Which States Are Growing More Competitive?


Update: We have posted a follow-up that shows the performance of major industry sectors in every state in an interactive format.

By Hank Robison and Rob Sentz. Illustration by Mark Beauchamp.

In many ways, individual U.S. states are like 50 laboratories where differing public policy, industry focus, and economic development strategies are tried and tested. Different approaches yield different results and some states become more competitive – gaining a larger share of total job creation — while others struggle and lose share. This phenomenon has been evident over the past few years as our nation struggles to recover. Some states have been doing quite well while others are still limping along.

In this post we have produced a side-by-side analysis of every state to show how they stack up against each other. The goal is to see which states are becoming more competitive (that is, gaining a larger share of the total job creation), and which are losing their share of the jobs being created. The table and graphic each rank the states based on the overall competitive effect and what percentage of jobs (from 2007-2011) are based on competitive effects.


To produce this analysis we used “shift share,” a standard economic analysis method that reveals if overall job growth is explained primarily by national economic trends and industry growth or unique regional factors. Shift share analysis, which can also be referred to as “regional competitiveness analysis,” helps us distinguish between growth that is primarily based on big national forces (the proverbial “rising tide lifts all boats” analogy) vs. local competitive advantages.

Read more on shift share in this article: Understanding Shift Share.


The chart (see the full version here) and table display aggregate industry data (2-digit NAICS) for every state plus Washington, D.C. from 2007-2011. To generate our ranking, we summed the overall competitive effect for each broad 2-digit industry sector (e.g., agriculture, manufacturing, health care, construction, etc.) and added them together to yield a single statewide number that indicates the overall competitiveness of the economy as compared to total economy. We calculate the competitive effect by subtracting the expected jobs (the number of jobs expected for each state based on national economic trends) from the total jobs. The difference between the total and expected is the competitive effect. If the competitive effect is positive, then the state has exceeded expectations and created more jobs than national trends would have suggested. It is therefore gaining a greater share of the total jobs being created. If the competitive effect is negative, then the state is below what we would expect given national trends. In this case the state is losing a greater share of the total jobs being created.

Click here or on the image to the right to see full infographic. And see our interactive graphic showing industry detail here.

State Total Jobs, 2011 Expected Jobs, 2011 Competitive Effect % of Jobs Due To Comp. Effect
Source: EMSI Complete Employment, 2011.4
North Dakota 516,605 469,857 46,748 9.05%
Texas 14,399,398 13,518,812 880,586 6.12%
Alaska 452,115 433,687 18,428 4.08%
Louisiana 2,504,020 2,407,581 96,439 3.85%
South Dakota 546,100 525,117 20,983 3.84%
Nebraska 1,212,275 1,172,633 39,642 3.27%
District of Columbia 815,948 792,259 23,689 2.90%
Oklahoma 2,130,093 2,082,728 47,365 2.22%
Vermont 422,070 412,696 9,374 2.22%
Utah 1,616,991 1,583,067 33,924 2.10%
Iowa 1,931,567 1,893,018 38,549 2.00%
Arkansas 1,534,714 1,506,531 28,183 1.84%
Massachusetts 4,135,549 4,072,323 63,226 1.53%
Washington 3,790,572 3,739,147 51,425 1.36%
Pennsylvania 7,092,698 6,999,188 93,510 1.32%
New York 10,838,410 10,695,567 142,843 1.32%
Colorado 3,095,540 3,055,919 39,621 1.28%
Virginia 4,716,133 4,657,857 58,276 1.24%
Wyoming 388,092 383,853 4,239 1.09%
Kentucky 2,320,844 2,305,702 15,142 0.65%
West Virginia 906,644 902,716 3,928 0.43%
Wisconsin 3,426,638 3,415,893 10,745 0.31%
New Hampshire 825,620 823,626 1,994 0.24%
Montana 618,754 617,477 1,277 0.21%
Maryland 3,313,904 3,307,612 6,292 0.19%
Kansas 1,773,058 1,769,699 3,359 0.19%
Mississippi 1,477,695 1,476,543 1,152 0.08%
Connecticut 2,158,390 2,157,345 1,045 0.05%
Maine 796,843 798,431 -1,588 -0.20%
South Carolina 2,437,347 2,443,486 -6,139 -0.25%
Minnesota 3,388,760 3,397,958 -9,198 -0.27%
Illinois 7,202,487 7,237,065 -34,578 -0.48%
North Carolina 5,129,787 5,156,952 -27,165 -0.53%
New Jersey 4,862,884 4,904,000 -41,116 -0.85%
Oregon 2,190,416 2,209,867 -19,451 -0.89%
Missouri 3,451,992 3,484,707 -32,715 -0.95%
Tennessee 3,518,654 3,553,409 -34,755 -0.99%
Indiana 3,490,060 3,533,252 -43,192 -1.24%
Hawaii 833,901 844,613 -10,712 -1.28%
Ohio 6,426,057 6,516,379 -90,322 -1.41%
New Mexico 1,049,578 1,066,008 -16,430 -1.57%
Delaware 521,838 530,012 -8,174 -1.57%
Georgia 5,152,260 5,246,899 -94,639 -1.84%
Alabama 2,463,047 2,508,686 -45,639 -1.85%
Idaho 871,814 888,471 -16,657 -1.91%
California 19,906,130 20,292,975 -386,845 -1.94%
Rhode Island 580,271 593,811 -13,540 -2.33%
Michigan 5,068,282 5,250,678 -182,396 -3.60%
Florida 9,632,855 10,042,000 -409,145 -4.25%
Arizona 3,144,238 3,290,959 -146,721 -4.67%
Nevada 1,473,322 1,584,189 -110,867 -7.52%


