Arizona State and Local Government Documents Collection

This paper complements a detailed assessment of job quality, based on analysis of industrial and occupational mix, recently completed by the Seidman Institute’s Center for Business Research. The overall conclusions in this report are consistent with those of the more extensive CBR research. Arizona’s economy grows very rapidly, but per person or per worker measures of wages, compensation, incomes, and gross state product are below the national average. No evidence exists that the situation is improving appreciably (or deteriorating). Indeed, the state appears to be creating income, wealth and quality jobs at rates that are similar to those displayed by other states. Arizona is a job-generating marvel and is among the nation’s leaders in aggregate growth. If the state is successful at improving the quality of its labor force and creating higher-quality jobs, its per worker and per person comparisons will improve.

Education decisions are among the most important choices people ever make. So we were surprised and disappointed to see an article so loosely reasoned and reckless in its conclusions as “Five Reasons to Skip College” published in Blank Slate at Forbes.com on April 18, 2006. The article never provides a numerical assessment of the costs and benefits of going to college, uses statistics inappropriately and in a way that biases the conclusions against college, contains conceptual errors on how to evaluate the return on a college education, and greatly exaggerates the only substantive criticism of typical evaluations of the financial worth of a college degree.

Universities contribute to the local community in three distinct ways: 1) Traditional Economic Impact; 2) Benefits to Individuals and Society; 3) Creation of Knowledge. Among the results are higher incomes of individuals and the community as a whole, higher-quality jobs, enhanced economic development, and improvements in prosperity and quality of life.

As the transition from the industrial age to the information age/knowledge economy continues, economic competitiveness has taken on added importance and new meanings. The concepts of competitiveness, productivity, and prosperity can be applied to individuals, companies, regions (such as metropolitan areas or states), and countries, though the meaning/interpretation of each may vary somewhat by the unit of analysis.

For those interested in one of the most extreme state tax and expenditure limitations, TABOR – Colorado’s initiative that limits the funding of most expenditures to annual revenue growth restrained by the sum of annual population growth and inflation rates – would seem to be exactly the right choice. To some, the initiative simply limits government to spend within its means. However, the analysis in this paper reveals that, true to the language in the 1992 Colorado initiative, TABOR limits government growth, and over time the public sector, as a share of the overall economy, declines sharply – crowding out opportunities for investments in strategic initiatives or opportunities for tax reform that may be popular with large voter constituencies or the business community. Advocates point out that provisions in TABOR do allow for voter overrides, but these are costly in both time and money, and until the overrides take place, government is
hamstrung. A simpler, more efficient alternative would be to elect fiscally conservative legislators and hold them accountable for prudent fiscal decisions that strike the right balance between a tax base conductive to economic growth and strategic investments that provide public sector infrastructure, nurturing the business climate and promoting the health and well-being of the citizenry. The paper first outlines the TABOR amendment in Colorado and examines its fiscal consequences for that state. It then examines the potential impact of a TABOR in Arizona.

The condition of Arizona’s infrastructure has a direct impact on economic productivity and quality of life. As economic competition expands domestically and globally, and as the knowledge economy evolves, the importance of a strong infrastructure increases. Education, in particular, is of growing importance. Arizona’s infrastructure challenges will require commitment and creativity to meet the needs and potential of 10 million people and to ensure a positive future for the state.

The analysis of the value of higher education contained in this report represents an important dimension of the P3 research agenda since measuring the value of educated workers can provide empirical context for understanding the importance of an educated and skilled workforce in a modern economy. In this report, the increases in individual earnings realized from enhanced educational attainment are measured and the benefits to the economy and society in general that are provided by a highly educated workforce are examined.

The attraction of a federal research laboratory to Arizona as a strategic economic development initiative of the Arizona Economic Resource Organization can be justified based on the literature cited below, the relationship of federally funded research and development centers to broader measures of research and development and prosperity, and the implementation of this strategy elsewhere. A primary objective of attracting a federal research facility is to help create a climate that is conducive to private-sector economic development, especially related to research and development. On a purely cost-benefit basis, the pursuit of a federal lab has strong appeal since the benefits largely will accrue within Arizona while a considerable portion of the costs conceivably will be borne by the federal government.

The demand for new workers in STEM (science, technology, engineering and mathematics) occupations in Arizona is a function of net job growth in these occupations in the state and the number of workers leaving STEM jobs in Arizona. Employees may leave their position for various reasons, including to retire, to move out of the state, or to change their profession. The supply of new workers in STEM occupations in Arizona is a function of the number of new college graduates in related majors, the number of workers moving to the state who are qualified to fill STEM jobs, and the number of Arizonans who are qualified to fill STEM jobs moving from a non-STEM to STEM occupation.

This paper explores whether a knowledge economy explanation for economic growth seems to fit with the growth experience of the Sunbelt during the 1990s. The issue is addressed through analysis of two different datasets. First, the education and income characteristics of the people moving to the Sunbelt region are examined using migration data from the 2000 census. Then we look at the link between the knowledge economy metric of the share of college educated adults and economic growth in the Sunbelt in the 1990s using data for 116 Sunbelt MSAs.