I keep hearing the argument that “red” or sunbelt states are outpacing liberal, coastal states economically because their policies are more business-friendly or because they offer more affordable housing. These theses don’t align with my own ideological priors, but they could be true, and if so, we should incorporate them into our mental models.
Indeed, in the past year, the top states for job growth have been Nevada, Texas, Idaho, South Dakota, Wyoming, Delaware, Florida, Kentucky, Massachusetts, and Pennsylvania. Although this list is heterogeneous, the large and currently conservative states of Texas and Florida are conspicuous.
Looking at any single year is risky because there’s a lot of annual variation. The previous five years have been weird, due to COVID. Therefore, ex ante, I chose the period 2010-2019 on the ground that this was a substantial timeframe before the pandemic.
According to the US Regional Economic Analysis Project, the largest percentage increases in employment during that decade were seen in Florida, Utah, Texas, Nevada, Colorado, California, Georgia, Arizona, South Carolina and Idaho. That cluster leans conservative, with exceptions (notably, California). However, in that period, the fewest jobs were created in a conservative-leaning cluster of Missouri, Kansas, Iowa, Wyoming, Maine, Vermont, Connecticut, New Mexico, Alaska, and West Virginia. My state of “taxachusetts” ranked 14th.
It’s not a reliable method to scan ranked lists for patterns. Instead, I correlated job growth for 2010-19 with combined state and local tax rates in 2018, from the Tax Foundation, and with median house prices (for 2023–a minor source of error), from World Population Review. I tested the hypotheses that lower tax rates and cheaper housing correlate with more job growth.
These hypotheses do not hold. Quite to the contrary, the correlation between housing prices and job growth is positive at .3, and the correlation between combined tax rates and job growth is slightly negative at .08 (meaning that higher taxes slightly predict more job growth). In a very simple regression model–with job growth as the outcome and housing and taxes as the independent variables–higher house prices predict more job growth (p = .013) and taxes are not significant.
This is not a causal analysis. Perhaps job growth causes housing inflation (rather than the reverse); and many other factors could be in play. For example, Nevada topped the list for job growth in every decade from the 1970s to the aughts, and Florida has always been in the top ten. But West Virginia ranked last in three of the recent decades and is always in the bottom tier. These specific trends have explanations (tourism, coal). However, I do not think that state ideology or partisan control offer generalizable reasons.