There’s no surprise at the top: North Dakota is the clear leader. If North Dakota grew at the rate of the national economy, we would have expected about 470,000 total jobs in the state for 2011. Instead, there are an estimated 520,000 jobs in the state. The difference between the two is the competitive effect. In other words, North Dakota is ahead of what we would expect by 47,000 jobs, or nearly 10% greater than it should be.

Second on our list is Texas, which is 6% (or 880,000 jobs) ahead of where we would predict given national trends. Alaska, Louisiana, and South Dakota are about 4% above their expected jobs totals. Better-than-expected performances in construction — and in some cases, oil and gas extraction and government — are major driving factors for this growth. More importantly, oil is driving lots of other economic activity within some of these states and they are pulling a greater share of jobs to support the resultant industry growth.

Bolstered by significant government spending, Washington, D.C, also gained a greater share of jobs since the recession. The region is nearly 3% ahead of where we would expect.

Other states with solid competitive effects (about 1%) are Nebraska, Oklahoma, Vermont, Utah, Iowa, Arkansas, Massachusetts, Washington, Pennsylvania, New York, Colorado, Virginia, and Wyoming.

Nevada is last on our list. The difference between total jobs and expected jobs is -110,000 or nearly -8%. For Nevada and Arizona, second-last in competitiveness, the construction sector is the major culprit.

In terms of total job expectations, Florida and California are losing the greatest share of the jobs. They are both about 400,000 below what would be expected. For Florida, that is a much more significant figure (4.25% below expected growth).

Michigan is nearly 200,000 jobs below where they should be.

Other states that are losing a significant share of jobs are Tennessee (-1%), Indiana (-1.24%), Hawaii (-1.28%), Ohio (-1.41%), New Mexico (-1.57%), Georgia (-1.84%), Alabama (-1.85%), Idaho (1.91%), California (-1.94%), and Rhode Island (-2.33%).


The big lesson: states that gained a greater share of the total job creation from 2007-2011 have characteristics that make them more competitive and healthy from a job creation point of view. If a state is losing, then it stands to reason that there are factors within the state that make it less competitive. As the economy recovers, the states with higher competitive effects could have an advantage over states that haven’t been able to create or pull their fair share of the jobs. If a state is hemorrhaging jobs faster than the national economy, there should be cause for concern. There are likely toxic conditions within industry sectors and economic policies that make it very difficult for employment and economic activity to flourish. As the nation recovers these states will likely recover much slower, and other states might just keep pulling more jobs away from them.

