By: Kurt Badenhausen
Arizona was absolutely hammered during the financial crisis of the late 2000s. Median home prices in the state plummeted 53% over five years from $250,000 in 2006 to $117,000. The foreclosure rate was the second highest in the U.S. for three straight years as construction ground to a halt. Unemployment peaked at 11.2% at the end of 2009 and net migration into the state fell sharply.
But Arizona has emerged from the wreckage to be one of the brighter spots in a slumbering U.S. economy thanks in part to renewed migration. Arizona’s projected job growth is 3.1% annually though 2019, best in the U.S., according to forecasts from Moody’s Analytics.
“Baby boomers retiring to Arizona is the main driver for Arizona’s employment growth,” says Kyle Hillman, an economist at Moody’s focused on Arizona. This migration fuels jobs in healthcare and consumer services. Net migration into the state is projected to total 679,000 over the next five years. Only Nevada is expected to enjoy a faster migration rate.
Companies and workers are also finding their way to Arizona as a more affordable option to West Coast locales like the Bay Area and Seattle. The state offers a diversified economy with a skilled workforce.
Financial service firms have a heavy presence in Arizona with Wells Fargo WFC +0.00%, JPMorgan Chase JPM +0.00% and Bank of America BAC +0.00% among the 10 largest private employers in the state. In February, Northern Trust NTRS +0.00% announced plans to expand in Arizona by opening a new operating center in Tempe that will house 1,000 employees by 2018. “This step will provide us with access to significant talent pools and a strategic location that will help us efficiently serve our clients,” said CEO Frederick Waddell in a statement announcing the news.
General Motors GM +0.00% opened a software-development center last year in Chandler, Ariz. with 500 employees and plans to add another 500 workers over the next three years. Many of the coders and engineers will be drawn from nearby Arizona State University.
Nevada has the second highest projected job growth rate at 2.9% a year. Nevada’s economy is less diversified than Arizona’s, as it leans heavily on tourism and mining for growth. Nevada has the highest average unemployment rate in 2015 at 6.8%, according to Moody’s, but that is down from 13% in 2011.
Las Vegas is the engine that makes Nevada go with 70% of the states’s $132 billion in economic activity based in Sin City. But the state has attracted non-tourism businesses in recent years as well. Tesla picked a location outside of Reno last year for its $5 billion lithium-ion battery factory. Governor Brian Sandoval offered the Elon Musk-founded company $1.25 billion in tax breaks over 20 years, but the factory is expected to create 6,500 jobs and $100 billion for Nevada’s economy over two decades. The factory is expected to be completed in 2017 when Tesla begins production on its $35,000 Model 3 electric car.
Rounding out the top five states for future job growth are Florida (2.7%), Utah (2.5%) and Georgia (2.4%). Utah ranks at the head of the pack in Forbes’ Best States for Business for a second straight year.
Not all jobs are created equal. Median household incomes are north of $60,000 in Utah, Washington and California, but are less than $53,000 in the other seven states projected to add jobs at the fastest rates.
Keep in mind that forecasts can change in a hurry. Arizona, Nevada and Florida are all heavily influenced by tourism, and a sudden downturn in the economy or jump in gas prices would dampen employment prospects. Texas had the fastest job growth projections a year ago, but lower energy prices laid waste to those forecasts. Texas fell out of the top 10 for job gains this year.
The Best States For Future Job Growth Gallery: http://www.forbes.com/pictures/mli45fefjm/the-best-states-for-futu/