The Arizona Department of Transportation, the Arizona Game & Fish Department and the Arizona State Parks Board are required to conduct a study every three years on watercraft fuel consumption and recreational watercraft usage. The fuel consumption data is collected to determine the allocation of motor vehicle fuel tax to the State Lake Improvement Fund. The information on recreational watercraft usage patterns on Arizona’s lakes and rivers is necessary, in part, to determine the distribution of SLIF funds to applicants.

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" (June 2005), 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).

This paper provides a capsule perspective on the lessons economists have learned from investigating growth and income gaps across countries. After providing the lessons for growth and development across countries, the paper asks whether these lessons can be extended to growth and income differentials between regions or states of the United States. It should be stressed that applying to regional growth what is known about country growth is partly untested at this time, and hence merely suggestive.

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.

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.

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.

The quality of jobs in the United States became a national concern in the 1980s after a long period of losses of relatively high-paying manufacturing jobs and gains of frequently low-paying service jobs. National job quality remains a concern today, as witnessed by the debate in the 2004 presidential campaign. The overall average wage is a measure of prosperity or well-being, but is not in itself a measure of job quality since job quality is just one of several factors — including cost of living, productivity, and desirability of an area — that affect the overall average wage. Little information on these factors is available by state. Adjusting for job quality reduces the state-by-state variation in wages. However, even after adjusting for job quality, the average wage still varies substantially by state.

This plan is an action agenda that avoids the long-term strategic planning platitudes and broad generalizations that sound good but do not achieve a great deal. The steps presented in this document are ones we can take in the near term, over the next two years or so, that will provide the foundation for long-term economic growth and stability.