For the past three months, Arizona’s unemployment rate has gone up, even as the nation’s jobless rate has dropped for most of that time. Right now, the state’s unemployment rate of 5.8 percent is nearly a full percentage point higher than the national average. Dennis Hoffman, director of the L. William Seidman Research Institute at the W. P. Carey School of Business at Arizona State University, will talk about why Arizona’s jobless rate is not improving.
TED SIMONS: Arizona's unemployment rate is up again. That makes 3 straight monthly increases. This, as the nation's jobless rate has been dropping and is now a full point lower that Arizona's numbers. Here to help us figure out what's going on is Dennis Hoffman, director of the Siedman Research Institute at ASU's W.P. Carey School of Business. Good to see you again.
DENNIS HOFFMAN: Great to be here, Ted.
TED: Thanks for joining us. Arizona jobless rate up two-tenths to 5.8%...third straight monthly increaseâ€¦what do we make of it?
DENNIS: Well, candidly there's lots to talk about with respect to the labor market. Unemployment statistics at the local levels and that's the way we get them, we get them for the state but we also get them for the metros across the state. They are pretty noisy statistics and your audience probably doesn't want to hear about noise in statistics and it kind of wants to search for a story here.
But if you look at the unemployment rate in Arizona, it actually marks down fairly steadily earlier this year and now has backed up, and I think, actually, rather than to think about changes in the labor market that we can grab onto and say, that's -- well, it's because of this or that or this job is changing or this -- these guys are getting fired, it's just probably more measurement error than anything. But let's see what we can tease out of it.
Historically, the unemployment rate in Arizona has been below the national average, and throughout much of this Great Recession it's been a balk and that has to be reflective on more challenges in finding jobs say in Arizona than in the nation. But again, to back up this random data point, if you look at the national unemployment rates by state, it's like somebody took all of the states and kind of shook them in a jar and put them down. You have some energy states doing really well, which is puzzling to me, some energy states doing horribly, which kind of makes sense at this point in the cycle,so I really like to focus less on unemployment rates and more on year-over-year job creation, and there Arizona certainly isn't 40th like we are in unemployment rates. We are solidly in the top ten.
TED: So, when the report says we've lost 40,000 non-farm jobs in June, and 6 of 11 sectors added jobs but 5 lost jobs, are you just saying--what are you saying?
DENNIS: Some of that is just the seasonal progression of K-12 churn. What you have to do is you have to look at June over June. You have to get the May-June comparison out. To be honest with you, if I wrote the report, I don't think I would spend much time with that. Now, they are reporting facts, and they are presumably not trying to cover up anything, nor am I. It's just that it is a natural progression through the year in the way that these particular statistics are reported.
TED: So year-over-year, how do we look? If that's more important than month to month, what are we seeing there?
DENNIS: Well, unemployment rates are continuing to come down. We are 3.2% ahead on job creation from the establishment survey. So this even confuses it. The establishment survey is a different survey than the household survey. It has its own noise, but less so I believe than the household survey, and especially the way the officials have to try to apportion out of these households by place of residence to get these unemployment statistics. So if we go to the establishment survey, we find 3.2% job growth in Arizona compared to under 2% nationwide. We're doing quite well compared to the nation.
We've got some usual suspects as the hotspot, you knowâ€¦the services, education, health care. Financial services are becoming a real sweet spot for the state with our growth in insurance companies and the like. We have concerns, and it's around electronics manufacturing, which has been on the steady decline for the better part of the last 20 years. We have not been able to grow in aerospace defense, that's kind of a stall worth for us. We're hanging on, but we're not growing very rapidly there and I noticed in this report it looks like we're picking up a little weakness in retail and department store sales, which to me is a complete reflection of what's going on on the Internet. You know? I mean how many folks just go to Amazon? And Amazon had their Amazon Prime day the other day.
TED: I did notice that construction jobs had increased a little bit month-to-month.
DENNIS: Yeah, year-over-year, year-on-year, yeah, some percent year-on-year.
TED: We don't pooh-pooh that one, that one makes sense.
DENNIS: They all kind of make sense in their own way. I'm just saying that in the unemployment rate statistics, there's just a lot of noise.
TED: What about the job quality? What about wages? What are we seeing there?
DENNIS: Well I think this is an interesting discussion. You know, there's been kind of a buzz in the newspapers about-- should we be looking at per-capita personal income? Should we be looking at, you know, per-unit metrics or should we be measuring overall population in job growth? It's just two different ways to measure the pace of the economy. A lot of economists--and there's a lot of economic analysis that's based upon metrics known as GDP per-capita. So the parallel here would be personal income for the state per capita. We lag the nation, but a significant part of that is the cost of living here is much lower. So what you would like to do is adjust for cost of living.
I think you still find that we're below the nation even after adjusting for cost of living, but not as much as the raw statistics without adjusting would say.
TED: All right. So, last question--what do we take from this report? There's a lot of noise, you're pooh-poohing a lot of stuff here. I mean what's going on out there? Wrap it all up.
DENNIS: I'm not an apologist for anything in this economy. I think you know me pretty well, Ted. I think that this economy is doing quite well. I'm very encouraged by Earl Deburg's consumer confidence survey that came out about a month ago. I'm seeing, overall, especially private sector job growth doing pretty well. If we can get government back in the game, which we could very well with 1-2-3 money and the K-12s coming back online in the fall, if they step up their hiring this fall compared to last fall we can get that impetus there. What we need is to get 3% job growth, get 12 months into it and then build 3% on that. Then we'll be feeling pretty good.
TED: All right, good to have you here. Thanks for joining us.
DENNIS: Great to be here, Ted.
NARRATOR: When London Bridge was completed in 1831, the automobile didn't even exist. By 1968, it may not have been falling down, but the bridge was sinking under the crush of modern traffic. So the City of London decided to sell it to a developer in Arizona.
Just off of State Route 95 in Lake Havasu City is a plaque memorializing the dedication and reopening of the bridge in October 1971. The two day gala included an elaborate dinner attended by 800 people, including then Arizona Governor Jack Williams and Sir Peter Stud, Lord Mayor of London. Behind the fireworks and go-go girls was over three years of risk taking and hard work.
It was the dream of Civi Wood and Robert McCullet, who were developing the fledgling town. The bridge was purchased for over $2 million. The 22 million ton structure was dismantled, each stone numbered, and shipped 10,000 miles to Long Beach California, and then trucked to Lake Havasu's Colorado River bank. It took 40 workers three years to reconstruct the bridge. The original 19th century construction crew of 800 took seven years, and 40 laborers died.
The bridge survived the German blitz of London during World War II. It's light poles are made from cannons seized from Napoleon's Army at the battle of Waterloo in 1815, the metal melted down and forged into lamps. Today, the London Bridge attracts over 1.5 million sun-seeking visitors a year exceeded only by the Grand Canyon.
Dennis Hoffman: Director of the L. William Seidman Research Institute at the W. P. Carey School of Business at Arizona State University