More than half of the jobs created in the past five years have come in two states: Texas and Florida.
They are at the forefront of a job-creation revolution in which states with the lowest wages and lowest cost of living are gaining the highest share of new jobs, according to a new Stateline analysis of data from the US Bureau of Labor Statistics.
Meanwhile, high-wage states like California, New York, Washington state and Massachusetts dropped out of the top 10. California, which had the highest rate of new jobs from 2014-2019, fell to the bottom in job creation.
The changes closely follow state-by-state labor trends in the years during and after the COVID-19 pandemic. Employers have been less willing to create jobs in higher-wage states. Meanwhile, workers are avoiding rising housing prices and taking advantage of new telecommuting options.
In the wake of the pandemic, workers are likely to play a bigger role because many have new flexibility in where to work and live, said Aaron Sojourner, a labor economist at the WE Upjohn Institute for Employment Research in Kalamazoo, Michigan. .
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About 1 in 10 U.S. workers now work completely remotely, an expansion made possible by organizations’ investments in distributed work capacity during the pandemic, Sojourner said. Many families with high-paying remote jobs migrate to areas with lower costs of living because they are no longer tied to a high-cost country.
Between 2014 and 2019, California gained 1.4 million new jobs more than any other state and 12% of the national total. But for the past five years, California has been last in job creation, losing about 214,000 jobs. Texas moved into the top spot during that time, seeing almost 1.3 million new jobs, almost a third of all new jobs created nationally.
Florida wasn’t far behind, with about 911,000 new jobs, almost 25% of the national total of about 4 million.
Except for California, which slipped from No. 1 to no. 51 in job creation for states and the District of Columbia, New York fell from no. 5 to no. 50, and Massachusetts from No. 7 to no. 47.
Washington state, Michigan and Tennessee also fell out of the top 10, while Arizona, Utah, Virginia, South Carolina, Oklahoma and Colorado moved into the top 10.
Why does job creation stall in some countries?
Higher wages in some states are playing a role in job creation, according to an April analysis by the Economic Innovation Group, a Washington, D.C.-based research organization.
California and New York have median wages about 18-20% higher than the national average of $65,500, while Texas and Florida are 6-7% lower, according to data from the Federal Bureau of Labor Statistics.
For the first time since the Great Recession, wealthier metro areas are no longer creating the majority of new U.S. jobs, the report noted.
Part of the changing job fortunes comes from a battle between California’s Silicon Valley and the Texas capital, Austin, for the upper hand in tech jobs. California’s share of tech jobs began to decline during the pandemic, while Texas’ share grew.
In a 2020 Wall Street Journal opinion piece titled California, Love and Leave, venture capitalist Joe Lonsdale described his company’s move from San Francisco to a new land of opportunity: Texas. He blamed bureaucracy for slowing business progress during the pandemic and restrictive zoning that made it impossible for workers to afford housing near their jobs.
Most recently, Jeffrey VonderHaar discussed in February his plans to move the bulk of his business, Specialized Orthopedic Solutions Inc., which includes the manufacture of prosthetic limbs and other medical devices, to Texas after 14 years in California . In an interview with Business Insider, he complained about California’s business regulations and taxes, as well as high housing prices that fueled the homeless and people living in RVs parked near his office in suburban Los Angeles.
Last year, Texas Republican Gov. Greg Abbott gleefully declared Austin the destination for the world’s top tech companies in a tweet, citing Teslas and Samsung expanding operations in the Austin area. Democratic US Rep. Lloyd Doggett, who represents the Austin area, told Stateline that Samsung is building a third semiconductor manufacturing plant in the area and already employs thousands of Texans.
But recent cuts in technology have led to setbacks in Texas as well as California. Oracle announced in April a move to Nashville, Tennessee, from Austin, where it had built a massive lakefront campus with the help of tax breaks, citing even more generous incentives from Tennessee. Tennessee approved $65 million in tax incentives in 2021, when Oracle pledged to bring about 8,500 jobs; Tennessee’s median wage is also about 5% lower than Texas.
Oklahoma has had a big boost in job creation, according to the rankings
Oklahoma made the biggest jump in the Stateline analysis of job creation rankings, from No. 31 to No. 9. The state has seen a reversal of the brain drain it experienced in the late 2010s, a period when it lost educated residents to other states, according to research this year by the Oklahoma City branch of the Federal Reserve Bank of Kansas City.
The state had been losing college graduates and higher earners to other states before the pandemic, but that has changed, said Chad Wilkerson, Oklahoma City branch executive for the bank and author of the report.
Leaders want to grow Oklahoma’s job landscape beyond the cyclical energy industry that attracts blue-collar workers but also creates boom and bust cycles, Wilkerson said. Many young Oklahomans have high levels of education and are employed in business services such as research and development and engineering, as well as retail management, reflecting both population growth and a more diversified economy.
It has been deliberate to some extent from the rooms [of commerce] and state politics, the desire to attract more than just oil and gas, Wilkerson said.
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The privately funded Tulsa Remote program, for example, has brought thousands of remote tech workers from other states with a promise of lower living costs and a shared workspace to encourage networking and camaraderie. A 2021 study found that $4.5 million spent on attracting new residents paid off in the form of $62 million in new jobs for both those workers and other jobs created to support them.
Most states have some form of job creation incentives and evaluate them regularly for effectiveness. Oklahoma has tax incentives for data processing and research and development jobs, and a state commission last year recommended keeping them.
State tax incentives may pay off in the long run, but the effect is modest, said Robert Chirinko, a finance professor at the University of Illinois whose most recent study on job-creating tax incentives was published in September from the National Tax Journal.
Florida has enjoyed a decade of job creation, climbing the rankings from No. 3 to no. 2 in the last five years. But overall, its economic landscape is mixed.
Wages have not kept up with inflation and housing prices in the Miami area are particularly high, making poverty a growing concern, according to a report last year by Florida International University’s Center for Labor Research and Studies.
It’s a tale of rich and poor, said Ravi Gajendran, a business professor at Florida International University in Miami. Many of the migration [to Florida] it is due to wealthy individuals moving to Miami, which is part of the reason why real estate prices have increased here to a greater extent.
For someone moving from New York or California, real estate prices are still cheap here in Miami, he said. But for local Miami residents, it drives up real estate and rental costs, making living here less affordable.
Oklahoma Voice is part of State Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. The Oklahoma Voice maintains editorial independence. Contact Editor Janelle Stecklein with questions: info@oklahomavoice.com. Follow Oklahoma Voice on Facebook and I tweet.
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