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June 12, 2014

Host: Ted Simons

Arizona Jobs Recovery

  |   Video
  • Arizona is lagging behind the national economy in recovering jobs lost during the Great Recession. Arizona State University Research Professor Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business at Arizona State University, will talk about why the nation has recovered jobs lost during the economic downturn but Arizona has not.
  • Lee McPheters - Research Professor and Director, JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business at Arizona State University
Category: Business/Economy   |   Keywords: business, economy, arizona, jobs, economic, recession,

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Ted Simons: Arizona is lagging behind the national economy in recovering jobs lost during the great recession. Here to help us figure out why that's happening is Lee McPheters, director of the J.P. Morgan Chase economic outlook center at ASU's W.P. Carey School of business. Good to see you again.

Lee McPheters: Good to see you.

Ted Simons: U.S. employment level now back up to prerecession levels. Arizona's isn't. Why?

Lee McPheters: National economy added another 200,000 jobs last month. So, that was a real milestone. All of the jobs lost in the recession have now been recovered, about 8.7 billion at the national level. You look at the Arizona numbers, we are just better than 55% recovered. So, there is quite a difference between where the national economy is and where Arizona is in terms of getting all of those lost jobs back.

Ted Simons: Talk about that difference. What are we seeing here?

Lee McPheters: Well, the difference really has its basis in the fact that the U.S. economy lost 6% of jobs. Arizona lost 12%. On top of that, Arizona went into the recession sooner, came out of the recession later. So, went in sooner, came out later, fell further, and therefore we have a much bigger hole to dig our way out of. On top of that, you have the fact that the rate of growth has simply been in the range of about 2%, where we need four to five percent, I think, to have the kind of Arizona recovery that most analysts were expecting a couple of years ago.

Ted Simons: I think most would understand that we got hit extra hard during the recession. So it might take an extra hard effort to get out of that particular hole. The rate of growth is 2% business. What's going on there?

Lee McPheters: The drivers that we usually see in Arizona have been fairly sluggish, for example. You would expect construction to be one of the leaders in recovery. This is what you historically see in recession comebacks. Right now, we're seeing construction job growth about one percent. We are seeing a fairly weak housing market; commercial building is not very strong. So, construction simply is not in the picture right now. Although growth is positive, but it is just not a driver of the economy. Retail sales affected by the fact that personal incomes are not growing very fast. So, that's a large sector. A big part of the Arizona economy is retail, and that's not growing very fast as well. You have tourism, which is affected by the national economy, and since the national economy is still some distance from where you would say, you know, we were having really robust growth, tourism is not as strong as it might be.

Ted Simons: I would imagine – still not doing very well. You got folks that still can't sell their homes perhaps somewhere else and the job opportunities here may not be -- it is like a vicious cycle. Looking for a job, you can't sell your home to get here. It is all a loop.

Lee McPheters: That is very much a difference between where we are with this recovery and where we have been in previous rebounds. Population growth is probably going to be under 1/2%. To give you some context, in a strong Arizona economy, you would expect to see two to three percent. Population growth, that drives housing and service employment. And we're simply not seeing that wave of people moving to Arizona right now.

Ted Simons: We are seeing, and keep hearing about big scores, whether it is Apple or State Farm. I think folks are expecting to see better numbers after hearing those particular stories. What's going on?

Lee McPheters: All of that is to the good, of course, but each of those represents a few thousand jobs, and those are very valuable jobs, good jobs, but we have an economy with, you know, 2.5 million people in the labor force. What we really need is something in the range of three to four percent growth, 100,000 jobs a year. We haven't seen 100,000 jobs added to the Arizona economy since I would say 2006. So, we're, you know, close to eight, nine years since we've really seen the kind of growth that this economy is capable of.

Ted Simons: We hear about tax breaks and tax credits. Just, you know, in general, how much of a factor are those in what has been Arizona's recovery, regardless of how that recovery is going, are they impacting what we are seeing out there?

Lee McPheters: I think one of the key things here when you look at the tax structure, you want to be competitive. You don't necessarily have to have the lowest taxes, but you do need to be competitive and I think Arizona has taken some steps, especially with business taxes, to get us more in line with what some of the competition is doing. On the other hand, when you look at a business and you look at their cost, what other costs, cost of equipment, cost of supplies, cost of labor, taxes is way down the list in terms of its proportionate contribution to the total budget of a business, but certainly lower taxes are better, I think, as an attraction.

Ted Simons: How about as an attraction or perhaps a repellant, the image of a state. Arizona's image has been hammered some would say unfairly, but hammered nonetheless. Is that an impact on a slow rebound?

