For the first time in two years, new ASU graduates should be optimistic when looking for employment in Arizona, according to local economists.
"About 50,000 jobs have been created in Arizona in the past 12 months," said Lee McPheters, associate dean of the W. P. Carey School of Business. "Even though we're growing at a 2 percent rate, that's better than other states."
But McPheters, who is also a contributing editor for the Western Blue Chip Economic Forecast, said the 2 percent rate was enough to push Arizona in a positive direction.
He said Arizona's ranking placed it second among the fastest growing states in the nation according to the number of jobs added between February 2003 and 2004.
A brighter future
Although there are more than 3,000 students graduating this month, competing for jobs won't be as difficult with a stronger economy.
McPheters said graduates this spring are more likely to have better luck finding a job than they had last year because of Arizona's job growth.
"People who would like to move out of state might find a sluggish economy," he said. "Right here in metropolitan Phoenix is where graduates will have the best luck."
Kathleen Heil, a religious studies senior, said despite the recent job growth, she is graduating this month and is feeling uneasy about finding a job.
"With the general market slowdown, it makes me nervous," she said. "Friends I've talked to say the job market is brutal."
Heil said she would have better luck elsewhere and plans to move to New York in the fall to search for a job.
"Once you graduate, there's no single path to getting a job," she said.
Tracy Clark, an economist and associate director with the Bank One Economic Outlook Center, a research facility of the business school, said focusing on the job market here is the best thing to do.
"If your goal is to stay in Arizona, the better we're doing with job creation, the easier it will be to find a job," he said.
Magnetic force
Arizona's population has been booming for years and economists said the state would continue to draw in people from all over the country.
In July 2003, a report from the Arizona Department of Economic Security showed that the state's estimated population was more than 5.6 million, making Arizona the second fastest growing state.
"Arizona's population has always been growing," McPheters said. "For 100 years, it's been one of the leading states in population."
He added that Arizona tends to grow in numbers at a rate of 2.5 to 3 percent each year, compared to the national average of 1 percent.
Jimmy Chmielinski, a global business senior, said Arizona's population is what is bringing more opportunities to the state.
"You have to set up the businesses in order for an area to grow as well," he said.
Chmielinski, who is graduating this month, said he grew up in Scottsdale and has noticed significant changes in the economy.
"In Arizona and other cities that are growing rapidly, it's obviously going to create growth," he added.
McPheters said Arizona is growing three times faster than the rest of the country.
"It's because of population growth that you can count on Arizona being one of the top 10 economies every year," he said.
Dawn McLaren, a research economist for the Bank One Economic Outlook Center, said Arizona is able to keep up with the population because of the type of people that are moving here.
She said that those coming into Arizona fit into three categories: kids, retired people or those in the labor force.
"Right now, our labor force is not increasing at a higher rate of job growth, so we have enough jobs to supply to those who want to work," McLaren said.
McPheters said that businesses aren't going to invest in states where the population is declining; they are going to go where people are flourishing.
People are moving to Arizona for better climate and job opportunities and people and businesses both go where these two things are available, McPheters said.
"It's the population movement that's increased job growth, so there's nothing magical going on," he said.
Breaking the mold
Clark said that after a two-year recession, Arizona is just starting to emerge from its economic slowdown.
"Sept. 11 made sure we were going to have a recession, but the economy was already slowing down before that," he said.
Clark said the major reason for the decline was that business spending dropped and people were more cautious of investing.
"People had woken up to the fact that they were investing money into businesses that didn't have a business plan," he said. "The year 2000 was the first time Arizona had gone into a recession, when interest rates were dropping."
He said at that time interest rates were about as low as they could get.
"Now we've had almost two years of recovery so we are improving, but not bouncing back to where we were before the recession," Clark added.
McPheters agreed with Clark and said the terrorist attacks in 2001 caused the recession to be drawn out, forcing the recovery period to take longer.
"Arizona was affected more than many other places because there was a strong fear of flying and tourism is very important to Arizona," he said.
The fears surrounding the coming of New Year's Day in 2000 is what McLaren said started the recession.
