Yesterday we published our free monthly reports ranking states by their total nonfarm job growth (6-month rolling averages of annualized rates reported by the BLS) as well as by reported unemployment rates. 

Our premise in doing so is quite simple – emerging market / recovering market real estate investors have historically been drawn to communities that are experiencing healthy job growth.  Healthy job growth is a key driver (if not the key driver) of robust housing demand. 

As noted in prior posts and newsletter articles, we like the 6-month rolling average approach to looking at the data as it tends to smooth out the inevitable swings in the BLS data, and yet stills allows the identification of trend changes over a shorter period than a year (another common time interval to asses the data). 

One of the truly interesting things to do with a pool of data is to search for correlations that shed additional insight into particular questions. 

The national economy is struggling on many fronts these days, though as always some states / regions are struggling mightily, and some are (relatively) chugging right along.  Bowing to the political season – we’ve decided to discuss a couple of interesting correlations to job growth and unemployment by state.

Consider if you will “right to work” status – the issue is still being debated somewhat hotly (see the recent issues in Colorado for example) this political season.  A thinking real estate investor might proffer the question – does a state’s “right to work” status have an impact on job growth in a time of national economic distress as we’re experiencing today?

Looking at the total nonfarm job growth data published yesterday (free reports available here) – it would appear in today’s economy that “right to work” status indeed has an impact. 

Of the top ten ranked states for total nonfarm job growth (6-month rolling average) – 60% are “right to work” states, as are 55% of the top twenty.  Of the worst ten ranked states for total nonfarm job growth (6-month rolling average) –  only 40% are “right to work” states, as are only 30% of the worst twenty. 

You don’t need a PhD in statistics to note a fairly impressive difference; yes, the measure is simple, but illustrative.  Think Occam’s (sometimes spelled Ockham’s) razor.   

Tomorrow we’ll look the correlation between “right to work” status and current unemployment information. 

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