Ronald J. Hansen

The Republic | azcentral.com

Arizona finally recovered the jobs it lost during the Great Recession, ahead of eight other states

The state's recovery is largely due to growth in the Phoenix area

More growth, especially in the Tucson area, is expected through mid-2017

Arizona formally matched its pre-recession employment levels in December, closing a job hole that lasted eight years and lingered 19 months longer than the nation's.

The numerical milestone is a reminder of how severely Arizona was hit by the Great Recession and how unevenly it has recovered. The Phoenix and Flagstaff areas, for example, are the only parts of the state fully recovered through February, but they offset the ongoing shortfalls elsewhere.

Only Nevada lost a greater share of its workers during the downturn than Arizona. Even so, Arizona has recovered faster than eight states.

The state's Office of Employment and Population Statistics expects Arizona's recent growth spurt to continue through mid-2017, helping bring a broader recovery to the state, especially in the Tucson area.

That projection comes as Arizona posted another solid month of employment growth in February, adding a net 25,300 jobs. That helped push down the state's unemployment rate to 5.5 percent. Arizona remains well above the nation's 4.9 percent jobless rate. Over the past 12 months, Arizona's work force has added 79,000 jobs, or 3 percent growth.

The figures released Thursday are subject to revision, but along with continued growth in population and personal income, points to a state that has belatedly ended one of the darker chapters in its economic history.

“I don’t know if analysts across the state are popping champagne but they ought to be,” said Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W.P. Carey School of Business at Arizona State University. “The pace of the recovery is not what anyone anticipated.”

"This recession was very different for Arizona," said Doug Walls, a research administrator for the Arizona employment agency. He noted that unlike the two recessions that preceded the 2007 downturn, Arizona fell further and its recovery took longer.

Within Arizona, an uneven recovery



Metro Phoenix formally filled its jobs deficit in August and had 14 percent more jobs in February than it had lost. Flagstaff was at 108 percent.While Arizona has regained its overall job total, the recovery is almost entirely due to growth in the Valley.

By comparison, the Tucson area recovered only 76 percent of its lost jobs through February. That area was hit hard by the federal budget cuts known as the sequester and by cutbacks at the University of Arizona.

Yuma was at 88 percent. Prescott was 78 percent of its former total.

The Lake Havasu City area was at 31 percent. Walls said that was likely due to the continued weakness in the Las Vegas area.

The remaining rural areas of the state still had 16,000 fewer jobs through January.

Arizona unemployment rate tumbled in January

Industries evolve

Beyond the geographic disparities, the state's industrial footprint has changed, too.

The housing crash and wider recession ravaged the construction industry, which has scarcely recovered at all.

At the end of 2007, there were more than 210,000 people working in construction around the state. By February 2011, there were less than 110,000. In January this year, there were nearly 132,000.

Eight years after the recession began, the construction industry still had nearly 80,000 fewer workers.

In the same time frame, but probably not involving the same people, the health care industry has added 74,000 jobs in Arizona.

The juxtaposition is only one of many changes in the way Arizonans make a living today.

Government work, most of it working for local schools, has 25,000 fewer jobs eight years later. In its place, the hospitality industry has added 27,000.

The state has lost 17,000 manufacturing jobs but gained 19,000 in financial activities.

The information sector, aided by telecommunications, has grown more than 6,000 jobs while the mining industry continues to shrink amid a global slowdown for resources like copper.

The recovery didn’t depend on construction and real estate, defense contracting or semiconductors, all pillars of Arizona’s industrial past, McPheters said. Instead, it is defined by growth in fields like financial services, health care and professional business services.

“The jobs that have grown ... the quality has been pretty good in this recovery. Going into 2016, it’s not food services. It’s not government.”

Arizona hit harder than the U.S.

The Great Recession technically began in December 2007 and ended in June 2009. For many, those periods don't really capture the reality of what they lived.

The U.S. entered the recession with 5 percent unemployment. At its peak, unemployment reached 10 percent for the nation.

The change was even more dramatic in Arizona, which had one of the nation's strongest labor markets entering the downturn.

Unemployment stood at 4.4 percent in Arizona in December 2007. That low rate had been creeping upward from as low as 3.7 percent as the state's booming housing industry was beginning to lose steam. Unemployment in Arizona peaked at 11.2 percent in the last two months of 2009, the middle of a six-month stretch of at least 11 percent joblessness.

Nationally, employers dropped 6.9 million workers by May 2009, when economists determined the recession had ended. Employment didn't actually hit bottom until February 2010. By that time, the nation had erased 8.7 million jobs, or 6.3 percent of all the workers it had at the outset.

In Arizona, 297,000 workers lost their jobs by the time the state hit bottom, or 11 percent. Only Nevada lost a greater share.

The U.S. as a whole reached its pre-recession peak in May 2014, five years after the recession ended. At the time, states like California and Texas led the recovery. Arizona had recovered less than 60 percent of its losses when the U.S. was back to pre-recession levels, one of the smaller shares in the nation.

In December, Arizona closed its job hole the same month as Rhode Island and ahead of eight other states. Alabama and New Mexico remained less than 60 percent recovered through January, the lowest totals in the nation.

Reaching pre-recession employment is, however, only one measure of the recovery. By others, Arizona has a long ways to go.

The state entered the recession with one of the lowest totals for unemployed, underemployed and discouraged workers, 7.7 percent. By the time that peaked, at 18.7 percent in the first three months of 2011, Arizona was among the hardest hit in the nation.

The U.S. as a whole moved from 8.8 percent at the outset to 17.1 percent at its worst.

Through December, Arizona still had a 12.8 percent underemployment rate, topped only by Nevada.

Does Ducey deserve credit for jobs in 2015?

State-by-state timetable

Eight years after the Great Recession began in December 2007, Arizona formally reached the job level it had when the downturn began. Here’s the timetable for other states and their respective recession-era losses:

2011

April 2011: Texas (287,000)

September 2011: South Dakota (8,700), West Virginia (21,000)

2012

February 2012: New York (285,800)

April 2012: Nebraska (27,100); Oklahoma (63,300)

September 2012: Massachusetts (111,800)

November 2012: Utah (92,000)

December 2012: Louisiana (61,500)

2013

January 2013: Montana (20,300)

February 2013: Colorado (137,300)

March 2013: Minnesota (146,300)

June 2013: Iowa (60,500)

August 2013: Washington (176,900)

2014

January 2014: California (1,286,000), Vermont (13,000)

February 2014: Kansas (65,500)

April 2014: Maryland (143,900), Tennessee (213,200)

May 2014: Virginia (180,900)

July 2014: Idaho (55,700), Kentucky (119,300)

August 2014: Georgia (332,400), Hawaii (44,100), South Carolina (154,600)

October 2014: Delaware (33,600), Indiana (214,900), New Hampshire (27,600), North Carolina (326,600)

November 2014: Florida (802,500), Oregon (146,700), Pennsylvania (247,100)

December 2014: Wyoming (14,400)

2015

January 2015: Wisconsin (167,600)

February 2015: Arkansas (57,400), Michigan (412,000)

July 2015: Ohio (416,800)

October 2015: Illinois (397,900)

December 2015: Arizona (296,800), Rhode Island (31,400)

Still waiting: Alabama (59 percent of 154,600), Connecticut (78 percent of 111,100), Maine (75 percent of 28,400), Mississippi (76 percent of 75,700), Missouri (91 percent of 149,000), Nevada (91 percent of 173,900), New Jersey (90 percent of 244,700), New Mexico (53 percent of 47,800)

Never went negative during the recession: Alaska and North Dakota

Source: U.S. Bureau of Labor Statistics, Republic research.