December 6, 2011
North Dakota is the polar opposite of Arizona.
One imagines lands of extreme contrasts: Snow vs. sun, icy tundra vs. burning desert, -18 in Fargo vs. 118 in Yuma. And that’s not the half of it.
North Dakota might be cold outside but by some measures of state economies, it is – surprise! surprise! – the country’s new hotspot:
Factors such as those, headlined by its abnormally low unemployment rate of 3.5 percent, have made North Dakota the new darling of economy watchers – at least the casual ones. The New York Times called what’s happening there “The North Dakota Miracle.”
Its success has been variously attributed to the tapping of oil reserves in the western part of the state, to the fertile farmland everywhere, and to the country’s only state-owned bank which has fueled expansion by providing ready access to credit.
There is another reason why the figures are so good. Simply put, it’s called supply and demand.
In Arizona, workers are looking for opportunity. In North Dakota, opportunity is looking for workers. Desperately. Not many would-be newcomers are willing to brave the winters there, even if jobs are plentiful. The population of North Dakota grew by just 6 percent over the 20-year period – ranking it 48th in the nation.
That’s one reason the unemployment figure is so slow. It also makes the growth in some metrics a bit misleading. A smaller base causes percentage gains to look much larger than the underlying absolute gains would merit. And North Dakota is plenty small. On a number of measures, it was one-sixth the size of Arizona in 1990.
Even so, the real per capita incomes for the two states, which were about equal 20 years ago, have changed at a dramatically different pace. North Dakota went from $19,500 to $34,400. Arizona went from $20,000 to $23,800. Figures for all 50 states.
That’s due, at least in part, to two telling distinctions:
Attribute part of this to the difference of scorching sun and frosty cold. When it comes to workers, simmering Arizona has the supply. Shivering North Dakota has the demand.
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