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The Verde Independent | Cottonwood, Arizona

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11/27/2012 10:47:00 AM
Arizona salaries continue to lag behind national average

Howard Fischer
Capitol Media Services


PHOENIX -- Arizonans continue to lose ground in the bid to at least keep pace with national income trends.

New figures Monday show that the year-over-year gain in per capita personal income in Arizona's six metropolitan areas was no more than 4 percent. And in some cases it was even less.

By contrast, the national change between 2010 and 2011 was 4.4 percent according to the U.S. Bureau of Economic Analysis.

What makes the numbers even more bleak is that Arizona per capita incomes are already far below the U.S. average. So the failure to even match that 4.4 percent national change means that the state is falling even further behind.

Economist Dennis Hoffman of the W.P. Carey School of Business at Arizona State University called the latest figures "disappointing.'

Hoffman said about the only "silver lining in an otherwise dark cloud' is that the cost of living in much of Arizona is below the national average. So that means the below-average incomes go farther here.

Marshall Vest of the Eller College of Management at the University of Arizona was a bit more upbeat about the numbers.

"At least per capita income is moving in the right direction,' he said.

Gov. Jan Brewer, who has been in office since the beginning of 2009, said she had not seen the report and could not comment Monday on whether it indicates weakness in her economic development policies.

"But I believe that we've been very successful and we feel comfortable moving forward with what we have done,' she said.

Gubernatorial press aide Matthew Benson cited a report by the Bank of Montreal which looks at things like the jobless rate and home prices. It rates Arizona's economic performance the fifth best in the nation; less than six months ago the bank, parent of BMO Harris Bank, ranked Arizona as 38th.

And something else on the horizon may help: California voters just approved a quarter-cent increase in state sales taxes for four years and higher income taxes for those making at least $250,000 a year for seven years, retroactive to the beginning of this year.

Vest said that may convince those living there that life is better here. More to the point, "a lot of people from California are bringing their businesses with them.'

Arizona already is fishing in that pond, opening economic development offices earlier this year in Santa Monica and Santa Clara.

"With all the tax reform we've accomplished and with the stability and accountability in Arizona state government, we have been very successful in regards to luring California businesses,' Brewer said.

But the income gap remains.

Arizona has traditionally had lower per capita personal income than the national average, in part because of the number of both retirees and children, people without income but who are part of the computation.

But Hoffman said Arizona is not even keeping pace.

By contrast, he said the places like Silicon Valley, Boston and even Austin are showing an acceleration of income, even though many are high cost-of-living areas. Hoffman attributed that to what economist Enrico Moretti called the "new geography of job growth.'

"It's the tech people that are driving higher incomes,' Hoffman explained. "Tech firms and tech workers are flocking to the same old places.'

He said Arizona needs to become one of those destinations if it is ever to show improvement in wages. And Hoffman said lower taxes are not the answer.

"We've clearly got our tax rates set at levels that can attract businesses,' he said. "Taxes and regulations are no longer any impediment whatsoever to businesses moving to Arizona.'

What's needed, Hoffman said, is "a smart, talented workforce' and a place they can come and have a market for their wares.

"We've got some work to do there,' he said, including education and "things that can improve the quality of our workforce.'

Vest said Arizona is both blessed and cursed by things like the weather and low cost of living which attracts newcomers.

"Arizona has always been, I think, you could describe as a state that's overpopulated and its economy is underdeveloped relative to one another,' he said. In fact, Vest said some of that took care of itself when the economy tanked.

"We did get quite a few people to leave in the last recession,' he said. "When all those construction jobs disappeared, a lot of people packed up and left.'

But Vest sees a reversal coming from the West.

"We see a lot of people moving here from California who are fed up with the high taxes ... and the congestion,' he said, making Arizona "quite attractive.' Vest said that migration will start up again "as soon as Californians are once again able to sell their houses.'

Benson said people should pay more attention to the Bank of Montreal report than to the per capita personal income figures. He said the fact the bank relies on things like home values rather than earnings to rate economic performance does not diminish the report's importance.

"That the largest single thing factor that impacts a person's wealth,' Benson said.


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Reader Comments

Posted: Wednesday, November 28, 2012
Article comment by: Citizen Not Subject

Just remember kids.
Higher wages = higher cost of living
no matter where you are


Posted: Tuesday, November 27, 2012
Article comment by: Mary Jane

No surprises here. Arizona has always been a 'Right to Starve' state!



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