Horizon, Host: Ted Simons

March 26, 2009


Host: Ted Simons

Arizona Unemployment

  |   Video
  • Dennis Doby, an economist for the Arizona Department of Commerce, analyzes the latest Arizona unemployment statistics.
Guests:
  • Dennis Doby - Econmist, Arizona Department of Commerce
Category: Business/Economy

View Transcript
Ted Simons:
Good evening and welcome to "Horizon." I'm Ted Simons. Arizona's unemployment rate was up to 7.4% in February under the national average of 8.1%. There was some good news as well in five of Arizona's employment sectors. They had small gains in February. Here to talk more about the numbers is Arizona Department of Commerce economist Dennis Doby. Good to have you back on the program.

Dennis Doby:
Good to be back. Thanks.

Ted Simons:
Up .4, 7.4%, any surprise there's in.

Dennis Doby:
Not really. Trending upward just like the national rate has been doing for the last few months. We are seeing the rates throughout the state trending up. The Phoenix metro rate went from 6.1 to 6.7%.

Ted Simons:
Lower than the national rate, which was at 8.1%, what do you take out of that?

Dennis Doby:
There's a number of factors that could be involved in that. One is, with the number of jobs we lost over the year, in February, it was 173,000 jobs over the year, people may have moved to other states looking for work for better opportunities. There could be a growing number of discouraged workers, people who have given up their active job search and they are no longer considered part of the labor force. Those factors factor into the official rate which is a measure of just those actively looking for work during the reference period.

Ted Simons:
Can you argue that with the nation at 8.1% and Arizona now at 7.4% that we are doing a little better than the curve?

Dennis Doby:
Difficult to say with that one because of the way the statistics are measured. We are playing catch-up to the national rate. We will probably catch it and may even go a little bit above it at this point. It is a bit of a lagging indicator. If you look at our establishment numbers, the non-farm payroll employment, that's certainly showing we are down towards the bottom of the growth in the country.

Ted Simons:
Again, trying to find a half-full glass here. State did add jobs. Correct?

Dennis Doby:
It did. It added 2100 jobs over the month. If we put this in perspective, last year, from January to February, we added just under 20,000 jobs. Two years ago we added just over 37,000 jobs. When you see the February numbers you typically expect because they are not seasonally adjusted. We typically expect to see things like professional and business services during tax time, some employment there. Leisure and hospitality, some games there because of tourism and government because of related to schools. We have seen some of those gains. Just not what we have seen in the past.

Ted Simons:
As far as those sectors hit hardest, usual suspects here? Construction, retail?

Dennis Doby:
Definitely. Construction, retail, trade, and the professional and business services portion that includes those temporary help agencies.

Ted Simons:
Let's talk about sectors doing well. You just mentioned a couple. What else looks like it's doing reasonably well?

Dennis Doby:
Our star has been educational and health services and that's been due to the health services portion. That one is still showing positive over the year growth. However, that growth has slowed down.

Ted Simons:
OK. Are there surprises in sectors doing well, sectors not doing well? Anything that kind of jumps out at you?

Dennis Doby:
At this point it's playing to form with construction leading the way and then that down turn in the housing industry is trickling through the rest of the economy in the state and it's affecting the amount of money that's out there that can be spent, and you are seeing retail trade numbers flowing down because of that. There's -- people are buying the necessities. They are not going out and buying some of bigger ticket items although some recent data suggested that sales may be up a bit. Maybe just very small bit but a bit.

Ted Simons:
You mentioned people may have stopped looking for work, and some folks may have left the state. Is there a metric involved? Can you find of figure that out a little bit better or is it just pretty much, what, anecdotal? How does that work?

Dennis Doby:
At the national level on a monthly basis they provide what they call alternate measures of labor underutilization and they call them U-1 through U-6 with the national rating about U-3 number. And at the national rate the official rate is 8.1. The broadest measures that include all those people that are marginally attach order discouraged that rate is 14.8%. If you apply that same type of methodology to the Arizona numbers, and say that the current rate is 7.4, and the broadest measure may be double that, you are into the 14 to 15% range.

