Should Arizona 'play it Parseghian' on job growth?
Arizona has been a champion of job creation in the past, but right now the state is doing just OK, says Economist Dennis Hoffman, director of the L. William Seidman Research Institute at the W. P. Carey School of Business. But the question is whether the state can afford to do nothing — to play it Parseghian — or to take a more activist approach to job growth.
Economist Dennis Hoffman was in the stands when No. 2 Michigan State played No. 1 Notre Dame for the national championship in 1966 — 30 years before collegiate football initiated overtime play. In the closing minutes of the game with the score tied, Notre Dame coach Ara Parseghian ran out the clock rather than risk a turnover. Since then, 'playing it Parseghian' has come to mean taking the risk-free way out of a challenging situation.
Arizona has been a champion of job creation in the past, Hoffman says, but right now the state is doing just OK. The question is whether the state can afford to do nothing — to 'play it Parseghian' — or to take a more activist approach to job growth.
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Dennis Hoffman:
I want to remind everybody that Saturday was a great day for almost everybody in this room, well, a couple of exceptions. The Notre Dame coach called it the “debacle in the desert.” So, I wanted to see if I could tie a football theme into a jobs talk, so here we go.
This particular clash — Notre Dame vs ASU — really took me back because in November 1966 I attended my first college football game. It was one of the first so-called ‘games of the century.’ It was No. 1 versus No. 2. The (Fighting) Irish No. 1, Michigan State, aspirational No. 2 were tied 10-10. The distinguishing feature of the day was an action taken by (Notre Dame) coach Ara Parseghian near the end of the game. Notre Dame took possession of the ball with two minutes to go, and had a fistful of timeouts. I remember it vividly. They ran out the clock, they laid on the ball, and the Spartans burned all their timeouts. Nobody got anywhere. So, the strategy was an interesting one.
The next week the (Fighting) Irish went out and thrashed USC. Michigan State’s season was over. Back in the ‘60s, we had a no repeat rule — you couldn’t go back to the Rose Bowl and (Michigan) State was there the prior year, so their season was over. So, Notre Dame was then awarded the quote “national championship,” so in ’66 playing it safe or being complacent paid off. So this was known as a strategy called ‘playing it Parseghian.’ For a number of years following this game, if you laid up on a par 5, if you didn’t go for it in two, you were ‘playing it Parseghian.’ So hold that thought.
This is what Phoenix and Arizona job growth has looked like historically:
If we go back to the ‘60s, the ‘70s, the ‘80s, the ‘90s up to 2007 - population growth, low single digits in the ranking of states. Employment growth, low single digits. Income growth, low single digits. More recently we’ve had our struggles, we really struggled in the ‘08 to ‘10 period. I would say we’re doing OK as of 2013. We’re doing OK, but we’re not back to these low single digits that frankly many of us, myself included, forecasted a couple of years back.
Arizona job growth for the first nine months of the calendar year is 14th overall. That’s above average. That’s OK. I think what’s startling though, other than the numbers for New Mexico, is that we’re really in mediocre shape compared to many of our Western peers. And these are states with really different compositions, of course Texas is completely unlike California, which is unlike Colorado which is unlike Washington.
This is the job growth by state in terms of numbers and you can see the orders of magnitude. You have North Dakota — 4.5 percent job growth. We’re sub-2 percent. Everybody in the top 10 is north of 2 percent, and yes indeed, we are, if you look at those Western states 8th in the West. Now this is, I think, cause for alarm.
Our job growth is OK but it’s largely service oriented and we don’t seem to do well in goods producing jobs — we are 47th overall nationally. Some of the states in the West do pretty well: Nevada, Utah, Colorado — goodness even Minnesota does pretty well on this metric.
And in terms of construction, yes you heard this, here are the top 10 jobs for construction growth. And look at these numbers: double digit growth in Nevada and Florida, 8.7 in Utah, Colorado almost 6 percent, California, are you kidding me, at 5.7 percent. And we’re losing construction jobs — unthinkable in any of our models a year or two ago.
Here it is by metro, and my good friend Bob Robb and I differ on this, but I want to make sure I echo the stats that he points to. And that is we’re 12th overall in large metros. There’s about 27 to 30 large metros in this kind of ranking, so we’re slightly better than average. But better than average is not our history. We’re usually up among our leaders.
And here again, are the cities in the West. Several of them, by the way, in this behemoth California are doing better than we are right now. It’s really quite a set of interesting statistics.
And again, looking at goods-producing job growth, we’re last among the big metros. And in construction, only 14 of them report construction, and we are 14th. We are the only one losing. Check this out: Chicago is gaining construction jobs and we are losing them. Go try to find that in your history book.
OK, part of this is a population in-migration challenge. We are 1.8 percent in terms of predicted population growth. Growth is accelerating, that’s the good news. The bad news is that it’s taking off from a very low bottom and it doesn't compare well historically.
In terms of net in-migration, Phoenix is doing pretty well. But we have to point out that 96,000 folks were net in-migrants in 2006. Well, maybe ‘o6 was a bubble. I think in a more normal year you would find 60,000 folks showing up on Phoenix doorsteps.
