Think Tank Says Arizona Income Below National Average

Posted on June 07, 2002 | Type: In the News
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Arizona's leaders should resist calls for more taxation and spending in the name of economic development, a Phoenix-based conservative public policy groups says.

The Goldwater Institute unveiled its latest report, "Assessing Arizona's Economy: Boom or Bust?" during a June 6 luncheon.

Robert Franciosi, author of the report, states: "Advocates of a greater government role have proposed a grab bag of policies to deal with the state's real and imagined economic woes. Of course, supporters of those policies often see tax increases as necessary to fund them. This sweeping and ambitious agenda for activist government has been cloaked in the mantle of economic development."

Mr. Franciosi writes a report that, while some issues deserve further study, Arizona's growth by and large has been positive for the state. He disputes the criticisms in some quarters that the state is too dependent on construction and lacks a sufficient industrial base.

Among the report's findings:

  • "Inflation-adjusted gross state product per person hit a trough in 1991 due to the recession. Since then, however, gross state product per person has grown at an average rate of 4 per cent initially faster than the nation as a whole, and afterward keeping pace."
  • "Gross state product per employee has recovered to the levels it achieved before the recession of the early 1990s. Gross state product per person, however, has not the reasons for this have yet to be determined."
  • "Personal income per person in Arizona is 89 per cent of that in the average state. This difference is largely due, in roughly equal parts, to the following factors: (1) Arizona's relatively unskilled labor force, (2) workers' willingness to sacrifice some pay to live in a warm climate, and (3) the relatively smaller accumulation of human and physical capital?" compared to other states.
  • "The construction industry's share of the state output is larger in Arizona than in the nation as a whole; manufacturing's share is smaller. Still, Arizona's economy is not dramatically unbalanced compared to [the] entire nation."
  • "Arizona exceeds the nation in the growth rate of residents with college and advanced degrees. The state also exceeds the nation in the growth rate of residents who have not finished high school. It has yet to be determined if this is due to our school system, our labor market, or our large immigrant population."

Mr. Franciosi concluded his summary by stating, "the only proven way for government to promote long-term, sustainable economic growth is to keep its tax and regulatory burdens at a modest level."

A full copy of the 24-page report may be obtained at the Goldwater Institute's website.

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