Lee McPheters: To some extent we do have a business model, development model that is based on the idea that this is an attractive place for business to relocate for people to come and perhaps have a better quality of life and reinvent themselves, and to the extent that we show up on the John Stewart show, you know, behind the host and some sort of perhaps sarcastic remarks, none of that, I think, is very positive. On the other hand, if you had a stronger economy, I think, and we had a better job growth environment right now, I think that that would probably be one of the key things we need in order to get people and businesses to relocate here.

Ted Simons: Interesting. I notice in these latest numbers, California and Texas doing very well, kind of leading the U.S. rebound. A place like New Mexico, as far as getting the jobs back, doing very poorly. Why are some of these states doing well? Why is New Mexico, for example, doing so badly?

Lee McPheters: New Mexico is a state that has a higher proportion of employment in government, and at the federal level, government jobs have been decreasing since, I believe, 2011. You look at Arizona or most other states, you find that local government jobs have been decreasing for several years. So, to the extent that you depend on government, this is not, perhaps, a very good time for your -- to expect your economy to be showing much growth.

Ted Simons: Last question here, as far as the U.S. economy, talk about Arizona, but the U.S. economy, the recovery is taking its time to say the least. Why is that? Why has this been such a long SLOG?

Lee McPheters: The driver of growth at the national level, after you kind of set aside special circumstances, energy production, so forth, is the consumer. 70% of the economy is counted for by the consumer. And consumers are paying off debt in many parts of the country, consumers are still under water. Arizona less so than we were, but still a problem. The consumers still see a high unemployment rate, and now we're seeing this emerging problem of the presence of student debt, perhaps, slowing down the ability of consumers to really make purchases, you know, big-ticket purchases simply because of their debt load of consumer debt tied to their college experiences.

Ted Simons: So, nationally, at least those jobs are coming back. If you put the population in -- increase in there, jobs are coming back, Arizona jobs not coming back as quickly as we would like.

Lee McPheters: They are coming back in a couple of sectors we are seeing great growth in finance, we're seeing great growth in health care, and Arizona is ranked in the top five states in the growth of both of those sectors. So, those are good jobs, good wages, and I think that is an important boost for the Arizona economy.

Ted Simons: Indeed. All right, Lee, good to have you here. Thank you for joining us. We appreciate it.

Arizona Technology and Innovation: Elementary Students Create Computer Code

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  • We’ll show you how first and second grade students at Fireside Elementary School in Phoenix are learning to write computer code and make their own apps.
Category: Technology   |   Keywords: amgradaz, american graduate, technology, innovation, arizona, elementary, students, computer, code, phoenix, apps,

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Ted Simons: Tonight's edition of Arizona technology and innovation, a Phoenix teacher recently honored nationally as one of digital innovators by PBS. The teachers are recognized for using technology in their classrooms in ground-breaking ways. Prodcer Shauna Fischer and Juan Magana introduce us to first grade teacher Karen Mensing and her pint-sized programmers.

Shauna Fischer: What looks like a typical classroom is anything but.

Hey, I'm Charlie, and I'm -- and today we're going to work on MIT calculator app.


Shauna Fischer: The first and second graders in Karen Mensing's classroom embrace technology in a way that is astounding.

Karen Mensing: We have been working on coding all year, using scratch and tinker and app inventor and the kids love it.

Shauna Fischer: Today the kids are creating a calculator app with a little help from student tutors at Paradise Valley High School.

Karen Mensing: The kids are very, very natural with technology which is fantastic and I say the younger ones -- they're a clean slate. Put something in front of them and they catch on very quickly. Many times I'll introduce something new, and a student in the class has mastered it quicker than I have. And that's great. I tell them great. Now you can show us. You can show me.

Shauna Fischer: Ms. Mensing uses technology every day in her classroom. Fireside elementary, is a 21st Century school, which means technology is incorporated into every lesson.

Shannon Sherwood: It's common to walk in classrooms and in kindergarten, up until the 6th grade classrooms, there will be students that are in groups working on their projects based through the iPads, through chrome books, a lot of Google apps.

Sareena Gupta: It's awesome, because you get to like explore different sites and not -- it's not like math, because it's boring, you just have to do it on a sheet of paper. But in technology, there is like these math sites that are games but they're actually -- you're actually learning math.

Shauna Fischer: Sometimes the technology is the lesson as in the case of the calculator app. And sometimes Ms. Mensing incorporates technology into the lesson. Here the students are reviewing a lesson on 5 de Mayo by using Google forms to create a questionnaire about the holiday. Assistant principal says given the world we live in, it is important they are introduced to technology at a young age.

