The real reason red states are hiring so much faster than blue states

Have we all missed a hidden red-state resurgence? For every politician who loves to talk about job creation, there are several economists who love to remind us that politics don’t have much influence on the economy. A political split this stark is as rare as a 17-pound potato, and at least as newsworthy.

That said, there are some plausible explanations in this case. Many of the fastest-hiring states — Alaska, Wyoming, Montana and Kentucky — have unusually low tax rates and lean on extractive industries such as mining or petroleum. We’ve seen firsthand the economic boom that gas and pipelines can bring to struggling regions.

Certain outspoken workers in those places often tell reporters that regulation-happy Democrats in Washington are stifling business. And they may be right. Until the booms go bust and the environmental bill comes due, hiring and pay often soar as the gas industry expands.

But when we delved deeper, confusion seized our synapses. First, we found this isn’t just a matter of pandemic policies or a Trump-era triumph. This set of states has been hiring faster for the entire decade for which we have data.

More perplexingly, we found that faster hiring hasn’t translated to faster job growth. When we ran the payroll numbers, the typical red state wasn’t adding jobs any faster than the typical blue one.

And faster hiring doesn’t indicate a more dynamic economy. A new analysis from the Economic Innovation Group found a healthy red-blue mix among the most- and least-dynamic state economies. EIG, a bipartisan D.C. outfit that churns out data-driven research and policy proposals, measured dynamism based on patenting, business start-ups, housing permits and other factors, few of which had any relationship to the pace of hiring.

Bewildered, we called Nick Bunker, economic research director at the job site Indeed. Bunker is the world’s second-most-prominent fan of job-opening and hiring data, behind only Treasury Secretary Janet L. Yellen, and he had a ready explanation for the seeming disconnect.

“It’s churn,” he said. Those red states weren’t creating jobs faster. They were just hiring more often because folks were bouncing around more. Red states don’t have more layoffs or job openings than blue ones, they just have more quits and hires.

As Bunker points out, quits and hires track each other closely. They both reflect how fast businesses churn through workers. When you combine quits and layoffs, then chart them against hires, you can’t tell the two lines apart.

It’s also why the ever-genial Bunker becomes uncharacteristically agitated when he discusses the “Great Resignation.” Yes, everybody was quitting, but they weren’t giving up. They were getting rehired elsewhere.

When we ran the numbers using the Bureau of Labor Statistics biennial job-tenure survey, we quickly verified that red states see more job-hopping than blue ones.

Our first guess, like Bunker’s, was that red states tend to have higher-turnover industries. Data backs us up, to a point.

To illustrate, look at the two extremes: Government workers spend more than three times as long at their jobs as retail workers do. And government workers are more common in Biden states, while retail workers take up a larger share of employment in Trump states.

But while quitting rates are correlated with some high-turnover industries — particularly the one containing increasingly ubiquitous dollar stores — it’s probably not the full explanation. Because further analysis shows that red states have higher worker turnover than blue states in almost every major industry.

To sort things out, we tracked down Kathryn Anne Edwards, one of the smartest labor economists we know and winner of the third-most-prestigious prize in economics: a button and membership card with our big, goofy logo on it. (Edwards suggested a data source that inspired our column on the vanishing vacation day.)

As usual, she’s right. An index from the anti-poverty outfit Oxfam America measuring workers’ right to organize is even more strongly correlated to a higher quits rate than Trump vote: The quits rate is lower in union-friendly states. (A lower median wage and a higher share of workers earning less than $25 an hour also correlates with a higher quits rate. But nationally, that analysis gets thrown off a bit by high-wage, high-quitting Alaska, one of the most unusual states in the union.)

And, of course, workers in red states tend to earn less than their blue-state peers (though they also benefit from a lower cost of living). Our analysis showed workers from low-income families face higher turnover in red states, even as folks from higher-income families actually had more job security in those same places.

The disparity seems rooted in education. The job-turnover gap between Trump and Biden states yawns widest among those with the least education. It closes as worker education rises and completely flips for workers with the highest education: They see more job security in Trump states than in Biden ones.

To help untangle what it all means, we descended upon research director Kenan Fikri and his friends at EIG. Fikri, the kind of guy who sounds genuinely delighted to get obscure state-data questions late on a Friday evening, confirmed that stronger unions probably lead to workers staying in their jobs longer in blue states.

He also spun out an interesting theory: Turnover is higher when workers and employers aren’t a good match. And it’s harder to find a good match in rural areas, where workers don’t have a ton of job prospects, and in areas with less education, where employers struggle to find workers with the right skills. And we did see some correlation with turnover in both cases.

As Bunker and Fikri both hinted, it appears the fullest explanation of this particular red state-blue state gap may lie in deeper, harder-to-quantify differences over the nature of work and the rights of workers.

Consider that if attitudes toward the social safety net mean a blue state is more likely to provide paid leave, then turnover probably will be lower because workers won’t have to quit to deal with a family emergency, illness or giving birth. Or if a blue state offers better unemployment benefits, laid-off workers may be able to hold out longer to find a new job that’s a better fit. And once they’re in a job that fits their skills and needs, they’re less likely to quit.

All three experts also brought up the minimum wage: In many blue states, politicians help low earners get raises by hiking the pay floor. That allows them to see a higher paycheck while staying in the same job.

In red states, raises tend to come only through competition. A worker gets a raise because their low paycheck pushes them to seek out a rival employer who’s willing to pay more. Logically, that would lead to higher job turnover, right?

As it turns out, both approaches seem to lead to the same place: Wage growth in a typical red state is virtually identical to wage growth in a typical blue state. But one of them necessarily leads to a bit more job-hopping.

The best chart we can’t explain

In this line of work, spurious correlations are an occupational hazard. Usually we can ferret them out through thorough reporting, which typically uncovers a third factor we didn’t measure or an accident of history driving the association.

But here’s an odd correlation we can’t get out of our heads: The age of a state’s housing stock is related to its hiring and quitting rates in a way that seems to transcend politics. The older the houses, the lower the quits rate.

It doesn’t seem to be the case that places with old buildings also have older populations that don’t job-hop as much. A scatter plot of human age and hiring looks like one of those moose-crossing signs that miscreant teens have peppered with birdshot.

We called Vanessa Brown Calder of the Cato Institute, a libertarian-leaning think tank, who suggested a fascinating theory: Turnover is higher among younger, less-skilled workers. And research has shown that younger workers are priced out of communities with tight zoning regulations, where there’s less new construction and houses are older.

Now we’re kicking the question to you: What else might explain the relationship?

Ahoy there! The Department of Data covets quantitative queries. What do you wonder about: What industries contribute the most to economic growth? How likely are you to encounter a new hire in each service-industry sector? Where do people get married the earliest? Just ask!

If your question inspires a column, we’ll send an official Department of Data button and ID card.