The U.S. Bureau of Labor Statistics recently released their report on state employment and unemployment for February 2014. It gives a snapshot of each state’s labor market and how they compare with others.

As you would guess, the Lone Star State remains a national leader in job creation from the Texas model. While the state’s lead dwindled slightly, the overall message remains the same: conservative fiscal policies that free entrepreneurs to create new businesses and provide good jobs is the best path for prosperity. 

Job Creation

According to the report, employers in Texas created 37,600 net nonfarm jobs across eight of eleven major industries. January’s jobs added number was revised up by 9,100 to 43,000. Over the last year, 314,200 net jobs were added across all 11 major industries, bringing the annual job growth rate to 2.8 percent, with 105,000 jobs added just during the last three months (see figure below).


From February 2013 to February 2014, the state leader in job growth was California with 336,600, Texas in second, and Florida with 211,500 rounding out the top three.

Liberal California may have topped the more conservative Texas and Florida in total jobs added, but over the last three months California added only 44,000 jobs-two-fifths of those added in Texas-and has a slower 2.2 percent annual growth rate. Further, accounting for California’s 45 percent larger population than Texas, California’s jobs number is not so impressive.


The increase in the Texas’ labor-force participation rate to 65.1 percent and the rise in employment led to the unemployment rate remaining at 5.7 percent (17th lowest in nation) last month in spite of total unemployed declining by 7,455 to 732,201, which is a good sign for all Texans (see figure below).


The state’s unemployment rate has matched or been below the national average since January 2007, or 86 months, and is a full percentage point lower than the nation’s 6.7 percent rate. Compared with its big-government counterpart, California (currently 8 percent-48th highest in nation), Texas’ rate has been at or below for 91 consecutive months (see figure below).


A comparison of each state’s unemployment rate shows North Dakota (2.6 percent), Nebraska (3.6 percent), and South Dakota (3.6 percent) have the lowest rates and Nevada (8.5 percent), Illinois (8.7 percent), and Rhode Island (9 percent) have the highest rates.


Unfortunately, with so many individuals dropping out of the labor market nationwide and a large increase in Texas’ labor force compared with others states, the unemployment rate tends to poorly signal the health of a state’s or the nation’s labor market. 

A better measure of employment at all levels is the percentage of the adult population who are employed because those who stop looking for a job do not sway it (see figure below).


Slower job growth and people dropping out of the labor market in California and nationwide contributed to a large decline in their employment-population ratios, but Texas’ rate has been near or above their rates every month since January 2004 and remains substantially above them since the end of the last recession. 


This is another strong labor market report for Texas and indication that the Texas model works. Our federal system is supposed to allow states to be laboratories of competition. Other states are catching up to the Lone Star State. To remain the leader in job creation, the Texas Legislature should work to restrain government spending by strengthening Texas’ constitutional tax and expenditure limit; implementing zero-based budgeting to root out inefficiencies in the Texas budget; resisting the temptation to spend-down the rainy day fund; and provide tax relief for all Texans.