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Economists: Arizona Poised For Boost In Job Creation This Year

Arizona State University economists are optimistic that 2015 will be the best year yet for job creation in the recovery thus far, but raised concerns about wages and education being underlying problems.

The discussion was part of ASU’s annual Economic Outlook Luncheon hosted Wednesday by the W.P. Carey School of Business.

Arizona has regained about 80 percent of the jobs it lost during the Great Recession, and most of the remaining 20 percent, or about 68,000 jobs, could be recovered this year, said Lee McPheters, research professor and director of W.P. Carey’s JPMorgan Chase Economic Outlook Center.

McPheters said 99 percent of these new jobs are coming from service industries, such as financial services, health care and also a category dubbed “other services.”

 “These ‘other services’ are basically consumer services like dry cleaning, massage services, barber shops, repair services, automobile repair, and so forth,” he said. “(Services) jobs are growing 8 percent and it suggests that consumers are taking some of the savings from lower gas prices and are getting some things taken care of that perhaps built up over the last year.”

But service industries typically pay lower wages, and McPheters said that affects Arizona’s per capita personal income, which has recently been declining and slipped to No. 41 in the nation last year.

Per capita personal income is one way to measure an area’s wealth or standard of living, so when it’s declining, “it’s a long-term threat to the Arizona economy,” McPheters said.

“Job quality, we need to emphasize that, and then we look at the big picture: what drives that? It’s absolutely linked with education. So then you look at what’s Arizona’s education policy. It’s not the best.”

He noted new data released by the U.S. Bureau of Labor Statistics this week, which showed Arizona had the lowest teacher salaries in the West — $43,050 annual average — last year and was below the $55,510 national average.

“We were above the national average in teacher pay until about 1980, and now we’re last in the west and well below the national average,” said Dennis Hoffman, economics professor and director of W.P. Carey’s L. William Seidman Research Institute.

Hoffman said the other issue is funding.

“The educational funding formula is very complex, it’s a mess, it clearly is a mess, and it certainly needs another look,” he said. “But the overall funding is the big challenge.”

Kristena Hansen covered commercial and residential real estate for the Phoenix Business Journal for the past two years, which involved a range of topics from housing trends, publicly traded home builders and real estate investment trusts (REITs), and commercial development.