Arizona’s Economic Health Report Card

Arizona is now the fastest growing state per-capita in the nation. That will undoubtedly pose both challenges and opportunities both to Arizona’s private sector and to our policy makers.

Policy must be grounded in a comparative analysis of the performance of both our public and private sectors to see where we are doing things right, and where we need to do better. Every five years, the Corporation for Enterprise Development publishes a report card for the states, grading them on various metrics impacting economic development. Arizona’s report card for 2007 makes W at Yale look like a Rhodes Scholar.

By themselves, the summary grades explain very little, but they do make for great headlines. To understand the value of what CFED publishes, one has to drill down considerably deeper into the data. That is what I am going to do over a series of four posts. This first post will deal with the components of our Performance grade, the next two will deal with Business Vitality and Development Capacity. The final post will deal with synthesizing the lessons this study can teach us, and where we can look for models of economic improvement.

Overall Performance = C

Performance is a basket of end-state measurements that attempt to summarize how economic development is proceeding in the state. Each metric gets a grade and an average is taken to arrive at the overall Performance grade. Here are the metrics of which Performance consists and Arizona’s scores:

As you can see, our Employment and Resource Efficiency scores save us from some very poor scores indeed. Here’s a handy view of how we are stacking up against other states, which also quite clearly indicates some regional trends.

The Employment Component = A

Employment is broken into the following components:

Employment is largely tied to population growth, so it is not surprising that we did so well in this measure. The employment trends used are not change in the employment rate, but rather the overall growth in the workforce. Due to our massive growth rate, Arizona ranked #2 and #6 in the nation in Long-Term and Short-Term Employment Growth, respectively.

The other components of Employment, Unemployment Rate and Private Sector Layoffs, found us toward the middle of the pack, and #21 and #20, respectively.

So, our excellent Employment score, which helped inflate our overall Performance score to a C, is largely based on our rapid and reckless population growth.

The Resource Efficiency Component = B

The other area in which we did very well is Resource Efficiency, scoring a solid B. Yet, when you look under the hood at the components of this metric, there is a lot to be concerned about here, as well.

Once again, it is one quite good metric that nets us a better score than one might expect; in this case it is our Per Capita Energy Consumption, which due in part to our weather, ranks 7th in the country.

The other measures find us again comfortably in the middle of the pack. One ranking of which we should be ashamed is our Use of Alternative Energy, in which we are #18, despite our manifest natural advantages in solar energy production. The most shameful measure, however, is our Toxic Release Inventory. This measures the number of pounds per capita of toxic waste that is actually released into the environment: Arizona ranks #47 in the nation with a whopping 60.41 pounds per person. The only states worse are #50 Alaska at an astonishing 854.25, #49 Nevada at an somewhat less eye-popping 229.20, and #48 Utah at 74.68. Much of the release load in these states, and our own, is due to mining and other extractive industries. For comparative purposes, consider #1 Vermont at just 0.32 per capita.

In the remaining Resource Efficiency components we scored well within the herd. Given our addition to sprawl, our large empty spaces, and disdain for public
transport alternatives, it is not surprising that we ranked #18 in Vehicle Miles Traveled. I rather expected us to be worse.

In Rate of Recycled Waste we scored a slightly below average #27. There is a lot of room to improve in this segment, and a certain flintiness when it comes to paying for solid waste handling is likely holding us back. Finally, in Greenhouse Gas Emissions we ranked #15, not terrible, but hardly anything to celebrate.

If our economic Performance was graded artificially high due temporary hyper growth in population and clement weather, the metrics that best illustrate our actual economic performance are those where we lag far behind the other states, and far behind our own potential.

The Earnings and Job Quality Component = D

In this category we start to see some of the major challenges faced by Arizona’s citizens, unmasked by our explosive population growth. The metric in this component start to give a much better idea of what it is like to be an average working family in Arizona.

Average Annual Pay measures the average pay of all workers in the state who are covered by unemployment insurance. Thus this metric doesn’t encompass the grey economy of illegal and informal employment, which is a large sector in Arizona, and would likely drag down the average far further. Our average pay was $36,646 placing us in the middle rank of states at #21.

