Job growth

Texas, Red States Beat Blue States On Jobs, Growth

By JOHN MERLINE, INVESTOR'S BUSINESS DAILY

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Texas outperformed every other state in the nation on jobs and growth over the past decade, according to the latest annual report on state economic performance released Thursday by the American Legislative Exchange Council. Michigan came in dead last.

The rankings are based on state GDP growth, population shifts, and changes in non-farm payroll jobs between 2001 and 2011.

The ALEC report also finds that Utah has the best economic outlook this year, and Vermont the worst.

That outlook ranking is based on more than a dozen public policies that the authors say are closely related to economic growth — including various tax rates, workers compensation costs, minimum wage laws, right to work laws, government jobs as a share of the workforce, and debt service as a share of tax revenues.

In addition, an IBD analysis of the data finds that conservative, Republican states vastly outperformed liberal, Democratic states over the past decade on jobs and economic growth, and attracted more people to their states.

In fact, of the 10 states that had the best economic performance over the past decade, all but two — Nevada and Washington — are solid red states, based on the past four presidential elections. Other top economic performers include Utah, Wyoming, North Dakota, Idaho and Arizona.

At the other end of the spectrum, all but two of the worst-performing states are solidly blue. In addition to Michigan, bottom-dwelling states include New Jersey, Illinois, Connecticut and Massachusetts. The only non-blue states in the bottom 10 were Ohio and Missouri.

"States with lower taxes and less regulation outperform those that pursue Keynesian-style public policies," said study co-author Jonathan Williams, who is director of ALEC's Center for State Fiscal Reform. "And people are voting with their feet in favor of these states."

In addition, of the 10 states expected to do best economically this year, only two — Virginia and Florida — aren't solidly Republican.

And of the 10 states expected to fare worst, all but one — Montana — are solid blue states.

California and Maryland lost ground on this ranking from last year, thanks to tax hikes in those states. California dropped from 38th to 47th place, and Maryland fell from 20th to 35th place, according to the report, which was co-authored by economist Arthur Laffer and economics writer Stephen Moore.

Kansas, Wisconsin, Indiana and Ohio gained in the rankings this year. Kansas, for example, jumped to the 11th spot from last year's 26th place, thanks in large part to what the study calls its bold tax reform.

The authors say their study provides lawmakers a roadmap for state policies that will generate jobs and growth in their states. "It's intended to be a resource to state lawmakers, citizen groups and all those interested in learning how to improve the economic health of their state," Laffer said.

The study supports other research that found states with lower taxes and less regulation outperformed those with higher taxes and more regulation.

It also undercuts a key premise of President Obama's economic policies. During his last presidential campaign, Obama said there was no evidence that lowering taxes and reducing regulations would improve growth and prosperity.

And Obama's budget plan runs counter to the policies that, the ALEC study shows, have produced greater economic growth at the state level. Obama would, for example, add $335 billion in new federal spending over the next four years, and raise taxes by nearly $1 trillion over the next decade. At the same time, Obama has aggressively pursued new regulations on the environment, Wall Street and health care.