#263. American as Texas vs. California, U-Haul VersionPosted on
|Over the years we have followed the rental rate comparisons for U-Hauls trucks entering and departing our two most populous states, California and Texas. Below, in part, is a blog by Mark J. Perry that tells the story, along with some additional information on unemployment, perfectly.
America as Texas vs. California, U-Haul Version
1. The chart above shows monthly unemployment rates in California, Texas, and the U.S. from January 2006 to November 2009. Back in January 2006, when the U.S. jobless rate was 4.7 percent, both California and Texas were slightly above the national average, and California’s unemployment rate of 5.1 percent was actually slightly below the 5.3 percent rate in Texas. But by 2007, as economic conditions in the United States started to show some early signs of weakness, a clear divergent pattern emerged: the jobless rate in California was consistently higher than the national rate, while Texas remained well below the national average. By November 2009, California’s jobless rate of 12.3 percent was a full 2.3 percentage points above the national rate of 10 percent, while the 8 percent rate in Texas was two full points below 10 percent.
Bottom Line – According to the jobless rates over the last three years, the Texas economy has clearly been out-performing both the rest of the country and California’s economy.
2. Another market-based indicator that can help measure a state’s relative economic conditions are the prices of one-way U-Haul truck rentals. People vote with their feet and will move away from high-cost, high-tax states with high unemployment rates to states with better job prospects and more favorable economic conditions, and one-way U-Haul rates will capture these migration patterns. That is, U-Haul rental rates for one-way truck rentals will be priced relatively high when there is high outbound demand (and low inbound demand), and rates for one-way trucks will be relatively low when there is low outbound demand (and high inbound demand).
Here are some examples from U-Haul:
From Dallas to San Francisco: $734
From Houston to Los Angeles: $706
In both cases, it’s almost three times more expensive to rent a truck. The American people and businesses are voting with their feet and their one-way truck rentals and escaping California and its forced unionism, high taxes, and high unemployment rate for a better life in low-tax, business-friendly, right-to-work states like Texas.