The state of Arizona is projected to reach a total employment of 3,514,910 by the second quarter of 2025.¹ On top of this, it ranks sixth for the fastest wage growth rate within the country! But before reaching these impressive statistics, Arizona experienced ups and downs just like other states.
What are the major shifts and changes that resulted in the state of today’s workforce? This article will delve into the 40 years of work within the state, as well as the key factors and milestones that shaped Arizona’s job market.
A Timeline of Arizona’s Job Market
From economic upswing to industrial development, Arizona has experienced many milestones in the last four decades. To fully understand how it was formed by previous companies and leaders, it’s vital to take a look at its history.
1980s: Foundation and Expansion
In the 1980s, Arizona’s labor market had a population of approximately 2.7 million.² The economy then was still heavily reliant on traditional sectors like mining, agriculture, and tourism.
The early years of the decade can be characterized by a relatively high unemployment rate. Reports state an average 7.2 percent unemployment rate, even as the state worked to diversify its economic base.³
A significant shift began mid-decade as Phoenix emerged as a major southwestern business hub. This resulted in the addition of job openings, particularly in the real estate and construction sectors.
Tourism also experienced remarkable expansion during this period. This growth was fueled by the development of numerous resorts and attractions, particularly in the Phoenix metropolitan area and Tucson.⁴
Despite the challenges of adapting to shifting economic realities, the state’s workforce grew from approximately 1.2 million in 1984 to 1.5 million by 1989. This served as a vital foundation that helped set the stage for the labor force growth in the following years.
1990s: Era of Technology and Employment
The 1990s began with significant expansion in the technology sector. As big companies like Motorola continued to strive for innovation and development, Phoenix experienced a surge in employment rates. It was considered one of the five states that led the nation in job growth during this decade, with an increase of around 48 percent.⁵
Aside from tech, healthcare emerged as a major employment driver during this period. This sector reported a 70 percent increase in jobs throughout America.⁶ Considering the context during this decade, this statistic was partially driven by the expanding population of citizens. On top of this, there was an increasing demand for medical services from both working-age residents and retirees.
Even with this upward trend of job increase, the end of the 1990s saw unemployment rates drop to historic lows. In fact, 4.2 percent of the national jobless rate was reported by 1999.⁷ With higher employment rates throughout the country, along with wage growth by almost one dollar an hour, this decade concluded with a significantly more diverse and robust labor market.
2000s: Recession and Recovery
The new millennium began optimistically for Arizona’s job market. Different employment opportunities were available across multiple industries and sectors.
The first half of the decade saw a particularly robust growth in construction. By 2006, businesses within the sector were able to create over 244,000 jobs.⁸ This period of expansion indicated a continuation of the previous decade’s positive trends. With new businesses and industries continuing to establish themselves throughout the state, people thought the 2000s would be a decade of growth and success.
However, the landscape dramatically changed because of the 2008 Great Recession. Due to the drastic changes in the economy, approximately 300,000 jobs were lost statewide.⁹ This caused unemployment rates to reach as high as 11.2 percent in 2009.¹⁰ This forced many workers to leave the state or simply transition to new industries outside of their expertise.
Despite the challenges, this decade began a structural shift in Arizona’s economy. Both businesses and professionals recognized the need for greater diversity in skills and industry focus. The recession, while devastating in many ways, ultimately helped catalyze changes that would prove beneficial in reaching new milestones related to work and the labor force.
Read more: Keeping Millennials: 5 Effective Engagement Strategies to Lower Turnover Rates
2010s: Growth of the New Economy
Further developing new positions beyond traditional industries, this decade saw the rise of modern sectors such as technology and sustainable energy. For example, the solar energy industry provided opportunities for a considerable part of the labor force participation rate. It offered jobs to more than 8,500 Arizonans in 2013, which helped support the state’s long-term economic upturn.¹¹
Through the use of technology, healthcare solidified its position as the state’s largest private employment sector.¹² Organizations that offered personalized health services became major employers in the labor market. Overall, the state created 380,000 new jobs between 2014 to 2020. This led to Arizona’s job growth rate being recognized as the second best among the entire nation.
These milestones were achieved alongside the implementation of important legislative changes that provided crucial benefits for employees. One example is the passage of Proposition 206 in 2016. This approved gradual minimum wage increases and set new standards for employee benefits.
2020s: Global Challenges and Solutions
Despite the success of the previous decade, the 2020s began with unprecedented challenges as the COVID-19 pandemic occurred. The inability of professionals to work outside for the sake of their health resulted in the loss of approximately 320,000 jobs across the state of Arizona.¹³
The tourism and hospitality sectors were particularly impacted. Data shows an 81 percent drop in year-over-year sales, which affected the overall industry. ¹⁴ However, this period also accelerated the existing trend of remote work adaptation. By 2021, 20.7 percent of the state’s workforce was transitioning into remote roles, positions, and responsibilities.¹⁵
The tech sector demonstrated remarkable resilience during this period, continuing to grow despite the pandemic’s challenges. This growth was further bolstered by significant developments in the semiconductor industry driven by major investments in Phoenix-based industrial facilities.
