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.

The long-term trend toward lower-quality jobs in the United States continued between 2001 and 2004. Industrial job quality fell 1.6 percent nationally between 2001 and 2004. The decrease in occupational job quality was not quite as great at 0.9 percent. Thus, overall U.S. job quality dropped 2.5 percent during the three years, causing the U.S. average wage to be 2.5 percent less than it otherwise would have been. Arizona’s job quality fell between 2001 and 2004 at a pace worse than the national average. Relative to the national average, the industrial and occupational job mixes each slipped a bit more than 0.3 percent during the three years, for an overall decline of 0.7 percent. In Arizona, job quality in 2004 was 2.0 percent below the national average, but Arizona ranked 23rd among all states.

A landmark assessment of infrastructure needs in Arizona was produced by the L. William Seidman Research Institute in May 2008 for the Arizona Investment Council (AIC): "Infrastructure Needs and Funding Alternatives for Arizona: 2008-2032", that addressed infrastructure needs in four categories: energy, telecommunications, transportation, and water and wastewater. The information from the AIC report is a major input to the report that follows. Other types of infrastructure — most notably education, health care, and public safety — also are analyzed here to provide a more complete picture of infrastructure needs in Arizona. The goals of this report are to place Arizona’s infrastructure needs into national and historical contexts, to identify the changing conditions in infrastructure provision that make building Arizona’s infrastructure in the future a more problematic proposition than in the past, and to provide projections of the possible costs of providing infrastructure in Arizona over the next quarter century.

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.

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 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 best way to evaluate job quality would be to analyze a dataset that presents both occupational and industrial data, but the only dataset of this nature available by state comes from the decennial census. It is severely limited by small sample size, the latest data are for 1999, and the 1999 data are not consistent with the 1989 data. Thus, the initial work by the Seidman Institute on job quality ("Job Quality in Arizona", March 2005, presented data on Arizona job quality from several sources of either industrial or occupational data. "Job Quality in Arizona Compared to All States" is an extension of the March 2005 report. Arizona’s job quality in the latest year and its change over time is compared to the national average and is ranked among the 51 “states” (including the District of Columbia).

Arizona is one of the states in which the high-wage end of the employment distribution provides a more favorable impression of its job quality than that based on all employment. Thus, Arizona’s subpar job quality is not due to a scarcity of high-wage jobs, but instead results from lesser job quality in the remainder of the employment distribution. In particular, Arizona has an above-average share of very low-paying jobs that serve tourists and seasonal residents. In turn, the low overall average wage in Arizona — 7 percent less than the U.S. average — primarily results from factors other than job quality. The average wage in Arizona is less than the U.S. average in the vast majority of industries and occupations, both high- and low-paying.

The biggest economic trend in Arizona over the last decade has been the flat line on various measures of prosperity relative to the national average. Arizona always has been below the national average on measures such as the average wage, earnings per employee, and per capita personal income. However, Arizona compares less favorably now than it did in the 1970s and early 1980s.