Available data on the cost of living indicate that living costs in Arizona are close to the national average — thus, the state’s lower-than-average wages are not offset by low living costs. No productivity data exist for Arizona. Worker productivity in Arizona could be below the national average due to lesser investments in physical or human capital, which would result in lower wages. Labor market supply and demand factors are a likely cause of the low wages in Arizona. A substantial number of people seem willing to move to Arizona and accept a substandard wage in exchange for perceived qualitative advantages to living in Arizona, primarily climate.

Unlike the rest of the Phoenix metropolitan area, population density in central Phoenix dropped during the 1970s and 1980s. The primary cause was a decrease in the number of housing units. Rising vacancy rates contributed, but the increase in vacancy rates was similar to that of the entire metropolitan area. Between 1990 and 1995, population density rose in central Phoenix. A sharp decline in vacancy rates was a major factor in the turnaround, though the vacancy rate decline only matched that of the entire metro area. Another major factor in the increase in density was the rising number of people residing in prisons, homeless shelters, or on the streets.