What Will Be the Difference in Job Creation for the State of Texas Obama vs. McCain Presidency?

21. October 2008 by Tony Magana.

No doubt one of the key concerns in the upcoming election is jobs. The State of Texas has been luckier than some states but still has seen unemployment increase from 4.3 % in September 2007 to 5.0% in September 2008 according to the Texas Workforce Commission. In our local McAllen area the unemployment rate is actually 7.8% which is higher than 6.3% a year ago.  Although that was the highest unemployment rate in the state it is notable that the McAllen-Edinburg-Mission area was reported by  the Texas A&M Monthly Review of the Texas Economy to still have the fastest growth job rate in the state at 4.1% in September 2008.

What if any difference will there be between the Obama and McCain presidency in job creation for our state?

Shanea Watkins, Ph.D., Policy Analyst for Empiric Studies at the esteemed Heritage Foundation this week published an in-depth analysis looking at the likely job creation on a state by state basis which would occur under either an Obama or McCain Presidency. A macroeconomic model which has been commonly used by government agencies and Fortune 500 companies to evaluate economic indicators effects was combined with each states employment data to formulate outcomes. Employment over a ten year period, gross domestic product, and disposable income were evaluated. 

Senator Obama’s job growth plan depends mostly on income redistribution through tax changes and rebates or credits to low income groups to bust consumption while Senator McCain’s plan decreases business taxes and allows for deductions of business purchases complete within the first year. Dr. Watkins concluded that owners of businesses would hire more employees and invest more in development under McCain’s plan than Obama’s plan.  Interestingly, the Obama plan would depend upon a trickle down effect from boosting consumption, however, based upon the data she concluded it was not likely that business investment or increased job creation would occur. Overall her analysis found that “job growth under Senator John McCain’s  plan at the national level is more than two times faster than job growth under Senator Barack Obama’s  plan.

The Table below shows a state by state comparison:

As the table above indicates the difference in outcome between job creation is rather dramatic throughout the United States. Under a McCain plan Texas would gain an additional 91,739 jobs than with the Obama plan. Total job creation for the State of Texas would be 161,171 for the ten year period. This important academic study should be considered by voters.

Since the study did rely on mostly macroeconomic factors it is very possible that the job creation effect could be magnified in South Texas where there has been a more robust economy than in other parts of the country. On the other hand, if a President Obama negates the North American Free Trade Agreement than of course that would be very deleterious to our area even more than his less favorable approach overall.

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