Arizona unemployment rises, becomes factor in race for governor

Yavapai County’s unemployment rate bucked the statewide trend in August by ticking down slightly from July’s report. It is more than a full percentage point below last year’s numbers.

Yavapai County’s unemployment rate bucked the statewide trend in August by ticking down slightly from July’s report. It is more than a full percentage point below last year’s numbers.

PHOENIX -- Arizona's jobless rate increased in August for the third month in a row, with indications that things may not get better for awhile.

Figures released Thursday show a seasonally adjusted unemployment rate of 7.1 percent. While that is a full point lower than last August, it has been rising steadily since May when it hit 6.8 percent.

This appears to be a local issue: The national jobless rate dropped a tenth of a point in August from the prior month, to 6.1 percent.

Aruna Murthy, director of economic analysis for the state Department of Administration, said what's particularly disconcerting is August should be a much better month for growth in private sector employment. That is where the seasonal adjustment comes in, based on the hiring that normally would happen this time of year.

And she was particularly concerned that the number of people working in retail trade actually dropped by 200 from July, including losses in both general merchandise outlets and at stores selling clothing and accessories.

"For a month where you have back-to-school shopping, this is not good,' she said.

Murthy noted an uptick in hiring among firms that provide temporary workers to other companies. But she said that is not a particularly healthy sign.

"That seems to say there are changes in the economy that a lot of people being are hired as temporary rather than permanent,' she said. What that indicates, Murthy said, is companies are not confident enough the economy is growing to actually put people on their own payrolls.

At this rate, Murthy said, it's unlikely Arizona will achieve the 2.2 percent job growth she had previously predicted for 2014

"And that was a conservative forecast,' she said.

The report comes as Arizona continues to phase in a series of cuts in corporate and personal income taxes and business property taxes enacted in the last five years that proponents argued would stimulate the economy.

Murthy declined to take a position on whether the already enacted tax cuts are paying off or have not helped job growth, saying it may be too soon to tell. And Gov. Jan Brewer, who signed them into law, would not comment.

The question, however, has become an issue in the race for who will replace Brewer.

Republican Doug Ducey has said taxes are the primary consideration when businesses decide where to relocate. And he promised that if elected he will submit legislation to reduce taxes every year, "with the goal of pushing income tax rates as close to zero as possible.'

But Democrat Fred DuVal said new across-the-board tax cuts do not make economic sense.

"We have been very aggressive in reducing tax rates waiting for the 'great comeback' to occur,' he told Capitol Media Services Thursday in an interview about the latest employment numbers.

"It, by itself, has not succeeded,' he continued.

"We've got a competitive tax system now,' DuVal continued. "What we don't have is a competitive education system,' something he said is a key concern of business executives looking to be sure that they will have trained workers for their companies and good schools for their own children.

But Ducey, in separate interview, said it's not that simple.

"A trained workforce and good schools are important in an economic climate, as are tax cuts,' he said. "They're not mutually exclusive of each other.'

Nor was he willing to back away from his campaign promise to further reduce taxes.

"Tax cuts are not a mistake,' he said. "Tax cuts put more money back in hardworking taxpayers' pockets.'

That still leaves the question of why Arizona has 137,000 fewer jobs now than before the recession despite the cuts already approved, including slashing corporate income tax rates by 30 percent. Ducey placed the blame on a "tepid and lukewarm national recovery' even though the national jobless rate is a full point below Arizona and employment in most other states is at pre-recession levels.

Thursday's report showed one bright spot in the economy: Hiring in health care is up by about 2,400 from July and 10,800 from the same time a year earlier.

But Murthy said this likely has to do with the enactment of the Affordable Care Act -- and Arizona's own decision to tap that to expand its Medicaid program -- as more people with insurance mean more people who can afford to go to the doctor.

There's a political angle to that, too: Ducey has openly questioned the decision by Jan Brewer to push through that expansion over the objection of most Republican legislators; DuVal supports the move.

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