Update: Jobs and Arizona’s economic recovery

January 28, 2013

By Lee McPheters, editor, Economy@WPCarey


Three and one half years after the end of the recession, Arizona lags behind the nation in the proportion of lost jobs regained. This is not because of slow growth in Arizona, but is due to the fact that the state was harder hit in the downturn and industries have more jobs to replace. Moreover, the Arizona employment recovery began later than the national turn around in job growth.

Nonagricultural employment in Arizona fell by 12 percent from the peak in 2007 to the bottom of the cycle in 2010. In the U.S., jobs decreased by only 6 percent. Job growth recovery began for the nation in February of 2010. Arizona growth became consistently positive seven months later, in September. Since the turn-around, the U.S. has recovered 54 percent of the 8.8 million jobs lost in the recession. Arizona has regained 35 percent of its 314,000 lost jobs.

The job loss percentage for every sector was greater in Arizona. The most extreme example is construction employment, down 55 percent in Arizona from the peak (June of 2006) to the bottom (June of 2011). Nationally, construction also took the greatest tumble of any sector, but the decline was smaller, at 29 percent.

Arizona’s percent losses in retailing, business services, and the hospitality sectors were nearly twice as large as at the national level. State government lost 14 percent of jobs in Arizona compared to three percent in the average state.

Health care in Arizona and nationally continued to add jobs right through the recession. Between December 2007 (the start of the recession) and December of 2012, national health care jobs are up 10 percent, while such jobs are up 15 percent for Arizona.

Arizona job recovery has been greatest in leisure and hospitality (77 percent of jobs regained). But even Arizona’s strongest rebounding sector lags the U.S., where 135 percent of leisure and hospitality jobs have been regained.

After bottoming out, most sectors in the Grand Canyon State have grown more rapidly than the national average. From the bottom of the employment cycle through December of 2012, Arizona transportation and warehousing jobs are up 9.9 percent, compared to 6.1 percent nationally. Arizona construction employment is up 9.5 percent, over four times faster growth than the national page of 2 percent.

Job growth in Arizona for all of 2012 was 2.1 percent, good enough to rank the state fifth among all states in rate of growth (following North Dakota, Oklahoma, Utah and Texas) for the year. Phoenix ranked third among large metro labor markets (greater than 1 million workers), with 2.5 percent gains. Only Houston (3.4%) and Seattle (2.7%) added jobs at a faster pace in 2012.

Arizona added 50,500 jobs in 2012 and job growth in 2013 is expected to be in the range of 60,000 jobs. With some 200,000 jobs yet to regain, recovery of all lost jobs back to the employment peak of 2007 may still require an additional two to three years.

Note: analysis based on seasonally adjusted data for states and the nation from U. S. Bureau of Labor Statistics, through December 2012. Data are subject to periodic revision.