The Politico - February 28, 2008

 

 

Ohio and Texas: A tale of two states

 

 

n his late presidential campaign, John Edwards often spoke about the “two Americas,” divided between the rich and the poor. In understanding the dynamics behind possibly decisive primaries coming up next Tuesday, it might be best to speak about a tale of two states.

Ohio and Texas may be voting on the same day, but in virtually every other way, they are on radically different trajectories. For the most part, Ohio more reflects the dismal Rust Belt reality that many eastern journalists expected to see in Wisconsin. In contrast, Texas is clearly on the rise, a fast-growing, dynamic and increasingly economically attractive place that will eventually contest California itself for national preeminence.

These radically different realities can be seen in both the economic and the demographic realm, according to analysis conducted by my colleagues at the Praxis Strategy Group. Over the past seven years, Ohio has been among the leading states losing domestic migrants to other places.

Immigration has been lackluster. It also suffers from a similarly large emigration of the college-educated between the ages of 28 and 50 — perhaps the best indication of people’s assessment of their prospects for the future.

In the case of Ohio, this assessment, sadly, is fairly on target, at least judging from the economic data. The state’s job growth has been less than the national average for the past half-century and all but stagnant for the past decade. It has been an underperformer in virtually every key field, from the critical blue-collar warehousing sector and to the manufacturing sector.

Since 1990, of the state’s major metropolitan areas, only Columbus has added jobs at the national average; Cincinnati’s performance has been somewhat below average, while Cleveland and Dayton have been particular underachievers.

This is not for lack of trying. Ohio and its cities have worked to lure jobs through tax abatements and downtown development projects. Cleveland, in particular, has tried to sell itself as a “comeback city” and has developed a gentrified Potemkin village, but in 2004 it actually surpassed Detroit and other disaster spots in its percentage of poor people.

Public backing for stadiums, convention centers and other ephemera is popular in the Buckeye State but has done little to stem long-term economic stagnation, population loss and the emigration of young professionals.

Texas presents, in many ways, Ohio’s mirror image. This free-market haven is among the few large states that enjoy both strong net internal migration of domestic residents and growth in immigration. Despite its less than stellar reputation among northeastern intellectuals and journalists, Texas also has become a major draw for college-educated workers in their late 20s and beyond. This is not merely an Austin phenomenon, but it is also true for Houston and Dallas.

Economically, Texas is on a roll, driven in large part by its historic role as an energy center. Bill Gilmer, a Houston-based economist from the Federal Reserve Bank of Dallas, ascribes the growth to several critical factors, including higher energy prices, relatively low housing and business costs and a recovery in the technology sector. “Everything’s now hitting on all cylinders,” Gilmer said.

Anyone who has spent time working in Houston, as I have, has noticed the big “buzz” of economic activity that shows the place has come back. The streets are definitely more crowded now than they were just a few years back, and there seem to be a lot of high-end stores and restaurants opening all around.

Houston’s job growth is running at about twice the national average, with manufacturing, finance and professional and business services all gaining. Incomes, adjusted for cost of living, have grown more quickly there than in most other cites. But it’s energy, Gilmer and other economists believe, that’s driving growth, bringing a whole cadre of new, highly paid professionals to an increasingly sophisticated high-tech business.

“Our business has been growing 40 percent for the last three years,” exults Chris Schoettelkotte, CEO of Manhattan Resources, a Houston-based executive search firm specializing in recruiting energy executives. “We’re pulling people from Wharton, Harvard, MIT and UCLA like never before.”

Houston is not alone in benefiting from the energy boom. Dallas, Midland-Odessa and other areas are also reaping a windfall. Technology, too, is making a comeback in the Lone Star State. Austin is often lumped in with “hip” places such as Boston or Silicon Valley, but unlike them, it is adding jobs and enjoying a big surge of new migrants.

Lower housing prices and no state income tax, it appears, appeal to techies as much as other high-income folks, particularly engineers and executives entering their child-rearing years and moving primarily into the city’s sprawling suburbs.

“The communities here are built around schools, and the old-fashioned social fabric still exists here,” says Mike Shultz, president of Infoglide, an Austin-based tech company. “There’s a bit of the hip, cool stuff here, but it’s kind of laid-back. You don’t have to wait around five hours to hear good music.”

Perhaps the biggest difference with Ohio lies on the international front. Due in part to expanding trade with Mexico and other Latin American economies, Texas in 2002 replaced California as the nation’s leading exporting state.

With typical Texas ambition, Houston is actively poaching global business from both East Coast and West Coast ports, and Dallas-Fort Worth and Houston are becoming huge players in air cargo, one of the fastest-growing elements in world trade.

Meanwhile, the heavily Latino McAllen area, along the Mexican border, has enjoyed one of the most robust job growth rates in the country in recent years. Blue- and white-collar employment has exploded there. Yet despite its large working-class population, Texas — unlike places such as Cleveland and the coastal states — has not suffered significantly from the housing foreclosure crisis.

These patterns suggest some surprises in store for the candidates. Generally speaking, Hillary Rodham Clinton has done best among downwardly mobile and older voters. In relatively healthy, economically diversified Wisconsin, this appeal proved largely ineffective. But Ohio, battered by industrial decline and too many ties to Detroit, could provide a more fertile ground for Clinton’s newfound populism.

Texas’ much stronger economy poses more of a challenge. There are some serious issues — for example, a very high percentage of uninsured people in the state — which Clinton could exploit. But anti-trade rhetoric, in which Barack Obama has also indulged, and promises to bail out distressed homeowners likely will have less appeal in Texas than in places such as Ohio, Michigan and, if it gets that far, Pennsylvania.

Then there are the all-important demographic factors. Despite his left-of-center background, Obama consistently has done well with younger votes. And Texas is a relatively young state — its population between the ages of 18 and 44 is expanding at more than three times the national average.

In Ohio, whose black population is slightly larger than that of Texas, African-Americans also represent Obama’s natural base. He also can look to some upscale suburbs around the major cities and to the college crowd in Columbus.

But in Texas, he can look forward to supplementing African-Americans with the large numbers of young professionals now flocking to Austin, Houston and Dallas. There will be a lot more of them voting next week than there were around 2004, some of them recent migrants from places like Ohio.

Perhaps the biggest hope for Clinton in Texas lies with the Latino community, which pretty much bailed her out in California on Super Tuesday. But Texas Latinos are not identical to those in the Golden State.

For one thing, they tend to be far less unionized and more entrepreneurial than their California counterparts. And they are far more integrated into the Texas mainstream than the California community, which is made up of more recent immigrants.

This means Clinton will likely not be able to benefit from the kind of union-dominated Latino machine — such as that controlled by Los Angeles Mayor Antonio Villaraigosa — which came through for her big time in Southern California. In addition, Obama has had more time to make his case in Texas, which could swing more Latino voters, particularly the more assimilated younger ones.

None of this suggests that Texas will end up handing its bounty of Electoral College voters to either Obama or Clinton in November. But with his more upbeat message for upwardly mobile Texans, and his black-young professional base, Obama has an outside chance to force probable Republican nominee John McCain into at least contesting the state, which in itself would represent a victory of sorts.

Ohio, though, may be closer to a Democratic lock. The hard times of the past decade will not reflect well on the Republican candidate, no matter how compelling. In Texas, George W. Bush’s legacy is mixed; in Ohio, it’s hard to paint it as anything but dismal.

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