Jobs report: Arizona wages rising faster than nation's

At least a year before Arizonans voted last November to increase the state’s minimum wage to $10 an hour, the state’s average hourly earnings began growing faster than the nation’s, the state’s Office of Economic Opportunity said Thursday.

Arizona’s average hourly earnings began outpacing the nation’s in mid-2015 and when last measured, in April, they were growing at a rate of 5.6 percent over the previous year. The national average was growing at 3.2 percent.

Two economists attributed that to a growing shortage of workers as well as the increase in the state minimum wage that voters approved last November.

“I think that Arizona’s wage growth has been accelerating because our labor market has been gradually tightening,” said George Hammond, a University of Arizona economist and director of its Economic Research Center.

“In other words, firms are having to compete harder for workers than they did a couple of years ago. In addition, the new minimum wage kicked in in January and that’s also contributing to the rapid increase in private-sector average hourly wages,” he said.

Lee McPheters, director of Arizona State University's JPMorgan Chase Economic Outlook Center, said the "Arizona is adding jobs faster than the average state. This puts pressure on wages as well, especially in those industries such as manufacturing or the professional categories in health care and, of course, construction, where workers have to be attracted from  other states. So, after a long dry spell, wage growth in Arizona has picked up."

The state’s average wage, though, remains at $25, about $1.20 less than the national average, said Doug Walls, research administrator at the state office of economic opportunity.  

“The gap between Arizona and U.S. earnings is closing,” he said.

Some sectors are seeing very high increases. Trade, transportation and utilities; financial services and other services are seeing increases of around 8 percent, compared with a year ago.

Arizonans voted in November to raise the minimum hourly wage to $10 from $8.05. Although effects of the state’s higher minimum wage haven’t been studied, Walls said workers in one sector that seem to have benefited from are in leisure and hospitality, including jobs at restaurants, bars and hotels. 

In December, those workers were getting wages that averaged only .2 percent higher than a year earlier. In April, their wages averaged 5.5 percent higher.

McPheters said the law is especially helping food-service workers and those in the lower rungs of retail and health care, among other industries.

Meanwhile, in Tucson

The good news in Pima County is that our unemployment rate not only fell in April to 4.2 percent from 4.4 percent in March but came in lower than the state rate of 5 percent and the latest U.S. rate of 4.4 percent. Arizona’s unemployment rate was unchanged from March to April.

But the bad news is that while Arizona as a whole added 51,900 jobs over the year (April 2016 to April 2017), for a 1.9 percent increase, metro Tucson added just 700, for a rate of .2 percent.

One reason could be that Pima County did especially well in 2016, making 2017 growth especially weak. In April 2016, metro Tucson had added 5,500 jobs over the previous year, or 1.5 percent, according to the U.S. Bureau of Labor Statistics.

“We have seen rather strong growth in Pima County in 2016. A lot of that has adjusted to much lower levels,” Walls said.

Still, it is not a good sign that his office also reported that Pima County lost 100 jobs over the month from March to April. Those numbers are preliminary.

Hammond said Tucson has had a slow start this year but that it is too early to say what is behind that.

“I’m not sure the preliminary data so far really reflects the underlying situation. We’ll have to keep an  eye on it,” he said.

Overall, metro Tucson seems to be trading jobs in stores for those in restaurants and bars. And people who are earning more money seem to enjoy eating out more. The sector that lost the most jobs over the year here was retail, which fell by 1,100 positions (2.6%) as online shopping continued to hurt brick-and-mortar stores.

And the sector that added the most jobs was leisure and hospitality, which gained 1,500 jobs over the year, for 3.3 percent growth.

The same picture is being seen statewide. Retail jobs only grew by 200 over the year, while leisure and hospitality jobs grew by 17,200.

Health services, a sector that could be hurt by the planned repeal of the Affordable Care Act, has been healthy, so far.  It is the one sector that kept growing during the Great Recession.

Health care and social assistance added 9,800 jobs over the year. Most of those were in ambulatory services and hospitals.