Arizona beats out 46 other states in population growth

People have been steadily migrating west (or east, if they’re coming from California) to Arizona year over year, taking advantage of our sunny weather, winter golf tee times, ample space to stretch out, and relatively low cost of living. Last year, Arizona added new residents at a faster clip than all states except Utah, Idaho, and Nevada. As of July 1st of last year, Arizona saw a 1.7 percent growth in new residents (or 122,770 total people), beating out major states like California, Texas and Florida.

This increase is reflective of job growth and the state’s robust economy, and highlights the fact that Arizona is on pace to be the third-fastest growing state in the nation by 2022.

Job forecasts and economic growth over the next five years are expected to be among the best in the nation, rivaling top competitors such as Utah, Idaho and Nevada. A major contributor to Arizona’s competitiveness is businesses interest in setting up in a less-regulated, somewhat more affordable destination with warm weather.

“The analysis of the benefits and costs of population growth is complex,” says Tom Rex, Associate Director, Center for Competitiveness and Prosperity Research at the W.P. Carey School of Business. “In the long term, population growth spurs economic growth, and economic growth leads to population growth. In the short term, however, job creation comes first, resulting in the migration of workers to the state if the number of jobs being created exceeds the net growth of the local labor force (new entrants to the labor force minus those retiring).”

According to Rex, all this points to the fact that the nature of job creation is a significant factor in determining the balance between benefits and costs of population growth. Low-wage jobs that don’t come with normal benefits, such as health and dental, a 401k, that are filled by a migrant to Arizona has a net cost to the state. Compare this to a high-wage job with high benefits that ends up providing a net benefit. Altogether, low-wage workers from out of state end up having a less positive impact on local private-sector businesses due to their limited buying power.

But for Jim Rounds, an economist and economic consultant at Rounds Consulting, population growth and job growth go hand in hand to help an economy like Arizona.

“This isn’t a chicken or egg debate between respective growth in jobs and population as one feeds off the other. Population helps with jobs,” he says. “It brings in people with skills to areas that are lacking, and it helps with volume for government finances. It’s a positive for a state that’s expected to grow for a while.”

In recent years, the tech sector in Arizona has gotten major attention from companies looking to set up new operations in the state. This has brought with it major job growth in the area, but it’s still a smaller job area compared to others. Manufacturing of computers and electronics went up 11.2 percent, but that accounts for 32,000 employees out of the 2.4 million in the private sector.

“You can’t have population growth without jobs, and you need higher wage jobs in a growing economy,” says Rounds. “The key is to find balance, but no one of those things disrupts how the economy functions. For every one higher wage job, you create two or three lower wage jobs.”