Arizona has led the nation in economic growth for several decades. This success was not by accident. When confronted with the direst of economic challenges, our leaders pushed for policy changes that allowed the state’s economy to survive, then thrive. Once again, we are faced with such a situation.
Now is the time again to shift our focus to the economy. However, this time we need to invest in projects like the Arizona Board of Regents and public universities’ New Economy Initiative that yield a positive return on investment. The initiative is a catalyst for much more aggressive economic growth and follows the same basic business principles of investing in high ROI projects.
About a decade ago, the Great Recession impacted Arizona more than almost every other state. Our policy and business leaders made tough budget decisions, and implemented aggressive tax and economic development reforms. In time, regulatory reforms were implemented, various economic development organizations began coordinating, marketing of the state reached new heights and budget reserves were properly managed. The effort helped the state return to being in the top five nationally in multiple categories of economic growth.
We now face another challenge, along with an opportunity. Less than a year ago, we entered the Covid recession. Severe job losses initially mirrored those of the Great Recession. However, this time Arizona has recovered jobs more quickly than the nation as a whole. This stronger recovery is due to the public policy decisions that were made over the past decade.
In many statistical categories, the state is doing well. This is not the case with most other states. Our primary deficiency is not in our rate of economic growth. Instead, it is in the quality of growth. We need more aggressive efforts to support the private sector in creating higher-wage and high-skilled jobs. This is our best chance to shift the economic dynamics in Arizona and catch up to our economic development competitors.
Highly skilled and higher wage job creation translates into increases in productivity. This leads to increases in company profits, adds to incomes and directly translates into more robust tax collections that can be reinvested. The cycle can continue or reverse itself depending on what policies state leaders put in place.
This is where the term ROI comes into play in relation to the New Economy Initiative. Third-party reviews of such proposals from the universities identified a positive ROI for the state taxpayer in much less time than would be typically expected. It is abundantly clear that workforce productivity and a focus on high-skill, high-wage job creation are among the most critical drivers of economic growth.
This is not a criticism of recent policies – it is quite the opposite. As previously noted, the past policies enacted after the Great Recession are what made us more resilient during the Covid recession.
Instead, this is a call to action to lawmakers and the business community to support policies like the New Economy Initiative that will allow the state to reach top-tier status when it comes to economic activity. Now is the time for our leaders to again be aggressive with policy planning and allow the state to not simply grow, but to flourish and surpass our economic development competitors.
Sen. Paul Boyer, a Republican, represents Legislative District 20 and Jim Rounds is an economist and public policy adviser.