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The Nevada Jobs Gap

July 2, 2010

A writer from invented a very nice statistical tool that helps him make unjustified arguments seem like they’re based in hard data. He calls it the California Jobs Gap, which is the gap between the national unemployment rate and California’s unemployment rate. It’s a broad brush to paint with but it definitely proves that, well, more people are looking for jobs in California than the rest of the nation. Our analyst says the gap is due to California’s business climate generally and the as-of-yet-unimplemented AB32:

In my past articles, I noted that the likely cause of the Jobs Gap was the state’s strong anti-business attitude. In particular, in 2006 Gov. Arnold Schwarzenegger signed into law AB32, the global-warming bill that mandates draconian cuts in greenhouse gas emissions of 25 percent by 2020.

The writer points out that “any theory should have a ‘falsification’ element, a way to prove it wrong by testing.” He says that if AB32 is suspended by the pending (and perfectly numbered) Prop. 23 or if whoever is elected Governor suspends it the disparity should go down. If one of these two things happen and it doesn’t go down, then the theory is incorrect.

In order to do my own bit of testing the theory, I created my own statistic, the Nevada Jobs Gap. It is the difference between Nevada’s unemployment rate and the national unemployment rate. As you can see below, the NJG followed a similar path to the CJG.

First time I used Excel in ages.

In fact, while the NJG was below the CJG in 2006, it has skyrocketed upwards past the CJG’s 2.8 2010 average to its current 4.3. Nevada’s business climate must have gone from great to horrible over that time period, right? Not exactly: Nevada is currently ranked 4th in terms of business climate by the Tax Foundation, a conservative think tank. Then, obviously they passed some draconian law to save the earth from the impending pollution-caused apocalypse, right? Actually I have no idea – find it if you can at the Nevada Legislature web site – but I’m pretty sure they didn’t.

I’m not saying that California’s business climate is great. From what I can tell, it’s not. Nor am I saying that AB32 will create jobs, although the studies that I have seen show that it could. What I’m saying is that comparing a state’s jobless rate to the national jobless rate doesn’t necessarily say anything of value about that state. Even if you point out changes in the comparison and link them with events that suit your ideological bent.

A better explanation for the disparity between California’s jobless rate and the nation’s could be the housing crisis. The five states most affected by the crisis have been California, Nevada, Florida, Michigan and Arizona. Their respective unemployment rankings are 48th, 50th, 49th, 46th and 33rd, as of today.

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