Ted Simons:
OK. As far as the next few months, what are you seeing? Are we scraping bottom here? I know that -- here's a question for you, jobless rates are usually lagging indicators of the economy. As far as jobless numbers being a lagging indicator of a recovery, is that the same thing?

Dennis Doby:
The unemployment rate will recover after we have seen increases in the establishment data, the non-farm payroll day that. Those numbers we expect hopefully to be at or the bottom and the rate of loss will begin to slow. As we see improvements in the job market, and the number of jobs start to increase, people that were discouraged recall start entering the labor force and they will show up on the unemployed side. So after we have seen the recovery actually start, we may see the unemployment rate still go up for a while before it heads back down.

Ted Simons:
What's your hunch? Are we looking at the bottom here shortly?

Dennis Doby:
That is my prognosis that we are sometime in calendar 2009, we are definitely going to hit bottom and the rate of loss is going to begin to slow and we will be positive but weak positive probably in early calendar 2010.

Ted Simons:
All right. Dennis, thank you so much for joining us.

Dennis Doby:
No problem.

Budget Cuts:Developmentally Disabled

  |   Video
  • An advocate for the developmentally disabled community talks about how recent state budget cuts will impact people in Arizona with developmental disabilities.
Guests:
  • Bev Hermon - Lobbyist for agencies providing services for disabled people
Category: Legislature

View Transcript
Protesters:
No more cuts! No more cuts!

Announcer:
Hundreds of people turned out to speak out against nearly $17 million cut from services for people with developmental disabilities. People with varying degrees of physical therapy or mental impairments, disabilities that can limit their capacity to care for themselves or function in society without some help. That's help that usually comes to the form of services that include in-home care, rides to job sites, and a variety of therapies. D.E.S. cut rates paid to providers of services like those by 10%.

Protester #1:
This is not right!

Announcer:
And it completely eliminated non-residential services that are funded entirely by state dollars. Advocates filed a lawsuit, and a Maricopa County superior court judge blocked those cuts from taking effect. But the State is appealing that decision, so this fight is far from over.

Ted Simons:
Indeed. Last night I spoke with a lobbyist for agencies that provide services for people with disabilities. Bev Hermon is a former state lawmaker who has an adult son with a developmental disability. And Bev Hermon thanks for joining us on "Horizon."

Bev Hermon:
My pleasure.

Ted Simons:
What kind of services were cut?

Bev Hermon:
In developmental disabilities, all of those called State-only services, meaning that they don't have a federal match component. And those were the zero to three kids, those right ones that show that they may very well be developmentally disabled if. If they don't get help while they're infants so that service was eliminated. And then the service for the people in employment, like the kids who work at Basha's and so forth they have lost their transportation and their support. So they're gone, too. And then for the match services, the ones that are paid 2/3 by the feds, those were cut 10%, and unfortunately, the rates are already 15% under market. And the 10% cut will just -- we just felt like we didn't have any other choice than to sue.

Ted Simons:
I was going to ask that question. Why did you decide to go to court as opposed to try to work with the agency, try to work with the legislature, just try to work with folks to get this stuff back?

Bev Hermon:
It's not that we didn't try. In proposing their cuts, the Department of Economic Security said they would not be able to meet all of their access requirements; they would not be able to do all their monitoring and all the other things that they are supposed to do for the centers for Medicare and Medicaid. But they didn't ever give us the option to take a look at some of the things that we could do that would actually have allowed us to suffer some, a cut of some size.

Ted Simons:
I was going to say, lawmakers will say, go ahead and do this now but this will only make future cuts that much worst. How would you respond?

