Arizona is now in the Bottom 10 of all states for per capita personal income, the result of the jobs here paying less than those being created in the rest of the country.
Lee McPheters, an economist at from the W.P. Carey School of Business at Arizona State University said the latest figures put Arizona at No. 41. That’s because the U.S. Bureau of Economic Analysis puts average per capita income for 2014 at just $37,895, just 82 percent of the national figure.
But the real key is that neither McPheters nor other ASU economists discussing the outlook here for the coming year see any sign that is changing. And that raises the specter that the state could slip even farther.
There is a trend.
In 1995 Arizona was 35th in the nation. It slid to 37th by 2000 and 38th five years after that.
We hit No. 40 in 2007.
McPheters said it’s not entirely a problem of Arizona’s creation.
He acknowledged part of the ranking is the state’s performance in the kinds of jobs created. But McPheters said the rankings also reflect what’s happening elsewhere.
“We are looking better,” he said, with projected employment growth in the 2.6 range, “the best this year that we’ve seen in this recovery.”
“But then you look at Utah,” McPheters continued. “They’re growing (at) 4 percent.”
That’s the rate Arizona’s economy grew at before the recession.
And even California is growing faster than Arizona.
“We’re just not keeping up with the pack, he said.
Curiously enough, one thing could help stem Arizona’s slide in the national rankings: Really bad times elsewhere.
McPheters pointed out that weak oil prices have pulled the rug out of energy producing states. Particularly hard hit have been states like North Dakota where the costs of production, such as fracking, have made continued drilling uneconomical.
So as those states slide, Arizona could look better, at least by comparison.
That, however, still leaves the issue of the kinds of jobs being created — and what they pay — which is what leads to the state continuing to slip in national rankings of per capita income.
McPheters said as people move to Arizona that creates a demand for service jobs, like serving food, “which is not high paying.”
“So we need some drivers for this economy,” he explained, things like manufacturing jobs.
But Dennis Hoffman said even that is not an answer.
He said there is an increasing reliance on automation. The result, said Hoffman, is that companies have boosted their output by 25 percent since 2010, but have increased their payrolls by less than 5 percent.
Then there’s the fact that many of the manufacturing jobs here are defense related.
“Essentially, there’s a lid on that as well,” McPheters said.
That is borne out by the latest employment numbers which show there are 500 fewer people working in manufacturing now than a year earlier.
Construction jobs also pay well. But Michael Orr said that has come nowhere near recovering. And there’s even an economic component to that.
“We have a lot more single family rentals than we’ve had,” he said. More to the point, he said that people are saving money by moving in together as there are few “affordable” rentals available.
“I mean, if you’ve got a four-bedroom house you can probably fit eight people in that,” Orr said. “A lot of people are doubling up.”
All of that means household creation is very low, with little need for construction jobs.
So what’s left to pull Arizona up?
Hoffman said the state has shown signs of attracting jobs in financial services, including the insurance industry.
“It doesn’t pay perhaps as high a wage as a defense or sophisticated tech manufacturing position would pay,” he said. “But it pays pretty well.”
Hoffman also put in a plug for the state spending more on education.
He said that teacher salaries in Arizona in the 1980s were actually above the national average. Now they’re at the bottom of all the states in the region and near bottom nationwide.
Along the same lines, Hoffman said Arizona will do better in attracting high-tech firms when the state produces and retains more college graduates who are trained for the positions these companies need to fill.
Whatever the quality of jobs being created, McPheters said they’re not going to be equally divided.
He said 85 percent of the 65,000 jobs expected to be created this year are going to end up in the metro Phoenix area. He said that could drop the region’s unemployment rate this year to below 4.5 percent.
The rest of the state will have to divide up the fewer than 10,000 jobs remaining.