Income levels for Maricopa, Pinal dip - East Valley Tribune: News

Income levels for Maricopa, Pinal dip

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Posted: Thursday, August 6, 2009 5:42 pm | Updated: 2:10 am, Sat Oct 8, 2011.

Some areas of the state seem to be weathering the recession better than others, at least when one set of figures are concerned.

A new report from the Bureau of Economic Analysis shows that per capita personal income in the United States grew by just 2.5 percent in 2008. That is barely more than half the growth between 2006 and 2007.

But Pima County managed to eke out a 2.6 percent year-over-year growth. More significant, that actually is an improvement over the prior year.

So did Mohave and Yuma counties.

At the other extreme, though, Maricopa and Pinal counties, considered a single statistical area, actually saw a 1.4 percent drop in per capita personal income between 2007 and 2008. And that follows a lackluster 1.0 percent gain the prior year.

So what happened?

David Drennon, spokesman for the state Department of Commerce, noted the main component of personal income is wages.

The state has lost more than 308,000 jobs since December 2007. And the jobless rate continues to increase.

As to why central Arizona has been hit harder, Drennon said the likely answer is the anemic pace of new construction.

"For decades, Arizona has led the nation in population growth,'' he said, with much of that occurring in the areas around Phoenix. That, in turn, has driven construction employment.

So when the bottom dropped out of that segment of the economy - jobs are down 26 percent in the last year alone - the total income from all those construction jobs also slid.

The impact is significant.

Two years ago, construction employment constituted 8.7 percent of all jobs in Arizona. That slid to 7.4 percent last year and is currently below 6 percent.

The decline is sharper in the Phoenix metro area, where construction employment made up more than 9.2 percent of all employment two years ago. Today it is around 6.1 percent.

Economist Elliott Pollack said the drop in income in and around Phoenix should not be surprising.

"It makes perfect sense,'' he said. "We did so lousy compared to everyone else last year.''

The situation, he said, wasn't simply limited to the number of jobs lost. Pollack said the kinds of jobs that disappeared were in the high-wage industries of manufacturing, construction, real estate and finance.

So why the different trend in Pima County?

Pollack has two theories.

"They didn't have as many high-wage jobs,'' he said, noting that per capita income there is still about $2,000 a year below the Valley.

But Pollack also pointed out that the figures from the Bureau of Economic Analysis are preliminary, meaning they are relying on estimates not only of income but of population. He said it is possible that the increase shown for Pima County is simply a statistical error that will be corrected when final figures come in.

Smaller counties present even greater opportunities for those sort of anomalies.

State Treasurer Dean Martin sees similar patterns.

"The majority of the housing bubble that burst was in Maricopa and Pinal counties,'' he said. That meant a sharp drop in not just construction jobs but related industries from real estate to cabinet makers.

His theory about Pima County, though, is that it is benefitting by the relatively high concentration of employment in companies like Raytheon, the University of Arizona and, more generally, in government.

Martin said business remains good for Raytheon. And he said while university and government employment has taken a hit, it is nowhere in the magnitude of what is occurring in some other sectors of the economy.

Drennon said the statistics for 2009, to be released next year, should be somewhat better, if for no other reason that the infusion of federal stimulus dollars.

He said his own agency is handing out money for energy efficiency and renewable energy projects. On a larger scale, Drennon said, the state Department of Transportation is awarding millions of dollars of new contracts for road construction.

The other thing Drennon said may make a difference is legislation approved earlier this year which provides generous tax breaks for renewable energy companies that locate their manufacturing operations or corporate headquarters in the state.

That, he said, should do more than simply add jobs. To get those tax breaks, companies need to have a majority of their salaries above the median wages being paid here now.

That new law does not take effect until the end of the year.

"And already, it's stimulating significant interest from companies that are looking to expand or relocate to Arizona,'' Drennon said.

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