For more, contact Rob Sentz (rob@economicmodeling.com). You can also reach us via Twitter @DesktopEcon.

8 Responses to “Which States Are Growing More Competitive?”

  1. fred schumacher

    North Dakota is booming because of the Bakken oil field development. This is a temporary phenomenon, as all mining jobs ultimately are. However, there is a second factor: North Dakota’s young people have a long history of leaving the state. North Dakota is the only state with a lower population than it had in 1930. A large segment of North Dakota’s unemployed do not live in North Dakota. They left and are unemployed in some other state, especially Minnesota.

  2. John

    How much of this is related to federal government subsidies? DC is probably doing well because the only major entity that hasn’t been hammered since 2008 is the federal government. My suspicion is that Nebraska and the Dakotas are high on this list because they receive a considerable part of their income from agricultural subsidies that have sustained the levels they had pre-2008. Say you add federal subsidy as another factor towards predicting growth levels, would that change the makeup of this list?

    I’m just bringing this up because although attracting federal subsidies to your state would probably be a good way to help it grow, it’s not necessarily something that could be easily reproduced. All states couldn’t do this at once.

    Texas on the other hand I suspect is on to something.

  3. Rob Sentz

    I don’t think subsidies are the primary driver. North Dakota, for instance, is being driven by very strong activity in the oil industry. The data we are considering is based in industry activities and states are being ranked based on how well their various sectors are performing. DC’s growth is all about the distribution of dollars into the region by the federal government. The DC metro is the biggest benefactor of all the stimulus spending and the metro area now considered the highest income area in the nation.

  4. jaykimball

    Expanding on Fred Schumacher’s excellent comment above –

    The oil/gas industry is sending in lots of workers, to frack for gas. This is an extraction technique that is fraught with risk to community water systems. North Dakota is dancing with the devil. Yes, they will see businesses like hotels and restaurants increase their business, catering to visiting oil industry workers. But they will see increased load on roads and infrastructure, increased public health problems, environmental degradation, etc.

    For more on how fracking works, a list of the toxic chemicals used in fracking fluid, how fracking can effect communities, and what you can do about it, see: http://8020vision.com/2011/04/17/congress-releases-report-on-toxic-chemicals-used-in-fracking/

    Rob, Hank – Can you parse the data to break out the transient work versus the resident work?

    Note that PA has been aggressively courting the fracking industry. I note that they are in the top 15. NY, OH, NJ are all considering fracking, but the public has been paying closer attention there and demanding that the politicians err on the side of public health rather than roll the red carpet out to the oil/gas industry.

    This is a trillion dollar industry, so big oil is funneling lots of money in to the politicians and feeding them the economic talking points. But as E. F. Schumacher reminds us, it is good to look deeply into the economics of an initiative, to fully understand both the direct and indirect costs. Politicians can see the tax revenue that gets added now, and ignore the toxic threats and public health problems that show up down the road.

    Jay Kimball
    8020 Vision

  5. Steve Arveschoug

    What are those common characteristics of the top performing states? And, to what extent can we project who the top performing states might be in the next five years?

  6. Eric

    Non-oil growth in North Dakota
    -Strong, growing agriculture sector
    -Diversified, growing manufacturing sector
    -Unmanned Aircraft Systems research, education, and training growth
    -Microsoft expansion – partnership with Hitachi (Microsoft’s second largest campus is in Fargo)
    -Amazon.com – 400 new jobs
    -Caterpillar – 250 new jobs
    -16,000 job openings, with fully two-thirds outside oil-producing counties. In only 10 years, the state has added nearly 50,000 new jobs (most outside the Oil Patch).
    -Small, sensible pro-business government (relatively speaking)

  7. sharon fisher

    So….what makes a state do badly, other than Nevada and Arizona doing so because of construction? I’m particularly interested in Idaho. Thanks!