Paul Krugman writes:

Hmm. Do you remember how Texas showed that conservative policies work — it was weathering the slump just fine, it had a balanced budget, and so on?
Oops: Legislature likely to cut deep to meet possible $25 billion budget gap.
I’d also add that the Texas economy has not, in fact, performed all that well. Here’s a comparison of the second and third most populous states.

The chart shows that Texas’s unemployment rate closely parallels that of New York. New York did experience much sharper job losses during the downturn, but the unemployment in New York state has fallen sharply, perhaps due to a larger number of discouraged workers.

So that’s one thing to keep in mind: how many discouraged workers are in both states? That is, is the gap in U-6 the same as the gap in U-3, the official unemployment rate? U-6 is defined by the Bureau of Labor Statistics as:

Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force.

It is a much broader measure of unemployment, and as of October it gives us a rate of 17% rather than the U-3 rate of 9.6%.

Unfortunately, the only number I can find is for an average of U-6 from fourth quarter of 2009 through third quarter of 2010. But I think it’s a fairly useful guide to the question I at least think Paul Krugman is trying to answer. Here we see that U-6 in New York state is 14.8% while U-6 in Texas is 14.5%.

That’s obviously not a big difference. Regardless, this is important information for those of us who want a fuller picture of the employment landscape.

But wait a second. Isn’t it also true that unemployment has varied across groups defined by educational attainment? Once again, the BLS comes to the rescue: workers with less than a high school diploma have an unemployment rate of 15.3%, high school graduates are at 10.1%, workers with some college are at 8.5%, and college-educated workers are at 4.7%.

Now let’s compare New York and Texas in terms of educational attainment. The Census has numbers as of 2007, and I assume levels of educational attainment in both states haven’t changed dramatically since then:

In New York, 84.1% of adults have a high school diploma or more, 31.7% have a bachelor’s degree, and an extraordinary 13.5% have an advanced degree.

In Texas, 79.1% of adults have a high school diploma or more, 25.2% have a bachelor’s degree. and only 8.2% have an advanced degree.

I think it’s safe to say that New Yorkers have a higher level of educational attainment than Texans, which could reflect the respective history of both states. Texas has been a magnet for less-skilled immigrants, as well as working and lower-middle-class workers from other states searching for opportunity. And like almost all states in the South, Texas has a history of enslavement and segregation that has had a lasting impact on the skill distribution. New York state has been a magnet for immigrants from the low and high ends of the skill spectrum, in part due to the opportunities for outsourcing of household labor created by the concentration of income and wealth in the state’s most affluent communities.

(To be sure, there could be an endogenous element here, i.e., Texas could be much worse at educating vulnerable students. But it seems that the quality of public education has been improving faster in Texas than in New York state, though of course there is room for disagreement.)

Is it fair to say that we’d expect Texas to have a higher unemployment rate than a skilled state like New York, yet for whatever reason it does not? I think so. Paul Krugman ends his post on the following note:

What is true is that Texas was spared the worst of the housing crisis — thanks to unusually strict regulation.
But will anyone change their line? No, sir. This is the West, sir. When the legend becomes fact, print the legend.

I absolutely agree with Krugman on the question of Texas’s prudential regulation of the housing sector. And I also agree that people tend not to “change their lines” in response to new evidence. Let me just gently suggest that we ought to consider educational attainment when making comparisons between states.