Karen Mensing: So it’s really important that we start them in 1st, start them in kindergarten, foundations to take upon and grow further. Time to graduate high school and into college, move into the work force, they're well equipped.

Shannon Sherwood: Right now it is 2014. This is the world we live in. There is technology everywhere. Every adult I know has a smartphone in their pocket at all times, meaning they have a computer in their pocket at all times. They can take a picture, video, Google something, send an email, any of that at a moment's notice. That's where we are. If I teach the kids like it is the 80s, I'm doing them a disservice. That's not the time it is now. I need to teach them how the world is right now.

Shauna Fischer: With access to all kinds of devices, it does seem intimidating, but the student are enthusiastic. Not only have they created apps, but they also have made games and art programs.

Sareena Gupta: Usually it's pretty easy, once you get the hang of it. Like for the first time when I like open the computer last year, I was like what do I do? What do I do? But once you like learn and your teacher explains it to you, you kind of get the hang of like how do you go to this site and what do you do and it's just easier once you practice.

Shauna Fischer: And that practice leads to success. And an outpouring of gratitude for a teacher who believes in her students unconditionally.

Karen Mensing: If I could clone and make million -- absolutely, I would put a Karen in every classroom.

Bethannie Woodard: She is a great teacher. She -- she teaches us a lot of technology things, and she is the greatest teacher I could ever have.

Ted Simons: Karen Mensing is also a Google certified teacher and travels around the country instructing other educators on Google's educational programs.

Eric Cantor Loss

  |   Video
  • For the first time, a sitting House majority leader was defeated in a primary election. Virginia’s Eric Cantor lost to Tea Party activist Dave Brat. Patrick Kenney, the Interim Vice Provost and Dean of the College of Liberal Arts and Sciences at Arizona State University and a Professor in the School of Politics and Global Studies, will discuss what the loss means for the GOP and the Tea Party.
  • Patrick Kenney - Interim Vice Provost, Dean and Professor, College of Liberal Arts and Sciences and School of Politics and Global Studies at Arizona State University
Category: Politics   |   Keywords: politics, tea party, gop, loss, virginia, eric cantor,

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Ted Simons: Virginia Congressman Eric Cantor's loss to Dave brat marked the first time in American history that a sitting U.S. house majority leader was defeated in a primary election. To discuss the fallout from Cantor's loss, Patrick Kenney, interim vice provost and dean of the College of Liberal Arts and Sciences and professor in the school of Politics and Global Studies. Good to see you.

Patrick Kenney: Thank you.

Ted Simons: This primary loss by Eric Cantor, this primary loss, how surprising is that?

Patrick Kenney: Very surprising. If you look at the overall numbers it is almost unheard of in the house of representatives that actually any incumbents lose always under 2,3% -- in a primary, always under two to three percent, and certainly leadership almost unheard of, first time ever in history. Primaries came in in the early 1900s, that is a 100-year run and that is the first time that happened.

Ted Simons: Did a tea party candidate win this thing or did Eric Cantor lose it?

Patrick Kenney: Probably a little bit of both. Cantor, probably, he had a lot of money he could have spent. He was sitting on a nice war chest that he didn't use. He spent a lot of time in D.C., and that was resonating negatively back in the district. The tea party has a strong following in certain sectors, certain areas and locations. And this is obviously one of them. And they can always rally out and increase turnout a little bit and it looks like that is what they did.

Ted Simons: This is a suburb of Richmond. Is the kind of area that might be similar to suburbs here in Phoenix?

Patrick Kenney: Sure, and in Arizona, in particular, you have elements of the tea party. The question always is what is the percentage within the Republican Party? And that varies anywhere depending on the congressional districts, not state-wise and it may run as small as 10 or 12% of the Republican Party up to maybe 30% of the Republican Party. When you get in the 20 to 25% range, if turnout is low, they might have a particularly strong influence.

Ted Simons: Basically when we hear about Eric Cantor and his image has always been as an ultra-conservative, and he loses because he is not conservative enough, again, is that a focused message on this district, that candidate, and his opponent? I don't think people in Richmond even knew all that much about this guy, this professor, I guess, is it so focused that people in Arizona don't take a step back or does everyone take a step back?