Bev Hermon:
Well, as long as we are, have the lawsuit in place every day is a gift. And so we keep hoping to work with legislators to accomplish some of the things that we would have done had D.E.S. chosen to work with us rather than to announce that these cuts were in place. And this was on February 13th for March 1st. Very little time to even adjust for making that size of cuts.

Ted Simons:
Would you rather have had lawmakers make these cuts as opposed to the agency?

Bev Hermon:
Yes. I would have preferred that. Because, A, so many of them understand our services. We make a point to try to educate members. Take them on tours; let them see the population, the services in place. And I felt as though it might have worked better for us simply because D.E.S. is a small agency, actually. And the cuts that were made to them kind of forced their hand with our cuts, too.

Ted Simons:
If the cuts wind up going into effect, what is your next step?

Bev Hermon:
Interesting. Well, I told you, there will be all kinds of services closed. There will be really problems with group homes because everything is a fixed cost except the staff and the food. So that means that there will be less staff. It's a safety issue. That is very vulnerable population. The very children or the very adults who actually are so charming also make them very vulnerable to abuse. And so we're very worried.

Ted Simons:
All right. Bev, thank you so much for joining us on "Horizon."

Bev Hermon:
Thank you so much.

Economic Growth

  |   Video
  • Mesa Mayor Scott Smith talks about efforts to get California businesses to relocate in Arizona.
Guests:
  • Scott Smith - Mayor of Mesa
Category: Business/Economy

View Transcript
Ted Simons:
Most of us visit California to go a theme park or the beach. Two Arizona business groups are heading to the coast for different reasons. Jobs and businesses. The Arizona Sun Corridor Open for Business Project is a joint venture by the greater Phoenix economic council and the Tucson regional economic opportunities group. It's aimed at getting businesses to relocate from California to Arizona. I will talk to a panelist about the project but first, Mike Sauceda tells us about one company that already has made the move.

Mike Sauceda:
The start of the New Year brought a new business to Phoenix Mesa Gateway airport, a Hawker Beechcraft service airplane facility. The facility does maintenance, repairs and overhauls on Hawker Beechcraft projects and opened January 5th. Joe Feeney is the manager and explains what brought Hawker Beechcraft to the valley.

Joe Feeney:
A lot of reasons. Primarily economics. The quality of life for our technicians is going to be better here than other locations. The costs of doing business here was better. It gave us a competitive advantage. The climate obviously. A good work force, a great work ethic in the area. Those are some of the reasons. We looked at several states in the Southwest, greater Phoenix just jumped out at us. Everybody here went the extra step to get us here. The state, the city, the County, greater Phoenix economic council, they all did the things necessary to get us here. And they have lived up to everything they said they were going to do.

Mike Sauceda:
Hawker Beechcraft has 32 employees right now and plans to expand to 49 by the end of the year. That could double next year with another hangar. He says the key position is aircraft mechanic and an aircraft mechanic program run by Chandler Gilbert community college helps provide quality people.

Joe Feeney:
We are co-located on the air field with an A&M school. It has a first rate technical school and they're producing aircraft mechanics and, in fact, one of our first hires here was a recent graduate from that school.

Mike Sauceda:
The tax structure also helped in the decision to move the facility to the valley.

Joe Feeney:
Absolutely. We are on Phoenix Mesa Gateway airport. This is an old were air force base and it's called a military reuse zone, and because of that, our contractors that we use to build our facilities have tax breaks. It's also a foreign trade zone that gives us an advantage there. The state has, gives us credits towards education so, yeah, the tax benefits here far superior than California.

Mike Sauceda:
Hawker Beechcraft has a similar shop in Van Nuys, California that will be closing because of the new facility here in Mesa.

Joe Feeney:
When we decided to come to Mesa, the idea was to eventually close our facility in Van Nuys, California, within a couple of years. Two years was the time line. But as we progress down the road and what happened in the economy, the quality of the life here versus the quality of life there for our technicians, the cost of doing business there versus the cost of doing business here just accelerated the process and instead of being a two-year process, it's probably turned out to be a about a nine-month process.