Average Annual Pay Growth is fairly self-explanitory. Between 2003-2004 pay grew by 4.54%, placing us at a respectable #13. So far, Arizona seems to be on track for an overall C, or even a B for this component.

Employer-Provided Health Insurance measures the percentage of non-elderly workforce covered by employer-based health insurance. Arizona’s rate was 56.7%, placing us at a disreputable #44 in the nation. This ranking equates with a grade of F. We need to be swinging for the 70th percentile where the top ten states already are. Clearly, a top prior for our legislature should be to work on expanding health insurance access through employers, or take drastic steps to provide health insurance to those employees who are not covered by their employers.

Working Poor is the percentage of households in which at least one person is working whose combined income is no greater than 150% of the federal poverty level (which is ridiculously low, BTW). Sadly, Arizona ranks #44 with a pathetic 21% of households living in poverty. Again, this ranking draws a grade of F.

Involuntary Part-Time Employment is the percentage of workers who work part-time by necessity rather than be choice, either because they cannot find full-time work, or because they have to supplement their income by part-time work. It also indirectly measures the degree to which the state’s employers are seeking to minimize their payroll costs by disaggregating full-time work into lower pay and lower benefit part-time positions. Arizona is #38 in the nation with 13.9% of its workforce engaged in involuntary part-time work.

The overall picture of employment conditions provided by the metrics of the Earning and Job Quality component belie the rosy picture drawn by the hyper growth of our population and workforce. Our average annual pay and pay growth are undistinguished, while our workforce suffers from lack of access to health insurance, poverty, and the marginalization of involuntary part-time jobs.

Equity = D

In this category we are able to disaggregate economic outcomes and take a look at how fairly economic progress is being shared among the residents of Arizona. With a D overall, it is a fair bet that Arizona is not doing a good job of ensuring that rising tides lift all boats; in fact, it seems the row boats have all been hulled, and the yachts all have private locks to allow them to berth well above sea level.

The metrics which make up the Equity component are as follows:

Poverty Rate simply measures the percentage of the population living at or below the federal poverty level. In Arizona, that percentage is a shameful 13.9% placing us at #38 in the nation, just 3.4% from Mississippi and New Mexico who tied for dead last.

Income Distribution compares the income of the top 20% of household incomes to those in the bottom 20%. In Arizona, the income of the top 20% is 12.37 times that of the lowest 20%. We rank #42 in the nation. Only 8 states have a greater disparity of wealth than we. And the worst state, Louisiana, has a multiplier of 14.37. We aren’t terribly far off the pace for being the most inequitable state in the nation. Again, this performance is a F grade.

Income Distribution Change measures the direction in which the trend of inequality is moving and at what rate. The gap between the richest and poorest in Arizona grew between 2000 and 2003 by 8.91%. We rank at #37; the 23rd worst performance in the nation. That’s pretty bad. Unless, of course, if you are Republican and think that income disparity isn’t growing nearly fast enough, in which case you should still be pissed because Mississippi’s disparity grew at an astounding 26.79%. Clearly, the hired help in Maricopa aren’t giving it their best.

Disparity Between Rural and Urban Areas is a composite index score of six economic performance measures that compare
absolute value differences between nonmentropolitan and metropolitan
counties within a state. Measures include long-term employment growth
(2001-2005), short-term employment growth (2004-2005, unemployment rate
(2004), average earnings (2004), long-term average earnings growth
(2000-2004), and short-term earnings growth (2003-2004). Arizona did fairly well in this regard, ranking #15 in the nation.

The Equity performance of Arizona’s economy, graded D, is a stark indictment of our development policies and speak of a lack of political effort to spread the benefits of our economic development to all of Arizona’s citizens (though we are doing better by our rural counties than many). The working poor make up a disturbing percentage of the workforce, and they are falling further behind, even as the greatest share of the benefits of economic growth accrue more and more to those at the highest end of the income distribution.

Quality of Life = D

Quality of Life attempts to measure the intangibles of health, the treatment of vulnerable and dependent populations, access to the American dream, and the strength and vitality of civic society through a range of metrics:

Given that Net Migration is obviously going to be a very strong metric for Arizona (we were #2 in the nation for 2004-2005, Nevada nosed us out for #1 that year), the fact that we ended up with a D anyhow is a strong indictment of the quality of life our political leadership has been able to create.

