Arizona Unemployment

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Arizona’s jobless rate went up in all 11 sectors last month, at a time when the national rate remained stable. Arizona State University Economist Lee McPheters will talk about what’s happening with Arizona’s unemployment rate.

Ted Simons: Good evening, and welcome to "Arizona Horizon." I'm Ted Simons.

Arizona's jobless rate increased in most employment sectors last month, at a time when the national rate remains stable. ASU economist Lee McPheters joins us to talk about the numbers. Good to see you again. Thanks for joining us. Arizona unemployment rate back up to % up a couple ticks here, your thoughts?

Lee McPheters: We saw four months under 8%, so that established a baseline. Then it went up this month. I think the more important comparison is with the year ago, a year ago it was well over 8%, about 8.4%. So it is down, it's trending down. The one comparison that I think is important is a look at the size of the labor force a year ago. And compared to the labor force now, and the difference is that the labor force is smaller. So what that tells you is that people have gotten discouraged, they're dropping out, and so there's a lot of people we're not measuring I think with this unemployment rate.

Ted Simons: There are different measurement, are there not, for those who are unemployed and filing, not employed, not filing, and then who simply -- Aren't there different variations there?

Lee McPheters: One of the important distinctions is whether in fact are you looking for a job. If you're not looking for a job, then you're not counted as unemployed. We do have ways of measuring those folks, and when you add those in, the people that have taken part-time jobs that really are not on their career path, or that really don't lead them into a full-time position, they're counted as employed anyway. But when you add all of those people up, the discouraged workers, the people that are working part-time for economic reasons, it turns out that Arizona's unemployment rate then is called the U- unemployment rate, is closer to 16%, which is one of the highest in the country.

Ted Simons: As far as the uptick here from May to June, seasonal factors at play? Government jobs seem to be hit hard, but that could be teaching?

Lee McPheters: Government jobs, there's really three categories -- Federal government jobs, and those are down month after month after month for the past three years. Local jobs, pretty much the same situation. Local employment, local governmenting have simply been cutting and cutting and cutting. State government is actually back up compared to a year ago. And I think that that is partly due to the fact that with this one cent sales tax, for example, we were able to preserve some jobs. But overall I would not look to government as a source of employment growth at all, and it is still one of the sectors that is losing jobs. That's why it's probably more useful to really look at the private sector, what's happening in the private sector, what parts of the private sector are showing some strength and which parts are still sort of languishing.

Ted Simons: Real quickly, sequestration at all a factor in those federal job cuts?

Lee McPheters: I think it definitely is, and it does extend into the private sector, because to the extent the private firms have government contracts, there's effects there.

Ted Simons: Private sector did lose jobs, construction was down. Is that unusual for this time of year?

Lee McPheters: Well, the numbers as we get them out of the department of administration are not seasonally adjusted. So you have to sort of do the mental seasonal adjustment, or you can look at the bureau of labor statistics' figures. But I think traditionally in the summer we always see employment dropping off, and that's why our particular approach at ASU is to say, where are we now compared to where were we a year ago, and we're up in the private sector about 50,000 jobs very similar to what we saw last year, so we have an economy which is very, very slow growing, certainly not on the threshold of recession. But really not the dynamic Arizona economy we'd expect to see in a recovery.

Ted Simons: Compare that economy with what you're seeing around the country. Because again, the national rate remains stable, we ticked up a couple notches.

Lee McPheters: Well, the western states as a whole are doing better than the rest of the country. Texas of course has had good growth, Utah's had good growth. Idaho has now replaced North Dakota as the number one job growth state for rate of growth.

Ted Simons: Do we know why?

Lee McPheters: Well, I think what has happened is in North Dakota the shale oil boom has kind of calmed, and it's certainly not in any way going backwards, but I think it's slowed down a bit. Arizona is still a top job growth state. We were number nine according to our latest numbers. We're doing better than the nation, the nation is adding jobs at about 1.5%, we're growing about 2%. Phoenix is growing about 2.5%, something in that range. So compared to everywhere else, we're looking pretty good here. The nation as a whole very slow growth still positive.

Ted Simons: What are you seeing now for the coming months? Especially when it comes to certain sectors? What sectors likely to grow, what sectors do you see -- Obviously government jobs don't look for any bright lights there.

Lee McPheters: Don't look for government to even be a stable source of employment. Usually you don't look to government to drive the economy forward. But you expect that the government sector is at least going to be stable. We're still losing government jobs, so that is something that just has to be factored in looking down the road. There are really three sectors in the economy that are providing about half the jobs that we're adding right now. One of them is health care, one of them is the construction industry, and the other is what you might call food services. Each of those three added in the past 12 months, eight to 9,000 jobs, there's 27,000 maybe 28,000 jobs of the 55, 56,000 that have been created. So when you look at those sectors, construction jobs, pretty good wages. Food services, not so much. About half the average wage I think in Arizona. So some of our growth drivers are really not high-wage sectors right now.

Ted Simons: Good information. It's good to have you here. Thanks for joining us. We appreciate it.

Lee McPheters: Good to see you, Ted.

Lee McPheters:Economist, Arizona State University;

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