John Hood: Employment Gains Reflect Policy Successes
RALEIGH — North Carolina’s strong economic performance persists — as do the lessons it reveals about politics and public policy.
The latest report from the U.S. Bureau of Labor Statistics found that North Carolina added 76,700 net new jobs over the last 12 months, an increase of 1.5%. Only five states posted larger employment gains.
Expanding beyond a single year produces a similar outcome. From February 2020 (the last pre-COVID month) to April 2025, the 10 states with the highest rates of job growth were, in order, Idaho, Utah, Florida, South Carolina, Texas, North Carolina, Nevada, Arizona, Montana, and Tennessee.
In nine of these states, state and local tax collections as a share of personal income are lower than the national average. Nine of them also rank higher than the national median on the Tax Foundation’s State Tax Competitiveness Index. All 10 rank higher than the national median on the Fraser Institute’s economic-freedom index, which measures not only tax burden but also labor-market regulation and the size of government.
These aren’t the only tells that our country’s healthiest labor markets tend to be in our country’s most conservatively governed states. For example, all 10 are in the top half of states in educational freedom, as measured by the American Legislative Exchange Council (North Carolina is #12). Most get better-than-average marks on the Reason Foundation’s latest evaluation of highway management (North Carolina is #1). Most have lower-than-average rates of public indebtedness (North Carolina is #48) and higher-than-average funding ratios in their public pension plans (North Carolina is #12).
I could go on, but I think you get the picture. Now, let me bring it into sharper focus.
I’m not saying that state-by-state variations in job growth or other economic measures are fully explained by public policy choices. Take another look at those top 10 states. Florida, Texas, Tennessee, and the Carolinas are in the South. Montana, Idaho, Utah, Nevada, and Arizona are in the Mountain West. There are conservative-minded legislators or governors in other regions of the country, too, but the South and Mountain West have other natural and cultural attributes that both job creators and job seekers find attractive.
Nor am I saying that constructing a few top-10 or top-25 lists and comparing them can produce rock-solid empirical support for conservative policy preferences. These are merely useful examples and illustrations. Careful studies are required, studies that specify and quantify dozens of distinct variables and then, holding some constant, attempt to detect statistically significant associations.
Fortunately, we don’t have to imagine what such research would yield. There are many studies already published in peer-reviewed academic journals that explore these questions. Dozens more are released every year.
Their conclusions aren’t unanimous. Indeed, if every academic study produced the same finding, that would probably be a sign of statistical manipulation, publication bias, or, at least, groupthink. Some legitimate research does call into question whether taxes, regulations, government size, and other variables of conservative interest exhibit a strong relationship with economic outcomes at the local, state, or national level.
But most published studies confirm relationships between, say, economic freedom and economic performance. Consider the case of the Fraser Institute index I cited earlier. According to Google Scholar, there are some 14,000 mentions of it in the academic literature. It has been used as a variable in more than a thousand peer-reviewed papers. Most of these studies found that economic freedom was positively correlated with such outcomes as higher incomes, faster growth, and higher rates of investment and entrepreneurship. In fact, economic freedom even tends to correlate positively with cleaner environments, less corruption, and greater social trust and tolerance.
These findings don’t suggest that all policymakers need do to make their communities more attractive places to live, work, invest, and form families is cut taxes and regulations. They should also seek to improve the quality of education, transportation, health care, and other services people value. Conservatives have good ideas for making them better, too. Let’s keep working.
John Hood is a John Locke Foundation board member. His books Mountain Folk, Forest Folk, and Water Folk combine epic fantasy with American history (FolkloreCycle.com).
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