More specific data — and more maps — after the break.
The job market in the Twin Cities hasn’t been terrible — we’ve been right around the middle of the pack in terms of employment.
However, by several measures of the economy, we have lost more value than most other metropolitan regions. Our gross metropolitan product — the market value of all final goods and services produced within the metropolitan area — fell more steeply than employment, which means the jobs we lost were among our more productive. Home prices also slid substantially.
Finally, the Twin Cities have been one of the worst 20 metros in terms of lender-owned properties. This means a high rate of foreclosures, along with a slow housing market in which lenders can’t sell these properties.
This is exactly what happens when you trade all logic, common sense, and reason in pursuit of one single, short sighted issue: income taxes.
People want to think our quality of life happens in a vacuum, but it is just not so. Quality of life is not free.
The hotter the housing market, the harder they fell. The correlation is pretty clear. Nashvillites and Houstonites were complaining during the boom about not seeing their homes appreciate like California or Florida. Now they are smiling.
Alec - it is quite a leap to make an inference between this housing market graph and income taxes. Texas and Tennessee fare pretty well on this chart, and they are no-tax states. California and Oregon, both classic high-tax states, did worse than us.
This is about how overheated the housing market was.
Housing isn’t the only metric there, Dan. Also, Alex didn’t draw an inference between housing and taxation, though you ended up conflating the two by implication.
Valid point, my mistake. I had been looking mainly at the foreclosure graph when I wrote it. My apologies.
I wonder if Houston’s resistance is partially due to having seen it before? I seem to remember reading somewhere that large parts of Texas experienced a debt-fueled housing glut during the 1980’s Savings and Loan Crisis. I could see their housing market having been built out fifteen years before the bubble took off would put them in a different dynamic.
Traditionally what has saved Minnesota from the worst of recession pain has been the almost 50=50 split between agriculture and manufacturing we had. Now with a more services, ag and smaller manufacturing economy we are in for a bit more of the bumps. I wish we had a few more manufacturing jobs around as a balance. We do have a pretty good medical manufacturing base.
You need to see these figures also in relation to the economic foundation. Houston has always been an oil based economy. They were doing fantastic when gas was $4 a gallon, along with Arctic Barbie’s Alaska and North Dakota. Once you get into an economy as large and diverse as California, I don’t think there are any simple graphs that would tell more than a slice of information.
You probably cannot make a direct causation claim between income tax base and quality of life of a state, but the correlations are so incredibly strong to make any other conclusion hard to reach.
For instance, the correlation between between tax base incarceration rates is almost perfectly inversely proportional. In other words, the lower the income tax rate the higher the incarceration rate. The proof of this comes from unbiased statistics of state prison populations and state income tax levels. Click Here for the facts.
Anyway, you cannot claim that low tax rates cause huge prison populations, and there are outlier exceptions, but the relationship is uncanny.
The education outcomes of low income tax states are also much much lower than the education outcomes of high income tax states. We know for a fact education levels affect crime rates and prison populations. In California they even use 3rd grade reading scores to assess how many prison cells to build in the next decade.
So, it would be invalid to claim causation, but the correlations between low income tax rate and being a crappy state are so strong I wouldn’t want to risk it for an extra 500 bucks in my pocket.
And yes, I know there are exceptions to every rule, but the trends hold true.
Back, you never realize how valuable an actual bed is until your sleeping on a cot.
Sitting out here an hour west of the metro, one effect we have seen is the number of people who are no longer commuting into the Twin Cities for work — in particular construction jobs.
The collapse of the housing market not only affected the immediate metro area. It affected the outer rings and beyond as that was where a chunk of the work force was from. For example, the sales at our convenience stores between the hours of 5 - 7 a.m. too a nosedive, since so many former commuters were no longer stopping in for gas, newspaper, coffee, gut bombs (oops, doughnuts), etc.
As other posters have noted, Minnesota’s economy is still pretty diverse to absorb some of this, but the results are still evident.