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.

Arizona’s total value of international exports as a share of gross product was 33rd highest among the 50 states and District of Columbia in 2012. Arizona ranked 36th for manufactured goods. In 1997, Arizona had ranked eighth overall and ninth for manufactured goods. The state’s large relative decline in export share can be traced to its sizable relative decrease in its manufacturing sector. In particular, the electronics manufacturing subsector’s share of total GDP has dropped considerably.