Patrick Kenney: I think everyone takes a step back. There’s some really interesting Research, unsafe at any margin, meaning that Congressmen always worry about this. This is one reason why incumbents raise so much money and have so much money. They always worry about this. This happens -- this one is really unusual, but incumbents do lose once in a while in the primary and once in a while in the general. They always worry about this. All incumbents take a step back when this happens and reassesses. I do not know what the internal polling showed -- obviously they were off. He was not engaged in the campaign --

Ted Simons: That was going to be my next question. Candidates have their internal polling, when warning flags show up you would think he would get out of Washington D.C. it’s not that long a trip down there to Richmond, and take care of business --

Patrick Kenney: House primaries, general elections, in particular, very difficult to poll. People often aren't sure ahead of election day, too far ahead of election day exactly which district they're in, exactly which Congressman represents them at any one time. Media markets cut across congressional districts a lot of times. That would be classic for Arizona. One media market covering all of the Phoenix area, almost all of our congressional districts touch into that media market. People are seeing all different kinds of names of house members on TV. Sometimes they're going, is that my Congressman? I'm not sure. A hard time identifying which voters will vote in which particular primary and that clearly must have been going on here.

Ted Simons: As far as issues are concerned, it sounds like immigration was a factor in this case. The idea that he was willing to talk and think about immigration reform may have cost him as far as the primary is concerned. Is that what you are seeing as well? Is immigration even going to be touched by the GOP for the rest of the year?

Patrick Kenney: I haven't seen any good exit polling that makes me think that immigration tipped it one way or another. That is the way it is being talked about somewhat because the media was talking about that and urging people because he looked like he might compromise a little bit on that, maybe that -- the tea party needs to take that into account. I think it is the probability of anything major on immigration between now and the Election Day is almost zero. I mean, I can't -- especially from the house. I can't imagine anything major. Maybe there could be a minor thing, but I don't think so. Senate gave them a bill some time ago and it has not moved at all.

Ted Simons: You mentioned the Senate, Lindsay graham, part of that bill, he wins in a cakewalk. It makes you wonder is this an anomaly or a trend. And what does this say now? What does this mean?

Patrick Kenney: If you look at all races over time, this is an anomaly. And it -- if you think of things being distributed in kind of a pattern where we can predict some of these kinds of outcomes, no one would have predicted this, so this is an anomaly, something odd happened between the turnout and between Cantor taking good care of his district, and if it looked like maybe he hadn't been doing that, he didn't engage quite right. Variables aligning in one particular race are pretty unusual. The second part of the question, is there a trend here? The tea party overall probably since '10, they're probably ebbing just a little bit because they have targeted a number of races that they're trying to do well in. And this is a big splash for them. It looks like they have had some success, they had success in Tennessee where they pushed a race to a runoff. But probably overall, they're not quite as powerful as they were one or two election cycles ago. Not so much anything that they've done, but I think the main stream in the Republican Party, especially the money behind the Republican Party, traditional Republican Party, they have engaged to be sure that their candidates -- this doesn't happen to very many candidates.

Ted Simons: That was going to be my next question. Does the republican establishment here do they fight back or do they start playing ball a little more?

Patrick Kenney: No, think they continue to fight back. The think overall the republican establishment and -- what I mean by that, traditional republican constituencies, chamber of commerce, small businessmen, officers in the military, overall, long-time rural voters, small town, long time traditional republican voters have been with the party a long time, especially the money folk that support that, they probably want to run candidates that a little closer to the middle of the spectrum, rather than that far to the right, overall.

Ted Simons: Okay. So, with that in mind, what lessons did we learn here? And I know a republican strategist, his quote was the grass roots are in revolt and they're marching. Is that valid and is that something that we will see more of as we head to November?

Patrick Kenney: I think there is always the risk for incumbents that there will be a bit of a grass roots movement to overthrow them. It is rare it mobilizes because they need a lot of money to get that done. Nevertheless, there is always an opportunity in a -- in a -- when turnout is low for a grass roots kind of organization to build a little quickly and make a difference in a race. And this may be is what happened here. Social media might have helped a little bit, too. That kind of stuff can happen quick. We don't know a lot about that. We are trying to learn more about that.

Ted Simons: You mentioned tea party, grass roots and money needed and that may be a problem for -- at what point does the big money, I know the KOCH brothers are involved in these tea party groups -- but at what point does the big money say grassroots, I’m going that direction?

Patrick Kenney: I think some already has. That depends -- I think it depends where the money wants to align. They're deciding which races they want to get involved in and when they get involved in a race, they hope to tap into the grass roots. I think the causal flow is that way. The strategists with the money decide these candidates look vulnerable, we need to do this here and try to engage the grass root.

Ted Simons: Interesting stuff. Quite a surprise.

Patrick Kenney: A very big surprise. No question about that.

Ted Simons: Good to have you here.

Patrick Kenney: Thank you.