Economists: Arizona Job Growth Slow, But Sustainable

By Devin Browne
May 22, 2012

PHOENIX -- If there is a bright spot in Arizona’s still nascent recovery, it’s the leisure and hospitality industry - the state’s largest job creator right now. (The industry added 10,700 new jobs between last March and this one.) This news makes 24-year-old Graham Doyle very happy that he decided to major in hospitality management at Northern Arizona University.

"You know the hospitality industry out here just always seems to be booming," Doyle said. "They’re always building new bars, new hotels - stuff like that, new casinos. So hopefully that’ll be an option for me, always."

There are a few drawbacks with the hospitality industry, economists say. One, the jobs usually don’t require a lot of education or skill. And two, they generally don’t pay very much.

But economists say there's an even bigger concern here than dependence on an industry with typically low-skilled, low-paying jobs. The larger concern is that the state's industries have tended towards growing too fast, and in doing so, have created the expectation that they'll grow that fast forever. Like, Arizona's construction industry for example.

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The rate of Arizona's growth during the boom, fueled by the construction industry, was roughly five times what it is now. Economist Stephen Brown at the University of Nevada, Las Vegas, says this is partly why the state's economy collapsed.

"Because you can’t have a region of the country that forever grows at a much faster rate than the country as a whole," Brown said.

As it turns out, Arizona’s now trailing the country as a whole in job recovery. (The U.S. has regained 40 percent of the jobs it lost, while Arizona has only regained 25 percent.)

This might seem disappointing, but Brown says the state’s current rate of job growth – about 2 percent from last March to this one – is much closer to what economists see as sustainable in the long term.