Mike Sauceda:
Despite bad economy Feeney says business is doing well.

Joe Feeney:
Actually pretty good. We have had airplanes here every day since we've opened. Some days there are more than others. This is a rather modestly sized hangar at 26,000 square feet. And we have had as many as 12 airplanes in here. Today there's four, and that's about average.

Mike Sauceda:
Feeney says he's happy Hawker Beechcraft located its service advocate facility in the valley and growth will come for the company here.

Joe Feeney:
We just broke ground on a new hang gather and administrative buildings that's going to add to the numbers of people and the capabilities of the capacity of the facility and the lot just behind me to the north of us, there's about six acres there and it's ours as far as leasehold to expand on to. Our plans, if we grow as we expect to grow, will be to add another hangar and possibly a paint facility to make this a real -- what we call in our industry a one-stop shop, an individual can bring his airplane here and have everything completed at one time.

Ted Simons:
Here now to talk about the Arizona Sun Corridor Project is Mesa mayor Scott Smith. Mayor, good to have you on the program. Thanks for joining us.

Scott Smith:
Appreciate it.

Ted Simons:
Lets get a definition of what the Arizona Sun Corridor open for business is.

Scott Smith:
Well, the Sun Corridor is how we have defined what has been known -- been known now as a Mega-Politian. It's basically an area that stretches from the southern part of Yavapai County that includes Phoenix and Tucson areas.

Ted Simons:
I think people would say if it's an idea of going to California and frying to draw businesses back to Arizona, why are Phoenix working to -- Phoenix and Tucson working together? Aren't they competitors?

Scott Smith:
One simple reason is that he they can't be competitors. You know, we get hung up on the Tucson versus Phoenix things. And really outside of Arizona, nobody cares. What they look at is Arizona. Arizona is a state. What does Arizona have to offer? They look at our two universities and they assume that they are working together. And when they don't work together it works against us. So we need Phoenix and Tucson to work together because that's our greatest strength is a combined effort. And we haven't been doing a very good job of it. One of the things we are trying to accomplish through this Sun Corridor and through this defining this is to recognize we are not competitors. We are actually partners in building a better state, a better economy, and in gaining and achieving some of these economic goals that we can achieve.

Ted Simons:
In going after some of these California businesses, we saw one there on the tape. What other results have you seen so far?

Scott Smith:
We have seen several solar companies that are looking at Arizona, from California. And we, one of Hawker Beechcraft's neighbors, Cessna, just moved a major citation or business jet service center from Long Beach, California, moved the whole operation to Phoenix Mesa Gateway airport there in Southeast Mesa. So we are seeing a lot of companies that are looking at Arizona now, really as a place where they cannot only prosper but where they can really establish a foot hold, and do so without the restraints that come with being in California.

Ted Simons:
As far as companies that the program is targeting, what are you looking at? Besides aerospace is there defense in there? You mentioned solar as well. Renewable energy a biggie?

Scott Smith:
The two primary energies are aerospace and solar, two things we naturally have strengths in here in Arizona. We have a long history in aerospace accomplishment. We have not truly achieved the kind of potential that we can get in aerospace and then, of course, in solar, we believe it or not, Arizona, the sunshine capital of the world, is really lagging behind other states in solar. And I am not talking about just the application of solar. We are talking about the manufacturing, the research, the development of solar. So those are two major industries that we are really focusing on.

Ted Simons:
Now, are you looking at businesses that are looking to expand? Are you looking at start-up businesses? What are you looking at over there?

