PHOENIX — Arizona is now in the bottom 10 of all states for per capita personal income, the result of the jobs here paying less than those being created in the rest of the country.
The latest figures put Arizona at No. 41, said Lee McPheters, an economist from the W.P. Carey School of Business at Arizona State University. That’s because the U.S. Bureau of Economic Analysis puts average per capita income for 2014 at $37,895, 82 percent of the national figure.
The trend line isn’t encouraging, McPheters said, as he and other ASU economists gathered Wednesday to discuss the outlook for the coming year. In 1995 Arizona was 35th in the nation. It slid to 37th by 2000 and 38th five years after that. It hit No. 40 in 2007.
Arizona’s projected employment growth is in the 2.6 percent range this year, “the best that we’ve seen in this recovery,” McPheters said. “But then you look at Utah. They’re growing (at) 4 percent. ... We’re just not keeping up with the pack.”
One thing could help stem Arizona’s slide in the national rankings: Really bad times elsewhere.
Weak oil prices have pulled the rug out of energy-producing states, the economist noted. Particularly hard hit have been states like North Dakota, where the costs of production, such as fracking, have made continued drilling uneconomical.
That, however, still leaves the issue of the kinds of jobs being created in Arizona — and what they pay — which is what leads to the state continuing to slip in national rankings of per capita income.
As people move to Arizona, it creates a demand for service jobs, which are not high paying. “So we need some drivers for this economy” — like manufacturing jobs, McPheters said.
But even that is not an answer, said ASU economist Dennis Hoffman.
An increasing reliance on automation means companies have boosted their output by 25 percent since 2010 but have increased their payrolls by less than 5 percent, Hoffman said.
Then there’s the fact that many of the manufacturing jobs here are defense-related. “Essentially, there’s a lid on that as well,” McPheters said.
That is borne out by the latest employment numbers, which show there are 500 fewer Arizonans working in manufacturing now than a year earlier.
Construction jobs also pay well, but that sector has come nowhere near to recovering, noted economist Michael Orr.
So what’s left to pull Arizona up?
Hoffman said the state has shown signs of attracting jobs in financial services, including the insurance industry.
“It doesn’t pay perhaps as high a wage as a defense or sophisticated tech manufacturing position would pay,” he said. “But it pays pretty well.”
Hoffman also put in a plug for the state spending more on education.
He said teacher salaries in Arizona in the 1980s were actually above the national average. Now they’re at the bottom of all the states in the region and near bottom nationwide.
Arizona will do better in attracting high-tech firms when the state produces and retains more college graduates who are trained for the positions these companies need to fill, Hoffman said.
Whatever the quality of jobs being created, McPheters said they’re not going to be equally divided.
He said 85 percent of the 65,000 jobs expected to be created this year are going to end up in the metro Phoenix area. That could drop the region’s unemployment rate this year to below 4.5 percent.
The rest of the state will have to divide up the fewer than 10,000 jobs remaining.