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Opinion: Yes, Arizona’s economy is burgeoning again, but that’s only part of the story. More ominous problems are lurking that must be addressed.

Arizona continues to be a state that ranks highly in terms of rates of growth. This is primarily true for population and job statistics. However, measuring rates of growth without also considering the quality of the growth that is being produced can be misleading. 

The economic forecast described by ASU professor Lee McPheters (“ASU forecast: Strong Arizona economic rebound in progress with no housing bubble growing,” May 6) focuses on counts rather than quality. Dr. McPheters is not wrong, but the story is just incomplete.

The economic summary fails to recognize some key areas of concern on the horizon for Arizona. To rebuild as a stronger, more inclusive statewide economy, Local First Arizona believes policymakers should be considering the following when they review economic data. 

Rural Arizona hasn’t seen much recovery

A recent report from the Brookings Institution showed Phoenix ranked highly among large metros for growth but lags in some key indicators such as prosperity and inclusion. Poverty and academic achievement continue to be under the radar yet will have a profound impact on the state’s overall growth potential.

Looking statewide, 85% of Arizona’s new jobs pre-recession were created in Maricopa County. Without a strategic plan to create 100,000-plus jobs outside of Maricopa County in the next two years, we have a tale of two recoveries – Greater Phoenix and everyone else – that will eventually drag down our statewide economy.

The Arizona Repubilc reported that 30% of Arizona’s small businesses have permanently closed, but the statistic, by itself, fails to grasp the full impact of this reality.

With every small business closure, so goes several important aspects of a healthy economy:

  • fewer dollars recirculating through local communities;
  • a decrease in customers for local business service providers like accountants and graphic designers; and
  • the erasure of the unique character that makes our cities and towns worth visiting.

Replacing small, rural stores with one corporate chain acts as a siphon that extracts wealth from the community where it stands, which further impoverishes locals while homogenizing communities.

Arizona needs better access to capital

We need a strategy to re-dignify the trades and rebuild our crippled hospitality sector by offering career opportunities with good jobs that don’t require a college degree and associated debt to obtain. Arizona needs electricians, plumbers, framers, restaurant managers, hotel event coordinators and many others. Workforce development policy related to small businesses should include everything from tourism to high-tech spinoff businesses.

Arizona needs a statewide strategy to address the estimated 83% of small business owners who are now seen as “too risky” for a loan and who are too small to attract venture capital.

As a state with only 12 community banks, we need to look at our options to address this critical issue. The lack of access to capital will stifle our small business community just at a time we’re hoping they rebound.

A simple look around the country will show we are behind on this too. As one example, the Kauffman Foundation and Rockefeller Foundation partnered to fund the Capital Access Lab, a pilot to both seed innovative strategies to get dollars flowing beyond the PPP Band-Aid and seed the efforts of entrepreneurs directly.

Workers need help with child, elder care

Small businesses are struggling to find employees. The idea that “low-wage workers would rather collect unemployment” is only a small part of the story.

A number of recent studies, including the Census Household Pulse survey, indicate as many as 6.3 million people aren’t working yet because they have children at home, and 2.1 million are caring for elders who lived elsewhere pre-pandemic. Combined, this represents 14% of eligible adults not working.

Arizona also needs to carefully consider the differences in small business policies in rural and urban areas and properly address inequities among women- and minority-owned small business activity.

Many businesses may be opening and seeing a surge of demand, but so long as schools, day care centers and elder care are still limited, there will be constraints in their ability to get workers.

We also have an affordable housing crisis

Beyond all of this, we are in a full-blown housing crisis. Not a bubble, but a severe shortage that simply can’t be overlooked.

In the Verde Valley, a significant portion of the workforce is living in camper vans off the highway between Sedona and Cottonwood. We have a one-month supply of housing in greater Phoenix right now, with rents skyrocketing and average home prices edging toward $500,000.

In Sedona, there are only 13 homes currently for sale, each more than $2 million. Sedona just attracted a new Chamber of Commerce director who will be on a six-month couch surfing excursion as she works her way through a waiting list to find something she can afford. A group from Prescott called US VETS is working to count the number of unsheltered individuals who are living in the forests of northern Arizona.

In response, we should be advocating for the Housing Trust Fund, properly considered low-income housing tax credit programs, and a joint effort with local governments to enact a more stable methodology for residential development.

We must prioritize community, personal health

Exactly how does our state move forward without adequate housing for working, low-income families? Low-income jobs are still off by 23%, according to Rounds Consulting’s recent study.

San Diego is light-years ahead of us, for example, in building “missing middle” housing, the more affordable courtyard- and triplex-style homes that can fit in single-family neighborhoods. Texas and Maine encourage tiny home construction, while other areas are incentivizing affordability and pursuing strategies to support accessory dwelling units.

Arizona charts a risky path by prioritizing rates of growth over quality, and selecting rankings over community and individual health, especially when considering climate change, water shortages and other impending crises that we are fully aware of today. 

But according to Dennis Hoffman, another ASU economic professor, “The forecasts are clear – it’s really onward and upward from here.”

And it sure is, if you’re lucky enough to be on the top half of the partially submerged ship.

Kimber Lanning is CEO of Local First Arizona. Reach her at

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