State to add 543000 jobs in 8 years, economist says

Posted: August 13, 2018 / Source: Ahwatukee Foothills News

State economists predict Arizona will add 542,975 new jobs by 2026, and one out of every eight of them will be in preparing and serving food.

Doug Walls, research director of the Office of Economic Opportunity, also figures: three-fourths of all new jobs will be in Maricopa County, with the majority of those in the communities outside Phoenix; an aging population will sharply boost the need for healthcare workers, from higher-paying medical professions to those in lower-paying jobs like aides; outside Maricopa County, the strongest growth will be in Yavapai County, much of that driven by that need for more healthcare workers; further out, job growth in rural areas will lag, with just a 0.8 percent annualized increase in Apache, Navajo and Greenlee counties, and not much better at 0.9 percent for Graham, Greenlee, Cochise and Yuma counties.

And construction employment, while predicted to grow a healthy 3 percent a year on average, still won’t get Arizona anywhere close to the number of people working in that sector before the recession and the burst of the housing bubble.

Overall, the report predicts an average 1.7 percent annual growth rate in new jobs between now and 2026. That compares with just 0.2 percent for the decade ending in 2016.

That comparison, however, is not exactly fair given that 10-year base period includes the Great Recession, when the state was shedding employment far faster than new jobs were being created.

Arizona lost about 300,000 jobs between 2007 and 2010. And at one point the state’s jobless rate topped 11 percent; it now is 4.7 percent.

Walls said jobs should grow faster in Arizona than the rest of the country, which currently posts a 4 percent jobless rate. But he would not predict what Arizona’s unemployment rate would be in 2026.

Much of what is driving both the employment growth and the type of jobs created is related to population.

It starts with the fact that Arizona, which actually saw population growth slow to less than 1 percent at the height of the recession, once again is growing twice as fast as the national average. And that, Walls said, has a ripple effect.

“More people within the area, either migrating to the area or born and raised into the Arizona economy, are going to consume healthcare, are going to consume housing, food, clothing and other resources,’’ he said. “That’s going to drive a lot of economic activity within an area.’’

The biggest jump in jobs, in pure numbers, is in food preparation and serving-related occupations, which is expected to create 67,231 new jobs, twice as many as health care support.

These are jobs that, in general, pay less than the statewide average. But Walls said the sheer growth in the number of jobs is simply reflective of how large a segment it already is of the state’s economy.

In fact, though, the number of current employees at food service and drinking places is just 8 percent of the economy, versus the 12 percent of the total job growth predicted by 2026. And the annualized growth rate for this sector is 2.4 percent, versus the 1.7 percent for the economy as a whole.

Walls also said that the 2016 voter-mandated increase in the minimum wage – from $8.05 an hour to currently $10.50 and going to $12 by 2020 – hasn’t had the dampening effect on hiring for these jobs that was predicted by the Arizona Chamber of Commerce and Industry in trying to convince voters to reject the initiative.

“We’ve seen strong employment growth rates and total numeric change in leisure and hospitality, food and drinking places, on a month-to-month basis,’’ he said. Walls said there was no indication that higher minimum wages “had any impact on that industry.’’

Still, he said, there may be other factors at work that are keeping employment in the food service industry growing faster than many other segments of the economy. And one of them, Walls said, are changing consumer habits nationally.

Most notably, in 2015, for the first time ever, the amount of money people are spending on food and drink outside the home exceeded what they were shelling out at grocery stores. And that disparity continues to grow.

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