PHOENIX (April 22, 2022) — Arizona would reap economic benefits of nearly $5 billion in additional state and local tax revenues over 10 years simply by reaching the U.S. average for educational attainment, according to a new report commissioned by Arizona’s leading business organizations.
The economic-impact report details statistics that reveal stark risks faced by the state if educational attainment doesn’t increase among residents. The report’s conclusion: tomorrow’s prosperous economy depends on improving investment in workforce development and postsecondary education today.
At stake is the reality that Arizona is underproducing bachelor’s degrees. Between 2020-2030, it is estimated Arizona will have an estimated 68,000 annual job openings that require at least a bachelor’s degree. Under current conditions, there will be an annual shortage of 26,300 bachelor’s degrees, leaving Arizona unprepared for a competitive workforce.
“Advancing Arizona’s Economy – Investment in Workforce Development” by Rounds Consulting Group, Inc., acknowledges that the state has made significant economic progress over the past decade. The tax code is competitive, the regulatory environment is favorable, and local leaders and policymakers have designed an efficient approach to business expansion and location.
However, Jim Rounds, president of Rounds Consulting Group, notes Arizona has not reached its potential – a potential that is realized through increased educational attainment. This offers a unique opportunity for the state’s leaders to further advance the state’s economic profile.
With additional targeted investment in workforce development, including postsecondary education, Arizona will reap a sizable economic return on its investment, leading to greater economic competitiveness and growth for the state. The report was unveiled today at the Southern Arizona Leadership Council Future of Workforce Event.
“Despite Arizona’s recent strong economic growth, this report makes clear that our state has yet to reach its full potential,” said Danny Seiden, president and chief executive officer of the Arizona Chamber of Commerce and Industry, which is among the groups that commissioned the analysis. “We all benefit when more Arizonans are contributing to the economy. Increased educational attainment means greater opportunity and a more vibrant future for Arizonans and our state overall.”
Rounds shared, “The key to making increased educational attainment and workforce enhancement a reality is the development of a coordinated effort among the universities, business organizations, economic development offices, and state and local policymakers to work on the full continuum of academic achievement – from high school graduation to community college, and trade schools to university degrees.”
“The consequences of inaction are significant,” said Todd Sanders, president and chief executive officer of the Greater Phoenix Chamber. “Between now and 2030, Arizona will experience a significant annual shortfall of bachelor’s degrees, which are necessary to support a competitive workforce. Fully resolving the bachelor’s degree shortage would result in a 10-year cumulative state and local fiscal impact of $8 billion. This is a common-sense strategy for a significant return on investment for Arizona’s families and businesses.”
Key takeaways from the report:
- The creation of higher-wage jobs leads to more economic stability. During the most recent recession, the number of jobs in Arizona that required less than a high school diploma declined by 21.8%. This compares to an 11.4% decline in jobs that require at least a high school diploma. Conversely, jobs that require at least a bachelor’s were stable.
- Arizona is underproducing bachelor’s degrees. Between 2020-2030, it is estimated Arizona will have an estimated 68,000 annual job openings that require at least a bachelor’s degrees. Under current conditions, there will be an annual shortage of 26,300 bachelor’s degrees.
- Arizona is underperforming in terms of quality growth. The demand for bachelor’s degrees will increase significantly if Arizona is able to match the U.S. in terms of per capita gross state product (GSP). This would require 165,300 new base sector jobs earning in excess of $140,500 per year. A portion of the “multiplier” jobs would also require a bachelor’s degree. In this scenario, Arizona would need 215,600 additional bachelor’s degrees in order to reach the national level of per capita GSP.
- The fiscal impact of not improving is significant. The increase in productivity related to enhanced GSP and employment counts would generate $4 billion in new tax revenues for the state and local governments each year, far exceeding investment costs related to policy implementation.
# # #