Personal income in Arizona slips 4 percent - East Valley Tribune: East Valley Local News

Personal income in Arizona slips 4 percent

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Posted: Thursday, March 25, 2010 12:31 pm | Updated: 3:47 am, Sat Oct 8, 2011.

The personal income of Arizonans slid more last year in this state than almost everywhere else in the nation.

New figures from the Bureau of Economic Analysis show the average per capita income of Arizonans last year dropped, to $32,935.

The fact of the slide is not surprising. The recession resulted in a decline nationwide of 2.8 percent.

But the drop in Arizona was 4.1 percent.

That had the added effect of putting Arizonans further behind the curve in comparing their income to that in the rest of the country.

In 2008, the Arizona figure was 85.5 percent. It dropped last year to 84.2 percent.

It also means that Arizona is now 43rd of all the states in per capita personal income, down two slots from last year — and six from the beginning of the decade.

University of Arizona economist Marshall Vest said a variety of factors are at work.

One is that per capita personal income is dependent on population growth.

Some of that is natural, with births last year outnumbering deaths by more than 54,000. But Vest said that even with the recession, people keep moving here.

Dan Anderson, economist for the Arizona Board of Regents, said what also figures in are the number of retirees: They count as part of the population used to determine per capita income, but they are not working.

He also said the companies that locate here have a lot of entry-level jobs with the commensurate entry-level wages.

But both concluded that much of it comes down to the fact that wages are lower here than in much of the country. And they said that’s a function of how the state markets itself to companies.

“There’s been kind of a philosophical debate in the state for a long time: Do we see our niche as being the low-cost entity in business?” Anderson said. The alternative is to be a “high value-added” state, where wages are higher “but the value of what you get from your employees offsets that greater cost.”

He said those involved in setting Arizona policy seem to have decided for the former.

Vest agreed, saying even the perennial push to lower taxes more and more sends a message to companies.

“We continue to market the state as a low cost of doing business,” he said. “If you’re the low-cost leader, you get the kinds of jobs that don’t pay high wages.”

Still, Vest said, salaries are likely to remain below the national average no matter what.

“You have to pay people more to live in Chicago or New York City or San Francisco or L.A.,” he said, versus the desire of people to live in “the wide open spaces” of Arizona. And, he said, there are other advantages.

“You don’t shovel snow, the earth doesn’t move, we don’t have terrorist attacks here,” Vest said.

One other factor relates to how the recession has hit Arizona versus the rest of the country. That has to do with the state’s dependence on growth itself as an economic force — and the construction jobs that go with it.

In 2006, more than 9 percent of all jobs in the state were in the relatively well-paying construction industry. When the bottom fell out of the economy, more than half of the jobs went away.

Vest said if there’s a bright spot in the report, it relates to the figures for the last quarter of 2009. He said income growth in Arizona is not only above average but is the 12th highest of all the states.

“It suggests that we may be coming out of this,” he said. “I think we are.”

Anderson, however, was not ready to go that far. He pointed out that the quarterly statistics are routinely revised with later-available data.

“I’m hopeful,” he said. “But I’m not, at this point, optimistic.”

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