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Texas, Immigration and the Economic "Doom and Gloomers"

11:17 AM, Apr 27, 2006 • By DANIEL MCKIVERGAN
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Texas shares a lengthy border with Mexico, and, in the last 20 years, the state has absorbed many immigrants. Yet, despite the remarks of Rep. Tom Tancredo and others, I was surprised to learn just how well the Texas economy has performed since President Reagan signed the 1986 immigration bill (setting aside the debate over whether the president should have signed the legislation). According to the Federal Reserve Bank of Dallas, the state's unemployment rate was 8.9 percent in 1986; at the end of 2005 it was 5.3 percent. Real wages have made substantial gains. In El Paso, for example, real wages increased from 647 million in 1986 to about 960 million in 2005. In the Dallas metro area, real wages rose from 7 billion in 1986 to over 11.8 billion in 2005.

Here are some other interesting statistics:

"Following recent revisions, data now show that Texas payroll employment grew more rapidly in 2005 than at any time since the tech bust. Jobs increased by 2.7 percent-half a percentage point stronger than the Dallas Fed's early benchmark and 1.2 percentage points stronger than initially estimated by the Bureau of Labor Statistics"

"Initial estimates of employment for January and February 2006 show growth moderating to 2 percent. However, anecdotal evidence from Beige Book suggests job growth is actually picking up in Texas. Recent Manpower surveys of hiring intentions also suggest a strengthening labor market, with employers in most major Texas cities far more willing to hire than the nation as a whole."

"Additionally, unemployment rates are flat or declining in all major metro areas even as formerly discouraged workers are re-entering the labor market (Chart 3). Taken together, the evidence suggests Texas labor-market conditions are not moderating at this time."

"Texas exports rose at a 7.9 percent annual rate in fourth quarter 2005, more than offsetting a hurricane-related decline in the third quarter (Chart 6). Exports to almost all of Texas' major trading partners rose, including a 4 percent increase to Mexico and a 16.3 percent increase to the European Union. Because different countries demand different compositions of goods, the broad-based nature of the export gain provides additional confirmation that Texas' current expansion encompasses many sectors rather than only a few. One of the few countries to which exports fell was China, but its trade volume with Texas is sufficiently small that the decline had only a modest effect on overall exports."

"The near-term outlook for the Texas economy is favorable. Consumer confidence in the West South Central census region (of which Texas residents make up 68 percent) remains higher than consumer confidence in the nation as a whole."

"Additionally, the Dallas Fed's leading index soared in the most recent three-month period, with the labor-market component especially strong (Chart 9). Taken together, this suggests good times are ahead for Texas."

As CNBC's Larry Kudlow likes to say, the economic "doom and gloomers" on immigration have a tough case to make when it comes to Texas.