Arizona performance was quite average in Infant Mortality, grabbing #21 with 6.5 deaths per 1000 live births. But it certainly nothing to brag about. The United States has the second highest infant mortality rate in the developed world. A baby born in Arizona has a 3 times greater chance of dying in its first month than a baby born in Japan. We can do a lot better than this.

Our performance in Uninsured Low-Income Children is miserable. We rank nearly dead last at #47 in the number of children in households under 200% of poverty without health insurance. The ramifications of that radiate throughout our health system, our educational attainment, our crime rate, our economic productivity, and, of course, our infant mortality rate. It is simply unconscionable that this situation should continue. I am glad that many of Arizona’s Democratic leaders have dedicated themselves to the goal of remedying this problem. Unfortunately, the Republicans in charge of our legislature couldn’t be more hostile.

With the mouth-foaming theocons running our GOP you would think that no teen would dare get pregnant in Arizona. You’d be wrong. Arizona’s Teen Pregnancy rate is shameful. We rank #47, with the third highest rate in the nation. Obviously, just saying no and holding an aspirin between the knees isn’t cutting it for a lot of these young people. We need comprehensive sex education and unfettered access to reproductive health services, including abortions.

Considering how many folks retire to Arizona, our Heart Disease score is surprisingly good. We are ranked 11th in terms of deaths from coronary heart disease. Part of this could be our excellent and ground-breaking coronary disease research centers and hospitals (Arizona is a pioneer in coronary surgery and medical devices), and part could be that our citizens are just to tough to die.

Arizona’s Homeownership Rate is also fairly good. At 71.1% of households owning their home, we rank 27th in nation. Just a bit below average. Obviously, we can do better, and if we aren’t to fall further behind we have to address affordable housing in our fast growing metro areas. We are quickly running out of new land to sprawl into, and stretching our water and municipal services with unrestrained growth. As we infill to grow further home prices will climb and many of our citizens may not be able to keep up if we don’t plan wisely now.

Arizona is #20 in Charitable Giving. Certainly not a bad ranking, but I wonder how much of that is due to the legislature’s attempts to redirect state taxes to private schools disguised as charitable gifts and scholarships. If those expenditures were reversed out, I wonder if our rank would be quite as rosy.

Arizona’s Voting Rate is nothing to celebrate. We are #43 in the nation with a voter turnout in the Presidential election of 2004 of just 54.3%. With the growing burdens on new voters to register and vote, imposed in fits of xenophobic and racist panic, I don’t foresee much potential to significantly increase that score. It is a sad irony that we have one of the most progressive campaign finance systems in the nation, and some of the most draconian and wrong-headed registration and voting laws. I hope that the idea of an all vote by mail ballot rides again in Arizona. That could break the deadlock and pull us out of the back of the pack in voter participation. Just look at Oregon, who switched to mail only balloting a few years ago; they are now ranked #5 in the nation with a participation rate of over 70%.

Arizona’s Crime Rate is a scandal. We are dead last in the nation with a rate of violent and serious property crime of 5,845 per 100K people in 2004. The sad thing is that our leadership seems only to know how to build more prisons and pass ever more draconian laws (which force the tax payers to support criminals long past when they are dangerous). There have been useful reforms such as drug courts and some limited experiments in community justice. But the standard solutions are broken, along with the incredibly stupid prohibition policies regarding drugs. The scariest thing is that if being dead last in the nation with highest incarceration rate in the world (which must make Arizona something like world crime central), doesn’t push us off the dime to institute radical and far-reaching reforms to our criminal justice system, what will it take?

Out stratospheric crime rate, the neglect of our children’s health and their mis-education about reproduction, and our laughably low participation in our democracy, when combined with an lackluster performance in other quality of life metrics place Arizona deservedly at the bottom of the American barrel. We can and must do much better if Arizona is going to rise above its origins as a cheap labor, cheap land retirement home for the nation.

Summary

Where we find ourselves now is a reflection of conscious choices by our political leadership, not the blind workings of the invisible hand on the market. We can do better, but not by relying on the same party’s leadership who led us to the back of the pack of American states in so many ways. To address these deep problems, who need a new Democratic leadership in the state capital, not just at the Governor’s desk.