So where do we go from here? What have we done in the past? Not an activist economic development strategy. We are the place everybody wants to be, we’re elite just like the (Fighting) Irish were in 1966. They didn’t have to gamble and go for it. They were awarded the national championship by ‘playing it Parseghian.’ I would argue that describes a lot of Arizona history. We have huge numbers of assets here, we’ve been a people magnet — we’ve grown like a weed.
Will it happen again? We keep waiting for it. Some say ‘market the state.’ OK, what do we use as our marketing strategy? Are we going to use education, lifestyle, taxes, regulation, a place that’s growing? It’s something to think about. Some say ‘cut more taxes.’ Which ones? I think I can make the argument that if folks were gonna come here for low taxes, they might be here already. How do we pay the bills if we cut more taxes?
So what will we choose as an economic development strategy? Should it be workforce and skills? Market our affordable land in labor? Unfortunately for some of us it’s now affordable again. Most of our infrastructure is in place. This state still has many of the assets it had when you moved here and when I moved here. But can we afford to be complacent? Will ‘playing it Parseghian’ work for us in 2014 like it did for the (Fighting) Irish in ’66? Enjoy your lunch.
If we go back to the ‘60s, the ‘70s, the ‘80s, the ‘90s up to 2007 - population growth, low single digits in the ranking of states. Employment growth, low single digits. Income growth, low single digits. More recently we’ve had our struggles, we really struggled in the ‘08 to ‘10 period. I would say we’re doing OK as of 2013. We’re doing OK, but we’re not back to these low single digits that frankly many of us, myself included, forecasted a couple of years back.
Arizona job growth for the first nine months of the calendar year is 14th overall. That’s above average. That’s OK. I think what’s startling though, other than the numbers for New Mexico, is that we’re really in mediocre shape compared to many of our Western peers. And these are states with really different compositions, of course Texas is completely unlike California, which is unlike Colorado which is unlike Washington.
This is the job growth by state in terms of numbers and you can see the orders of magnitude. You have North Dakota — 4.5 percent job growth. We’re sub-2 percent. Everybody in the top 10 is north of 2 percent, and yes indeed, we are, if you look at those Western states 8th in the West. Now this is, I think, cause for alarm.
Our job growth is OK but it’s largely service oriented and we don’t seem to do well in goods producing jobs — we are 47th overall nationally. Some of the states in the West do pretty well: Nevada, Utah, Colorado — goodness even Minnesota does pretty well on this metric.
And in terms of construction, yes you heard this, here are the top 10 jobs for construction growth. And look at these numbers: double digit growth in Nevada and Florida, 8.7 in Utah, Colorado almost 6 percent, California, are you kidding me, at 5.7 percent. And we’re losing construction jobs — unthinkable in any of our models a year or two ago.
Here it is by metro, and my good friend Bob Robb and I differ on this, but I want to make sure I echo the stats that he points to. And that is we’re 12th overall in large metros. There’s about 27 to 30 large metros in this kind of ranking, so we’re slightly better than average. But better than average is not our history. We’re usually up among our leaders.
And here again, are the cities in the West. Several of them, by the way, in this behemoth California are doing better than we are right now. It’s really quite a set of interesting statistics.
And again, looking at goods-producing job growth, we’re last among the big metros. And in construction, only 14 of them report construction, and we are 14th. We are the only one losing. Check this out: Chicago is gaining construction jobs and we are losing them. Go try to find that in your history book.
OK, part of this is a population in-migration challenge. We are 1.8 percent in terms of predicted population growth. Growth is accelerating, that’s the good news. The bad news is that it’s taking off from a very low bottom and it doesn't compare well historically.
In terms of net in-migration, Phoenix is doing pretty well. But we have to point out that 96,000 folks were net in-migrants in 2006. Well, maybe ‘o6 was a bubble. I think in a more normal year you would find 60,000 folks showing up on Phoenix doorsteps.
So where do we go from here? What have we done in the past? Not an activist economic development strategy. We are the place everybody wants to be, we’re elite just like the (Fighting) Irish were in 1966. They didn’t have to gamble and go for it. They were awarded the national championship by ‘playing it Parseghian.’ I would argue that describes a lot of Arizona history. We have huge numbers of assets here, we’ve been a people magnet — we’ve grown like a weed.
Will it happen again? We keep waiting for it. Some say ‘market the state.’ OK, what do we use as our marketing strategy? Are we going to use education, lifestyle, taxes, regulation, a place that’s growing? It’s something to think about. Some say ‘cut more taxes.’ Which ones? I think I can make the argument that if folks were gonna come here for low taxes, they might be here already. How do we pay the bills if we cut more taxes?
So what will we choose as an economic development strategy? Should it be workforce and skills? Market our affordable land in labor? Unfortunately for some of us it’s now affordable again. Most of our infrastructure is in place. This state still has many of the assets it had when you moved here and when I moved here. But can we afford to be complacent? Will ‘playing it Parseghian’ work for us in 2014 like it did for the (Fighting) Irish in ’66? Enjoy your lunch.
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