The state’s unemployment rate remains at historic lows. And Arizonans who do find themselves out of work through no fault of their own won’t see their benefits cut, at least not this year.
The seasonally adjusted rate for June is 3.4%, a new report Thursday from the Office of Economic Opportunity shows. No lower figure has been registered in the state since the current method of computing the statistic was instituted in the 1970s.
The report comes just days after state lawmakers narrowly defeated a proposal by Sen. Steve Kaiser, R-Phoenix, that would have sharply cut the length of time Arizonans who are laid off can collect jobless benefits.
Kaiser contends the current system, which provides benefits of up to 26 weeks for those fired or laid off without cause, removes the incentive for those out of work to go out and look for new employment.
He got the state Senate to approve a graduated scale that based the eligibility period on the statewide unemployment rate. At current levels, benefits would have ended after 12 weeks under his proposed legislation.
But two House Republicans aligned themselves with Democrats opposed to the bill, denying Kaiser the 31 votes he needed for approval.
One of them, Rep. David Cook of Globe, said a big flaw in Kaiser’s plan was that the length of benefits would be based on the statewide unemployment rate — a rate that, because of where most Arizonans live and work, is linked heavily to economic conditions in the Phoenix metro area.
“If I lost my job in Chandler I could drive to Queen Creek,’’ Cook said. “If I lost my job in Mesa I could go to Tempe. Tempe, I could go to Phoenix. Or Phoenix, I could go all the way to Mesa.’’
But that flexibility isn’t available for residents of rural areas, he said.
Pima County jobless rate is 4.1%
Even now, in a time of generally low unemployment rates, both statewide and nationally, the picture varies across Arizona.
Maricopa County, for example, has logged jobless rates below 3% for four of the past five months.
In Pima County, the percentage of people listed as unemployed, meaning they are actively seeking work, has been running about a half point higher.
And in Gila County, where Cook lives, the latest unemployment rate was 4.1%.
That’s still low. But it’s also historically proven quite volatile.
Even disregarding what happened during COVID, Gila County hit a 14.1% unemployment rate in January 2010. A decade ago it was 9.3%.
Much of that is because the employment situation in not just his county but several others in Arizona is closely linked to copper, both mining and smelting.
“And when the mining industry lays people off, it takes a long span for it to recover,’’ Cook said.
He said Kaiser’s legislation did not take into account that there simply are not nearby jobs that people can pick up while waiting to be called back to more permanent work.
More problematic, Cook said, is what happens if laid-off workers, facing a cutoff in their benefits, decide to pack up and move elsewhere.
“If the mining companies lose those experienced workers, then they spend thousands and thousands of dollars on training new people that have no mining experience,’’ he said.
Another issue is that the unemployment benefits are not paid for from state tax funds. Instead, they are a form of insurance, Cook said.
Payments come from a special fund financed by a levy paid by employers on the first $8,000 of each worker’s salary.
The tax rate for that fund is based on how often a company’s workers end up being found eligible for benefits. Rates range from as low as 0.07% for firms with low usage to as high as 18.78% for companies with a high number of employees who are laid off or fired for no reason of their own.
Wages are rising
Thursday’s new statewide report shows generally good employment conditions — especially for workers.
The “openings rate’’ in Arizona is 5.9%. That reflects the number of positions that are not filled.
The figure is higher than in pre-pandemic levels, said Doug Walls, the state agency’s labor market information director.
By contrast, the hiring rate — the rate at which employers were able to fill jobs — is just 4.4%.
“That’s a sign that employers are still understaffed and looking for labor,’’ Walls said.
One bit of fallout is that Arizona companies are having to pay more to fill those slots.
The state’s wages rose 5.6% in the past year, compared with 3.6% for the rest of the nation. Still, the average hourly wage in Arizona is $31.61 versus $33.37 nationally.
Effects of inflation, interest rates, more
Not all sectors of the Arizona economy are growing.
One big loser these days is warehousing and transportation.
“This was an industry sector that had benefited from the impacts of the pandemic,’’ Walls explained. “Consumers turned to purchasing goods,” a lot of it done online. “More traditional retail businesses also had closed in-person sales.”
That benefitted companies that could store and deliver those ordered goods.
Now, he said, these companies don’t need as many workers, although the industry still has more people employed than it did before COVID.
Different factors are affecting other sectors of the economy that shed jobs last month. At least some of that is tied to inflation and the Federal Reserve Bank’s efforts to curb it with a series of interest-rate hikes.
So, for example, Arizona’s financial activities sector shed 3,800 jobs between April and May. Half of those were among credit unions, mortgage and other loan brokers and commercial banking, as higher borrowing costs meant fewer qualified applicants.
The closely related construction sector lost 1,300 jobs in the past month. By contrast, it normally adds about 1,000 jobs between April and May.
That’s tied to demand for housing which, in turn, is affected by the cost of mortgages.
Walls pointed out that there was pretty much a consistent and steady increase in permits for new homes from 2010 until the middle of 2022. It plummeted by nearly two thirds earlier this year. And while there has been some recovery, Walls noted that the number of permits is still 17% below what it was a year earlier.
Still, he said, there are some optimistic signs. One of the biggest, he said, was the decision Wednesday by the Fed to pause further interest rate increases, at least for the time being.
That “should be a positive indicator for those looking to purchase a home,” he said.
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