"Phoenix has consistently been one of the fastest growing large metros in the country, but new data from the Brookings Institution shows prosperity has not kept up with the growing population.
Brookings Metro Monitor ranked Phoenix
> 19th out of 53 very large metros on growth
> 46th on prosperity using data from 2009 to 2019.
The report notes that although there has been much effort put in over that decade to grow and diversify the area’s economy, that has not yet come to fruition.
"The statistics indicate that Phoenix continued to grow pretty rapidly in the 2010s, but didn’t, on average, become a more valuable economy,” said Alan Berube, senior fellow and deputy director of the Metropolitan Policy Program with Brookings.
Arizona has put in the effort to remedy the situation by attracting higher value sectors, he said, but some of the effort had not yet produced results enough to reverse losses from the Great Recession.
According to Brookings data, in 2019, 52% of families with children in the Phoenix metro did not earn high enough wages to make ends meet.
In order to move half of those families, about 126,755 families, to self-sufficiency, the region needs to add more than 168,000 more jobs that pay at least $24.84 per hour.
Further disparities
The disparity between those from the area’s wealthiest neighborhoods and those from the poorest also widened during the 2010s, according to the report, which studied key indicators such as employment, median earnings and relative poverty rate between the top 20% most-advantaged areas to the bottom 20%, the least-advantaged.
“This, in turn, reflects high and rising levels of economic segregation that tend to separate underserved communities from needed jobs, services, and investment, and thereby limit the region’s potential to fully engage its diverse talent and entrepreneurs,” Berube said.
Phoenix ranked #43 for standard of living, which Berube said is calculated by regional GDP divided by population. In order to raise the standard of living, he said, the region must focus on attracting high-paying jobs and attracting new jobs because promoting the area for its lower labor costs will not prove to be the answer.
"Gaining more jobs isn’t an end in itself; the goal of economic development should be to improve the standard of living enjoyed by residents, both existing and new,” he said.
“If a region attracts and grows jobs primarily based on its ability to minimize labor costs, then — surprise — it’s going to end up with a bunch of low-paying jobs and a low standard of living.”
Arizona’s GDP has been one of the fastest-growing in recent years, outpacing the rest of the nation in 2019, when Arizona saw a 3.3% increase, compared with the country’s 2.3%, according to Bureau of Economic Analysis data released in 2020.
The Milken Institute recently ranked Phoenix as No. 7 among U.S. metros poised for recovery post-Covid, but also cautioned that the skyrocketing home prices and rising rents in the area are freezing out a large segment of the population and could put the region at a disadvantage.
Berube said as cities prepare for economic recovery following Covid-19, Brookings recommends they adopt a broader definition of economic development to include racial and geographic inclusion, as well as support strategies to improve business dynamism and talent development.
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