-------- Original Message --------
Subject: RE: FW: backup data
Date: Fri, 17 Jun 2011 11:40:27 -0700
From: Lee McPheters
To: Gardner Selby <wgselby@statesman.com>


1. The basic methodology of computing the Texas job growth as a percent of national job growth is flawed by counter example. That is, in 2010 Texas added jobs for the year and the U.S. lost jobs for the year, the Texas percent of jobs created cannot be computed in that case, so it is obvious that there are certain conditions that must exist for the Texas percentage share approach to be valid.

2. The approach would be valid if every state was adding jobs, so the US would grow by the sum of the states growth, and the Texas share would be some percent of that total.

3. If some states are adding jobs and some are losing jobs, the relevant percent is the Texas share of the jobs gained only by those states adding jobs, the Texas share of the US total does not make sense in that case.

Here is an example. In November of 2010, employment in the U. S. increased by 651,000 jobs over November of 2009.
Texas employment increased by 204,000 jobs in Nov of 2010 over Nov of 2009.

The Texas share is 204/651 or 31% of the jobs created in the US. (?)

But 36 states also created jobs in that same period. If Texas accounted for 31 percent, then the other states must account for 69%. But the 36 other states combined created 593,000 jobs, or 91% of the jobs created.

What is the problem? The answer is that 37 states created jobs and 13 states lost jobs. In all, 798,000 jobs were created by the sum of the states, but the losing states reduced the total increase. The Texas share of the 798,000 jobs created by all states creating jobs is 204/798 or 25%.

The Texas contribution to job growth is still very significant, and Texas has led the nation in number of jobs created each month. But the methodology of computing the Texas share of total jobs should actually be based on the Texas share of jobs created by those states creating jobs (this will still be a dominant proportion), not on the US total, if the US is losing jobs.


Lee McPheters
Research Professor, Department of Economics
Director, Economic Outlook Center
Editor, Economy@W.P.Carey, L. William Seidman Research Institute

W. P. Carey School of Business
Arizona State University ... Tempe, Arizona ...

McPheter Follow-Up, 8:54 pm, June 17, 2011:

The 37% job claim is probably getting to be old news, but over the past couple of days I have clarified my thinking and worked up a better example of why the claim is not exactly accurate.

These are the facts from the spreadsheet.

US employment was 130,320 in June 2009 and was 131,042 in April 2011, increase is 722 (thousand).
Texas employment was 10,292 in June 2009 and was 10,557 in April, increase is 265 (thousand).
Since 265/722 = 37 the Texas share of the increase must be 37%, that is the claim.

Here is the counter example.

Assume 46 states lose jobs during the period and combined job loss = 600 for those states.
Assume 4 states add jobs, each state adds 200 jobs, a total of combined job increase = 800 for those states.

The net increase is 800 (gained) - 600 (lost) = 200 new jobs for the period for the nation as a whole.
Four states each added 200 jobs. So any one of these states can claim they account for 100% of the national increase.

The Texas claim is equally misleading. Many states lost jobs, but other states added jobs to push the US increase into the positive region. Any one of the states that added jobs could claim some share of the net increase, but the sum of the shares computed this way would have to exceed 100%. Any individual state can only claim a share of the job increases, but not a share of the national total, since as long as other states are losing jobs the percentage computation compared to the US does not apply. The Texas share is still large, but I don't believe it could be 37%.


From: Gardner Selby [mailto:wgselby@statesman.com]
Sent: Thu 6/16/2011 3:21 PM
To: Lee McPheters
Subject: Re: FW: backup data

This could be very helpful, thank you. Is there a time we can visit by phone Friday?

W. Gardner Selby
Editor, PolitiFact Texas
Austin American-Statesman

Visit our site: www.politifacttexas.com <http://www.politifacttexas.com/>
We're also on Facebook and Twitter and so am I as twitter.com/gardnerselby

On 6/16/2011 4:57 PM, Lee McPheters wrote:


We had a fire here and everything has been completely thrown off schedule.

In brief, the calculations are correct as stated. However, a standard comparison would be year over year. So year to date in 2011, the US has added 1,239,300 jobs and Texas added 247,300 or 20% of the US total.

What makes the proportion compared to 2009 so large as reported by the Fed is that the US lost jobs for all of 2010 while Texas began adding jobs. What was Texas share of US jobs added in 2010 when the US actually lost jobs? That cannot be computed, so it shows that the approach should actually be "of the sum of jobs created in each state that created jobs since June of 2009, what is Texas share?" If the comparison is Texas share of US it is confused by the fact that some states lost jobs and thus pulled down the US overall increase.

From: Gardner Selby [mailto:wgselby@statesman.com]
Sent: Thursday, June 16, 2011 10:51 AM
To: Lee McPheters
Subject: Fwd: FW: backup data

as discussed

-------- Original Message --------


FW: backup data


Wed, 15 Jun 2011 11:29:43 -0500


Lavergne, Mark <mark.lavergne@twc.state.tx.us> <mailto:mark.lavergne@twc.state.tx.us>


<wgselby@statesman.com> <mailto:wgselby@statesman.com>


My name is Jerrod Vaughan and I serve as President Fisher's special assistant at the Federal Reserve Bank of Dallas. I am responding to your inquiry, which I received from James Hoard, regarding the statement: "Texas accounts for 45 percent of post-recession job creation in the U.S."

This number -- it is actually 47.8 percent -- is calculated using the Dallas Fed's internally adjusted Texas data, which can be found on our website, and the national survey employment number (non-farm payroll employment). I've attached a spreadsheet containing the data to this email. The spreadsheet also has Texas employment data from the BLS. Using the BLS number, Texas accounts for approximately 37 percent of all jobs created in the U.S. since the end of the recession (June 2009 to April 2011). However, a word of caution.

The 37 percent number comes from "sum-of-states" data. As you may know, the sum-of-states data is more volatile and gets revised when the national data are benchmarked, to be more equal to the national number. Here is what the BLS says about the data:

"Caution on aggregating state data. State estimation procedures are designed
to produce accurate data for each individual state. BLS independently develops a
national employment series; state estimates are not forced to sum to national
totals. Because each state series is subject to larger sampling and nonsampling
errors than the national series, summing them cumulates individual state level
errors and can cause significant distortions at an aggregate level. Due to these
statistical limitations, BLS does not compile a "sum-of-states" employment series,
and cautions users that such a series is subject to a relatively large and vola-
tile error structure."

Therefore, when comparing Texas' share of jobs compared to the nation, it is more correct to use the Dallas Fed's internally adjusted Texas data and the national survey employment number. The justification for this is that these are the best available numbers for each and is the approach that has been used historically within the Dallas Fed. Using this method, as mentioned previously,Texas accounts for 47.8 percent of all jobs created in the United States since the end of the recession (June 2009 to April 2011).

I hope this clarifies any questions you may have. If not, then please feel free to contact me.



Jerrod R. Vaughan
Senior Economic Analyst
Special Assistant to the President
Research Department
Federal Reserve Bank of Dallas
Phone: 214.922.5152
Cell: 214.914.8330
Email: Jerrod.Vaughan@dal.frb.org

Mark Lavergne

Deputy Director of Communications

Texas Workforce Commission