Scott Smith:
Yes, yes, and yes. One thing is we would like to say we get all these start-ups and the fact of the matter is Arizona has not historically been a great place for business start-ups. It's just not our history. We are trying to change that. We are trying to do things that create the kind of environment where we can do that. But there's a lot of business that's still starting in places like California, the Silicon Valley which believe it or not has a lot of solar in there. We want to take those companies that maybe have germ natured in California, and now show them a place where they can truly grow. We want them to both expand here but we also want them after they expand or when they see what they can do with that expansion to locate here permanently. Not to be a branch office operation but to truly be a headquarters place.

Ted Simons:
Indeed because it seems as though having headquarters here would be a whole lot better than just having branches.

Scott Smith:
It's night and day. We recognize that when headquarters are located in you're community; they are much more active in the community. They give more to charity. They participate more. And it's just a whole different animal if a company is headquartered here versus having a branch office.

Ted Simons:
Let's talk about getting companies to move here, headquarter here, the whole nine yards. How much did culture, quality of life, education, these things factor into a company in California looking at Arizona, going, hmm?

Scott Smith:
Well, we look at California, for example. Use them as an example. California is generally regarded as one of the highest taxing states, regulatory states. They are a lousy place to do business and yet business thrives there. They move there. Why? The overall quality of life, cultural, the beaches, the outdoors, everything is considered to be high in California. We recognize that at the end of the day it's all about people. Companies go where people want to live. Companies go where they can entice their talent to live. Arizona has got to be concerned with the quality of life issues because, that's not just whether it's nice here. Its things such as culture, such as art, such as the education. People have got to believe they can grow and prosper here as individuals before companies come here.

Ted Simons:
Are you hearing or getting any indication of companies over there maybe thinking about coming over here but they hear about the budget crisis, they hear about the universities being cut, education being cut, health care, the whole thing. Are they hearing about that and getting cold feet?

Scott Smith:
They are hearing a lot of it in their own state with their significant budget problems. So they are looking to Arizona to see, am I seeing anything different? Am I seeing that Arizona government is taking a different or more proactive approach? Oh more far reaching approach to their budgetary problems? Yeah, they are looking at it. What they want to see is can Arizona get through this budget crisis without selling out its future. Can we get through it and maintain while also setting the stage for a great future? And that is a concern for a lot of companies.

Ted Simons:
All right. I can't let you go without a couple more questions regarding Mesa. You are the mayor.

Scott Smith:
Love to talk about Mesa.

Ted Simons:
I am sure you do. Expansion of light rail looks like a go now down Main Street? How far? Mesa drive? Something like that?

Scott Smith:
Metro, the metro just today suggested light rail go expanded from about Dobson clear past Mesa drive, almost three miles right through the downtown area down Main Street. We are excited about that.

Ted Simons:
Is that going to get a thumbs-up from the city council?

Scott Smith:
Can't tell yet. We are not going to vote on it until the first of May but right now it seems like the momentum is going toward a main street route. It seems like the most logical from a financial standpoint. And it will be the one area where it literally light rail goes through -- more traditional type of downtown which is exciting to think about.

Ted Simons:
Indeed. Also for us baseball fans, we keep hearing that the Cubs are making noises about leaving. They want something new. I got an idea for you. Cubs-Diamondbacks share a facility in Mesa. What do you say?

Scott Smith:
I would love to see it. Give me one plus million dollars and we will do it tomorrow. We will work hard to keep the Cubs here. The Cubs are happy. It's a great fan friendly stadium except for some of parking but the experience is great. But we have practice facilities that are 20, 30 years old. And the business of spring trainings has changed. So we are going to work hard to do those. We would love to get the Diamondbacks. I think pulling everything together is going to be a tall order. We are going to do the best we can.

Ted Simons:
We have about 30 seconds left. Last question. Is Mesa starting to say I want to play? I want to be in the game now? I am tired of watching, let's start doing something?

Scott Smith:
Mesa is the boom town of the 21st century. The citizens, we just passed the Gaylord 84-16. They stepped to the plate and Mesa is the place where things are going to happen.

Ted Simons:
Spoken like a true mayor. Thanks for being with us.

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