Creating legislative changes is one of the response of the state to these challenges. For example, they provided incentives in 2022 for major semiconductor industries. This provided substantial tax incentives and infrastructure support for manufacturers which helped position Arizona as a key player in the nation’s technology and manufacturing sectors
Read more: 2024 Labor Trends: Insights into Wage Growth and Labor Force Participation
Other Key Legislative Changes in 40 Years of Work
Aside from the laws and propositions mentioned above, here are a few key legislative changes that helped shaped Arizona’s workforce over the last four decades:
1. 1990: Americans with Disabilities Act
This federal legislation fundamentally transformed workplace accessibility and employment practices across Arizona and the entire nation. The ADA mandates that employers with 15 or more employees provide reasonable accommodations for qualified individuals with disabilities and prohibits discrimination in all employment practices. In Arizona, this law led to significant modifications in workplace infrastructure and hiring practices that affected many industries like construction and manufacturing.
2. 1996: Employment Protection Act
This state legislation established Arizona’s Enterprise Zone Program, which was created to stimulate job creation in economically disadvantaged areas. The Act provided tax incentives to businesses that created new jobs within designated zones. It placed particular emphasis on the manufacturing and producer services industries. Companies participating in the program received tax credits of up to $3,000 per qualified new employee, with additional incentives for hiring local residents. The program has been particularly effective in rural Arizona communities and led to 30,000 new jobs during its first decade of implementation.
3. 2007: Legal Arizona Workers Act
This act is a state law that mandates the use of E-Verify for all Arizona employers. It ensures that all employment within the state is eligible. This act is now considered as one of the strictest state-level employment verification requirements within the country. To prevent violations, it imposes several penalties, such as suspension or revocation. These are specifically meant for businesses that knowingly employ unauthorized workers into their workforce.
It significantly impacted industries in Arizona that traditionally relied on immigrant labor, such as agriculture and construction. This led to increased compliance costs for businesses, as well as the reshaping of hiring practices across the state.
Read more: Guiding Arizona’s Workforce Future: 40 Years of Expertise in Emerging Employee Trends for 2025
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References
- “Arizona 2023-2025 Projected Employment Report.” Arizona Office of Economic Opportunity, 22 Feb. 2024, oeo.az.gov/news/arizona-2023-2025-projected-employment-report.
- Wescott, Diane, and Robert Bednarzik. “Employment and Unemployment: A Report on 1980.” Bureau of Labor Statistics, 1981, www.bls.gov/opub/mlr/1981/02/art1full.pdf.
- Devens et al. “Employment and Unemployment in 1984: A Second Year of Strong Growth in Jobs.” Bureau of Labor Statistics, 1985, www.bls.gov/opub/mlr/1985/02/art1full.pdf.
- Devens. “Arizona’s Tourism Industry Has A Legacy Going Back More Than 100 Years.” AZBigMedia, 1 Jul. 2011, azbigmedia.com/lifestyle/travel/arizonas-tourism-industry-legacy-going-back-more-than-100-years/.
- Marcus, Morton . “A Graphic Overview of Employment and Earnings in the 1990s.” IBR Indiana Business Review, 1 Jul. 2011, www.ibrc.indiana.edu/ibr/2002/fall02/fall02_art4.html.
- Hatch, Julia , and Angela Clinton. “Job Growth in the 1990s: A Retrospect.” Bureau of Labor Statistics, 2000 , www.bls.gov/opub/mlr/2000/12/art1full.pdf.
- Hatch, Julia , and Angela Clinton. “State and Regional Unemployment, 1999 Annual Averages.” Bureau of Labor Statistics, 25 Feb. 2000, www.bls.gov/news.release/history/srgune_02252000.txt.
- Howard Fischer Capitol Media Services. “Arizona Continues to See Growth in Construction Industry Jobs.” Tucson.Com, 23 Jan. 2019, tucson.com/business/arizona-continues-to-see-growth-in-construction-industry-jobs/article_d336e427-5105-555a-85ba-58543d10246c.html.
- Hammond, George. “Arizona’S Economy: A Shock to the System.” Arizona’s Economy, 1 Apr. 2020, www.azeconomy.org/2020/04/outlook/arizonas-economy-a-shock-to-the-system/.
- “Economic Snapshot: Arizona.” Joint Economic Committee, 18 Sept. 2015, www.jec.senate.gov/public/_cache/files/83669d44-44cc-4c48-9bad-7b06e117b2ff/arizona.pdf
- “Star Power: The Growing Role of Solar Energy in Arizona.” Environment Arizona, 19 Nov. 2014, environmentamerica.org/arizona/resources/star-power-the-growing-role-of-solar-energy-in-arizona/.
- Brunner, Kamryn, and Glenn Farley. “The Economic Impact of Arizona’s Health Care Sector.” Common Sense Institute Arizona, 28 Jul. 2023, www.commonsenseinstituteus.org/arizona/research/healthcare/the-economic-impact-of-arizonas-health-care-sector.
- “Arizona’s Jobs Progress Meter Shows Some Strengths and Weaknesses Remain Post-COVID-19.” Center for the Future of Arizona, 14 Dec. 2023, www.arizonafuture.org/news-events/news/2023/12/arizona-s-jobs-progress-meter-shows-some-strengths-and-weaknesses-remain-post-covid-19/.
- “COVID-19 Effects on Arizona’s Tourism and Trade with North America.” Maricopa Association of Governments, 23 Sept. 2022, azmag.gov/Portals/0/Documents/MagContent/EDC_2020-10-06_item-07_COVID-19%20-Effects-on-Arizona-Tourism-and-Trade-with-North-America.pdf.
- “Arizona in Top Third of States with People Working from Home.” Arizona’s Economy, 23 Sept. 2022, www.azeconomy.org/2022/09/economy/arizona-in-top-third-of-states-with-people-working-from-home/.