She said big businesses wanted to make sure they had enough inventory to survive after January 2000 if their suppliers didn't.
"They purchased six months worth of inventory and after they realized everything was OK after Jan. 1, the suppliers were in big trouble," McLaren said.
Usually, she said, businesses had two weeks worth instead of six months worth of inventory on hand. This caused suppliers to close down, forcing them to lay people off.
"There was a huge build up right before the new year, then a huge drop afterwards," she added.
Road to recovery
In January 2004, job growth in Arizona picked up although other states fared better. Nevada ranked No. 1 with a 4 percent increase. The rest of the states in the top five were Alaska, Hawaii, Georgia and Florida.
"Last year we saw a stop," McLaren said. "We were just waiting and waiting for it to perk up."
Now, she said Arizona is outpacing everyone else.
"If you look at who is second from the bottom on the job-growth rankings, it's Michigan," McLaren said.
She said Michigan relies on one industry: automobiles.
"When you think of Arizona, do you think of just one industry? No, because we are very diverse," McLaren said.
Clark said this January and February were the first two months that Arizona has seen positive job growth.
"Even though we've been in the top 10 percent for job growth for about a year, we haven't had to do very much to get there," he said.
Clark said that one reason was that consumers never really stopped spending.
"People kept moving here and spending their money," he said.
Clark said Arizona could expect to see a 2.5 percent increase in 2004 and a 3 percent increase in 2005.
His forecast for the Bank One Economic Outlook Center suggests that about 50,000 jobs or more will be added in 2004 and more than 70,000 will be added in 2005.
McLaren said most of these jobs are broken down into two categories: manufacturing and non-manufacturing. She said manufacturing jobs won't experience much growth at all, but that most of the growth will be in non-manufacturing jobs.
Chmielinski said he expects most of the available jobs to be in real estate and construction.
"I'm looking into real estate now because I know that's where the market is," he said.
McLaren said most of the manufacturing jobs have been declining because of an adjustment in old technology.
"Also, a lot of them have gone overseas to reduce costs, or even out of state," she said.
Clark said Arizona needed to focus on expanding in knowledge-creation jobs.
"If you're at the top of knowledge creation, those jobs are less likely to be moved to another country," he said.
Quality v. quantity
With more than 50,000 jobs being added to the pool this year, economists are hoping the quality of the jobs will increase as well.
Clark said, "We've recovered on the number of jobs and we are slowly recovering on the quality of jobs.
"Is it the jobs that attract the people, or do the people attract the jobs?" he asked.
His answer was "both."
"We have to be sensitive to both aspects and make sure the jobs created are good ones," Clark added.
Clark also said that whenever people move to Arizona, new jobs have to be created.
"Population expands the labor pool and it attracts companies because they know they'll find people to work," he said. "Let's just hope the jobs are more than decent."
McPheters agreed that quality must surpass quantity.
"When you are looking at job growth, you are only counting numbers," he said. "There's always that concern about the quality of jobs and having jobs that pay above average wages."
Chmielinski said because there is so much competition for graduates and jobs, companies will have the upper hand.
"Companies want the cheapest way to fill voids," he said. "So, if someone is willing to work for a few thousand dollars less than I am, they'll take them."
McPheters said it's important to have an economy that reflects the new job growth, and strong, emerging industries that provide quality jobs will do just that.
Playing the game
This month, graduates will face competition for the jobs they want, and some said being a focused competitor would bring students success.
McLaren said she would still be concerned about finding a job as a graduate, even though the job market has improved.
"Most of the jobs created have been in construction, so it may still be tough to find what you're looking for," she said.
Chmielinski said he knew all about the competition he and his fellow graduates would face this spring.
"The smarter ones have had internships and have had that connection," he said. "They've developed a relationship with a company that would hire them once they graduate."
For Chmielinski, preparation was key.
"You need to set yourself apart from the masses," he said.
Out of the 50,000 jobs added to this year's job market, McLaren said there might be only a few that suit one student's needs.
"But, if you've got a solid background and a degree, you'll get a lot further than someone who hasn't prepared for their future," McLaren said.
Reach the reporter at pamela.j.coffman@asu.edu.
