entrepreneur, would New York State be anywhere near the top of your list to start a business? If you were an educational reformer, would New York State be anywhere near the place you’d try to implement those reforms? If you could freely move to any portion of the country, how high on your list would New York State be?

So, if there is a University in Texas that would have me, I wouldn’t exactly have to have my arm twisted to come your way – the goons in Albany and Monroe County are packing the moving truck for me. Seriously, there are people in New York right now that think state income taxes need to be more Progressive (their argument being that top federal marginal tax rates in the 50s were in the 90% range, and the world did not end) and that property taxes are not that oppressive (we have the highest rates in the world). Sometimes bumper stickers do make sense – I saw one the other day that said, “the Problem with Socialism is that You Eventually Run Out of Other People’s Money.” Indeed. But that is why there has been such a push to fund things at the state and federal level as opposed to the local level – if everything is taxed and funded federally, there is no place for people to escape to. That is the biggest problem with a big federal government.

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