Sad to say, the ­economic recovery has bypassed Pima County

By: Roger Yohem
July 21, 2011

Roger YohemFor economic conditions to improve in Tucson and Pima County, only one thing matters: jobs. But from where?

We already have too many university and government jobs. Manufacturing diversity is weak. Real estate is in tatters. It could be 2015 before the housing debacle heals.

For job growth, Tucson trails the nation and the state. For 2011, the metro area is poised to be the only Arizona region not to gain jobs. According to Moody’s, Tucson will be one of the last cities in the entire country to recover from The Great Recession.

Around here, meaningful job growth is a fantasy. Developers are vilified by enviros and NIMBYs. Copper mines and corporate profits are characterized as filthy free enterprise. To open a low-wage burger joint, the cost of permits is equivalent to funding a government worker’s pension for a year.

Sad to say, the nation’s economic recovery has bypassed Pima County. The upturn will come about the time the Wildcats play Ohio State in the Rose Bowl.

Forever lost are many jobs. Staggering uncertainty about the future has changed the economy’s fundamentals.

These uncertainties include more regulation. City and county officials continue to send anti-business signals. Plus, what will ObamaCare really cost?

Supply-demand fundamentals are out of balance. Sluggish sales create no jobs. Future demand is uncertain as costs rise for energy, materials, taxes and soon, inflation. That’s why businesses are hoarding cash and not hiring.

Tucson’s labor forecast is dismal. For the entire state, jobs are expected to grow a pathetic 0.7 percent in 2011. Tucson got a zero. The most growth will be in overburdened taxpayers and underemployed workers. That’s no way to keep well-educated young people in town.

The state’s labor analysts say Arizona’s economic downturn began in 2007. For Tucson, their most current data (through May) shows:

Construction employment peaked at 28,700 jobs in mid-2006. By the end of 2008, some 8,000 jobs had been lost. As of May, the sector employed 15,200, down 13,500 jobs due to the recession.

Since peaking in June 2001 at 33,500 jobs, manufacturing has broken down ever since. When the economy turned, the level was 28,500. As of May, the manufacturing sector had 24,800 jobs, a cut of 3,700.

In the trade, transportation and utilities sector, the May total was 58,400 jobs, some 8,000 less than the December 2007 high of 66,700. Information services peaked in mid-2006 at 6,700 jobs and is now 2,600 less at 4,100 workers.

In finance, the mid-2007 top was 18,800. It was 17,400 in May, another 1,400 jobs in the red.

In professional and business services (call centers included), jobs hit 53,900 in November 2007. Today, the level is 47,800, a 6,100 loss. In health services and private education, Tucson had 56,200 in December 2007. Currently, this category has gained 3,500 to 59,700 workers.

In the leisure and hospitality sector, jobs peaked at 41,500 in early 2007. Today, its 36,600 people, a loss of 4,900 jobs. And in the miscellaneous category, jobs are off 2,600.

Then there’s government. To be clear, the state and feds define this category as all local municipalities, universities, local school districts, and other sectors like the post office thrown in.

In December 2007, local governments employed 81,100 people. As the recession took hold, jobs jumped to 82,600 in November 2008. During 2009, jobs bounced around but settled at 82,200 in May 2010. As of May 2011, the total was 80,100, a net decrease of only 1,000 jobs.

Add it up: the damage in the private sector is 39,600 jobs lost. That’s almost 40 business jobs cut per one job cut in government.

People move to where the jobs are, but that business concept conflicts with the leanings of many political officials. Their attitudes toward economic development haven’t really changed despite the despair caused by unprecedented unemployment.

This recession is different, driven by debt. The housing collapse crushed mobility. Unemployed workers can’t afford to sell their homes to move to better labor markets.

To survive the economic uncertainty, many companies have reorganized around technology, outsourcing and the disposable worker. Workers are added as needed, then let go until needed again. Plus, they are working harder and smarter for less money.

Many pre-recession jobs are lost forever, replaced by just-in-time disposable workers. At 40 to 1, the odds are stacked against the business community.

Contact Roger Yohem at [email protected] or (520) 295-4254. His Business Ink appears biweekly and weighs in on local political, social and business issues.

For ongoing news impacting investors and businesses in Tucson, Southern Arizona, and Sonora, Mexico, subscribe to our blog, PICOR Connect: Trends in Commercial Real Estate.

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