Prior to the “Great Recession,” Arizona was often one of the top job-creating states. That is not the case anymore. Lee McPheters, director of ASU’s JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business will talk about his new report on the top job-creating states and cities.
Ted Simons: Good evening and welcome to "Arizona Horizon." I'm Ted Simons. What are the nation's top job-creating states and cities and where do Arizona and Phoenix rank on the list? For the answers, we welcome Lee McPheters, director of J.P. Morgan Chase economic outlook center at the W.P. Carey school of business. Good to have you here. You helped -- you did compile this list, didn't you?
Lee McPheters: That's right. Final figures for 2014 out of the bureau of labor statistics. Big story here, we go an entire year with estimates of what job growth looks like for the states. Finally three months after the end of the year, we get the final revised figures, and we know who ranks where. And so we have provided that list to people that would have an interest in seeing where their state ranks compared to everyone else.
Ted Simons: Let's talk about -- let's talk about states first. We have Nevada number one -- I'm sorry, North Dakota number one, oil probably there. But I notice in the top 10, Nevada number two, Colorado three. California tied for sixth. Utah eighth. Washington and Oregon tied for ninth. Arizona not in the top 10. What's going on here?
Lee McPheters: Well, Arizona ended up, we thought we were going to be perhaps 10th, 11th, but when the final numbers came out, Arizona ranked 16th among all of the states. Phoenix ranked 16th also among large Metropolitan areas, and it was quite a disappointment. There were a lot of important revisions in the data that really pushed Arizona down in the rankings.
Ted Simons: So, compare what was expected to what happened. Better yet, let's do a different comparison. Why are we seeing Nevada two, Colorado three and everyone else in the top 10 on the west side except for Arizona. We are a western state, too.
Lee McPheters: There is two things going on. One, growth in these states is very, very strong. They're growing -- Utah, for example, growing over 4% right now. Nevada around 3.5 to 4%. So, for the latest numbers we have the first three months out of 2015, Arizona is growing close to 3%, but that still puts us way down out of the top 10. One of the things that is at work here is other states are doing very, very well. Second side of the coin is that important industries for Arizona are just lagging behind, and at the top of that list, of course, is construction. We did add construction jobs in 2014, but only about 1,400 jobs. About 2% of all jobs created were in construction, and, you know, you think back a few years ago, that used to be 20% of all jobs being from construction.
Ted Simons: When we had so many construction jobs in Arizona, a lot of folks thought that wasn't diverse enough, that wasn't healthy. Are we in some ways healthier not being so dependent on construction?
Lee McPheters: Well, I would say no. If you look across the country, you see that construction accounts for about maybe five or six percent of all jobs. In Arizona, we have fallen down a little below that national figure. But as a growth state, it's quite ordinary, I think, to see Arizona with seven to eight percent of all jobs in construction and, you know, if the economy was a bit stronger, I think that is what you would be seeing. In essence, construction just seems to be nearly flat right now.
Ted Simons: As far as cities are concerned, number one, San Jose, I think we can figure that out with Silicon Valley. Riverside two, Orlando 3. Denver number four, Dallas, Houston there as well. Phoenix, you said was 16th. Why aren't we --
Lee McPheters: First of all, all of those places are seeing strong construction growth. In some cases over 10% up in the, you know, double digits for job growth and construction. You are also seeing a shuffling of population, people moving into the Riverside area, looking for lower-priced housing. There is a lot of blue collar, mid-range distribution jobs in that Riverside County area. And that inland empire as it's called has always been a growth location for California.
Ted Simons: So, what can, as far as Phoenix learning from the major cities here in Arizona from the top states, we can go to some of the bottom cities and bottom states. We can learn from them as well. But what can we learn?
Lee McPheters: Well, first of all, when we look at the 2014 numbers, that's, of course, you know, those numbers are in. That's done. We have the more recent numbers, and Arizona has added in the past 12 months over 70,000 jobs. So, that is the best we have seen in many, many years here. So, we seem to be on track for some improvement. But there is still deficiencies, and the three areas simply not contributing at all, are manufacturing, where we are seeing job losses, construction, as we mentioned, basically flat, and then government as well. Government is simply not growing, and while some people would say well, that's good, the problem there is that government lost a lot of jobs. Those are jobs that bring stability usually to the economy. And they're usually pretty good paying jobs. So you have three parts of the economy that are simply not contributing at all right now and looking across the country, and particularly across the west, those sectors are doing pretty well.
Ted Simons: So, but with it, the high point there, bright spot for Arizona, as far as job creation, again, always concern. What kind of jobs are we talking about here?
Lee McPheters: Well, what we are seeing is health care still strong. Those are good jobs. Finance, still strong, those are good jobs. We were surprised to see that retailing in the last 12 months added eight to 9,000 new jobs. Those of course will be mid-range, many part-time jobs. And we are seeing a lot of back office, data processing type jobs. Those are solid jobs. They pay the average wage or a little better, but what we don't see is the high dollar manufacturing jobs, the high-dollar construction jobs that would push Arizona up, I think, in the income rankings.
Ted Simons: Still seeing a lot of service-related jobs as well?
Lee McPheters: Based on the numbers that we have for the past 12 months, 99% of all new jobs in Arizona are in services, the new jobs. Usually about 85% of all jobs are in services anyway. But the sectors of the economy that produce goods, which is mining, manufacturing, construction, there is just not much activity there.
Ted Simons: Well, let's see if we can do better between ranking 16th in the country next go round. Good information. Good to have you here. Thank you for joining us.
Lee McPheters: Good to see you.
Lee McPheters:Director, ASU's JPMorgan Chase Economic Outlook Center at W. P. Carey School of Business;