More than half of the jobs created in the country over the past five years have been in two states: Texas and Florida.
They are at the forefront of a job creation revolution in which states with lower wages and lower costs of living are gaining the largest share of recent jobs, according to a recent Stateline analysis from the U.S. Bureau of Labor Statistics Data.
At the same time, high-wage states like California, New York, Washington and Massachusetts fell out of the top 10. California, which had the highest share of recent jobs from 2014 to 2019, plummeted to the very bottom in recent job creation.
The changes closely track labor market trends in each state during and since the COVID-19 pandemic. In states with higher wages, employers have been less willing to create jobs. Meanwhile, workers are avoiding skyrocketing housing costs and taking advantage of recent remote work opportunities.
“In the wake of the pandemic, workers are likely to play a larger role as many now have more flexibility about where they work and live,” said Aaron Sojourner, a labor market economist at the WE Upjohn Institute for Employment Research in Kalamazoo, Michigan.
“About one in 10 U.S. workers now work entirely from home, an expansion made possible by companies’ investments in distributed work capacity during the pandemic,” Sojourner said. “Many families with well-paying remote jobs have moved to areas with a lower cost of living because they are no longer tied to one expensive location.”
Between 2014 and 2019, California added 1.4 million recent jobs—more than any other state and 12% of the national total. Over the past five years, however, California has been at the bottom of the list in job creation, losing about 214,000 jobs. During that time, Texas moved into first place, adding nearly 1.3 million jobs, nearly a third of all recent jobs created nationwide.
Florida was not far behind, with about 911,000 recent jobs, nearly 25 percent of the national total of about 4 million.
In addition to California, which fell from 1st to 51st place in job creation among the states and the District of Columbia, New York fell from 5th to 50th and Massachusetts fell from 7th to 47th.
The states of Washington, Michigan and Tennessee also fell out of the top 10, while Arizona, Utah, Virginia, South Carolina, Oklahoma and Colorado rose into the top 10.
High wages in some states are playing a role in the sluggish job creation, according to an April analysis by the Economic Innovation Group, a research organization based in Washington, DC.
In California and New York, average salaries are 18 to 20 percent higher than the national average of $65,500, according to federal employment and wage statistics, while in Texas and Florida they are 6 to 7 percent lower. Data.
“For the first time since the Great Recession, the wealthiest metropolitan areas are no longer creating the majority of new jobs in the United States,” the report said.
Part of the shift in employment is due to a battle between California’s Silicon Valley and the Texas capital Austin for dominance in tech jobs. California’s share of tech jobs began to sink during the pandemic, when Texas’ share rose.
In a 2020 Wall Street Journal Opinion piece Under the headline “California, Love It and Leave It,” 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 regulations that made it impossible for employees to afford housing near their workplace.
In February, Jeffrey VonderHaar spoke about his plans to move much of his company, Specialized Orthopedic Solutions Inc., which makes prosthetics and other medical devices, back to Texas after 14 years in California. Interview with Business Insiderhe complained about California’s economic regulations and taxes, as well as high real estate prices that led to homelessness and people living in mobile homes near his office in a Los Angeles suburb.
Last year, Texas Republican Governor Greg Abbott gleefully proclaimed that Austin was “THE destination for the world’s leading technology companies.” tweetmentioned Tesla‘s and Samsungis expanding its operations in the Austin area. Democratic U.S. Rep. Lloyd Doggett, who represents the Austin area, told Stateline that Samsung is building a third semiconductor factory in the area and already employs thousands of Texans.
But recent cuts in the technology sector have led to setbacks in Texas and California. Oracle announced in April a move from Austin to Nashville, Tennessee, where it had built a huge lakefront campus with the assist of tax breaks, and pointed to even more generous incentives from Tennessee. Tennessee approved $65 million in tax incentives in 2021, when Oracle promised to create about 8,500 jobs; plus, the average salary in Tennessee is about 5% lower than in Texas.
Oklahoma has made the biggest jump in the Stateline analysis of job creation rankings, from 31st to 9th. The state has seen a reversal of the “brain drain” it experienced in the delayed 2010s, a period in which it lost educated residents to other states, according to Research this year from the Oklahoma City branch of the Federal Reserve Bank of Kansas City.
The state had already lost college graduates and high-earners to other states before the pandemic, but that trend has reversed, says Chad Wilkerson, the bank’s Oklahoma City branch manager and author of the report.
Policymakers want to expand Oklahoma’s jobs landscape beyond the cyclical energy industry, which attracts workers but also creates boom and bust cycles, Wilkerson said. Many recent Oklahomans have higher 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 diverse economy.
“The chambers intended this to a certain extent. [of commerce] and state policy, the desire to attract more than just oil and gas,” Wilkerson said.
The privately financed Tulsa remote control For example, the program has lured thousands of remote technicians from out of state with the promise of a lower cost of living and a shared workspace to encourage networking and friendship. A 2021 study found that the $4.5 million spent recruiting recent residents paid off in the form of $62 million in recent jobs — both for those workers and other jobs created to support them.
In the wake of the pandemic, the role of employees is likely to augment, as many have recent flexibility in where they work and live.
– Aaron Sojourner, labor economist at the WE Upjohn Institute for Employment Research
Most states have some form of incentive to create jobs and regularly evaluate their effectiveness. Oklahoma offers tax incentives for jobs in data processing and research and development, and a state commission last year recommended to keep them.
Government tax incentives can pay off in the long run, but the effect is modest, says Robert Chirinko, a finance professor at the University of Illinois whose Latest study on government tax incentives for job creation was published in September by the National Tax Journal.
Florida has seen job growth over the past five years, rising from third to second place. Overall, however, the state’s economic situation is mixed.
Wages have not kept pace with inflation, and real estate prices in the Miami area are particularly high, making poverty a growing problem, according to one Report from last year from the Center for Labor Research and Studies at Florida International University.
“It is a story of rich and poor,” says Ravi Gajendran, economics professor at Florida International University in Miami. “A vast part of the migration [to Florida] is due to the influx of wealthy individuals to Miami, which is one of the reasons why real estate prices here have increased more sharply.
“For someone coming from New York or California, real estate prices here in Miami are still cheap,” he said. “But for Miami residents, this increases real estate and rental costs, making it less affordable to stay here.”
