Tunneling into the new boom

While I was in Phoenix last week, the Census Bureau released news showing the biggest annual jump in median household income since 1967 and poverty falling the most in 50 years. Nationally, incomes jumped 5.2 percent from 2014 to last year, to $56,516. The numbers are adjusted for inflation. Thanks, Obama.

The data are more complicated for Phoenix and low-tax/light-regulation Arizona. Income statewide rose 2.8 percent to $51,492. Yet it was down 9.7 percent compared with 2007. Metropolitan Phoenix median household income increased 3.9 percent to $55,547.

In other words, the state and metro area trailed a nation that includes Alabama, Mississippi, and West Virginia. Phoenix was No. 25 among the largest metros, with Nashville and Birmingham in the lead in percentage increase.

Drilling down to the city level is even more sobering. Seattle, which is undertaking numerous progressive policies that would supposedly kill business, led the nation with a total increase of $9,374 to $80,349. Blue Portland jumped $6,268 to $60,892. Denver, another blue city, saw incomes rise $3,062 to $58,003. And Phoenix? Its income struggled up $523 to $48,452. (No, that's not a misprint).

If any comfort can be had, San Diego's median household income rose a mere $72 to $67,871. But metro Phoenix's underperforming is a serious problem. The city's poor showing is even more troubling, the "hole in the doughnut" effect. More than 23 percent of the city's residents are below the federal poverty line, compared with 13.5 percent nationally and 17.4 percent for Arizona. The state's poverty rate fell 0.9 percent from 2014 to 2015, but had risen 3.2 percent since 2007.

No, purchasing power doesn't cut it as an excuse. The conservative Tax Foundation used federal Bureau of Economic Analysis stats to calculate the real value of $100 in each state. Statewide in Arizona you get $103.73, but that's not much, and I wonder how much it translates to more expensive metro Phoenix. The bottom line is that Arizona's conservative policies have not yielded a strong economy, especially one required for such a populous state.

It's telling that California, with its reputation for regulations and taxes, added 63,000 jobs in August, 42 percent of the U.S. total. Arizona added 29,600, "entirely due to (sic) the start of the school year and all the state and local government workers that entails," according to the Arizona Republic's Ronald J. Hansen. "Perhaps more importantly, the state's 12-month job growth slowed to 2.1 percent with the August figures. That's more in line with the sluggish annual rates posted between 2012 and 2014." So-called "anti-business" California boasts booming Silicon Valley, San Francisco and LA. Arizona tries to get a few of its back-office crumbs.

This week, the federal Bureau of Economic Analysis said that gross domestic product for metro Phoenix grew 1.8 percent to approximately $198 billion in real dollars, ranking No. 163 among 382 metros nationally. The increase in real GDP for all metros was 2.5 percent.

"But people keep moving here!"

This chestnut is the last refuge to justify the status quo. Indeed, the state's population grew an estimated 6.8 percent from 2010 to last July. Still, this is far below the trend line of growth, even during the Great Depression. But set that aside.

First, added population means added costs in the great growth-machine Ponzi scheme. For example, backlogs in road repairs alone are estimated to cost drivers $1.5 billion a year in repairs and extra maintenance. The state is billions of dollars in the hole for the costs of growth in the 1980s, 1990s, 2000s — always kicking the can forward. Education, transit, parks, and infrastructure are all starved while the Real Estate Industrial Complex playerz make a killing. Impact fees are minimal or non-existent. With this tax and land-use structure, population growth doesn't pay for itself. It is a burdensome cost.

Second, what kind of people are moving here? The majority are retirees and poor Hispanics. Among the Anglos, most are here for the "good deal" on housing and sunshine, and sorting themselves in with the dominant conservative tribe. Few have lived in real cities and want to build, love, and sustain one. The Hispanics, while making the backbone of the labor force in the toughest jobs, have little path up thanks to poorly-funded schools. They also have yet to make their votes count to change things. Arizona and Phoenix don't get their share of talented high-skilled workers, especially young people — a reputation for intolerance and lack of urban bones can't be overcome by "cheap" and "sunshine." All these souls are individually precious to the Lord, but Phoenix is not attracting enough world-class talent or civic stewards for a city its size.

Third, Arizona has long since hit population overshoot, especially in single-family tract house sprawl. A terrible reckoning is coming. But even if it hadn't — or shifted to a dense, oasis model — the population growth data point is the wrong "metric." Where Arizona needs is growth in K-12 and university funding, graduation rates, new companies in advanced industries, real headquarters, patents, software engineers, trade connections, commuter and intercity rail, trees and foliage in central Phoenix, preservation of wilderness, research institutions, high-end federal projects, real downtowns, transit options, historic preservation, and cultural assets. This is the growth that counts.

Finally, remember that this Holy Growth has always been highly subsidized, from the U.S. Army and reclamation projects to defense industries, freeways, flood control, etc. And this is not even counting the externalities, the costs from air pollution, contamination of groundwater, destruction of wilderness, and greenhouse gases worsening climate change. Arizona is distorted (and degraded) by not being priced appropriately.

I was always told by the playerz, racketeers, and local-yokel experts that "people are going to come no matter what." If so, they would pay the taxes for raising Arizona. Problem solved.

Read the latest journalism on the Grand Canyon State's challenges on Rogue's Arizona's Continuing Crisis.

 

 

 

 

 

Comments

[Cal Lash]

"One man alone can be pretty dumb sometimes, but for real bona fide stupidity, there ain't nothin' can beat teamwork".
Edward Abbey

[soleri]

The Big Ideas out there that in Trump Land are that all you need to do to fix the damage liberals have done to America is close the borders, cut taxes on the rich, remove the yoke of regulations, tear up trade deals, and bingo! It will be 1950 before you know it. Also, shoot unarmed black people whenever possible. As the sign says, Deplorable Lives Matter.

I'm sorry civilization has gotten as complicated as it is. It must be a conspiracy! The daftness here expands like an accordion from the racist right to the unicorn left. Evil people did this! We can vote to repeal reality but first we must generate the necessary jargon.

I'm fond of saying Arizona is a bellwether of our national psychosis. We shucked the chains of neighborhood and place, isolating ourselves in suburban housing pods while loser states were shoveling snow. We made the best deals, drove the biggest cars, and scored the hottest women. Because we're winners!

When you look at loser cities with their high housing prices and mass transit, you also see a large percentage of foreigners, people who don't look like Real Americans. Some of them are terrorists, no doubt, but it's politically incorrect to say it out loud. You don't see this in Quartzite!

Democracy is not a panacea. Dumb it down enough, and people get the idea it might be better to burn down the house than pay the high heating bill. Arizona was one of the first states to realize that details and complexity are unnecessary bummers. All you need are right-wing bromides, Fox News, football, and charter schools. God will take care of the wogs and orphans.

[INPHX]

First, why would someone use a state wide index to gauge purchasing power? Think there's just a tiny difference in the cost of living between Modesto, California and San Francisco?

Second, this:

http://www.bankrate.com/finance/real-estate/best-worst-places-for-homeowners.aspx

And as far as state deferred costs, there's this:
http://mercatus.org/statefiscalrankings

Worst 5:

Kentucky, Illinois, New Jersey, Massachusetts, and Connecticut

and California is 6th worst.

And Soleri has to take a pot shot at racism, of course.

Got an answer for this, genius?

http://www.npr.org/2016/09/16/494266208/how-equal-access-is-helping-drive-black-renters-out-of-their-neighborhood

"Watson witnessed firsthand as San Francisco's African-American population plummeted from about 13 percent in 1970 to less than 6 percent today."

What's more racist than forcing folks out of their homes cause the rent's too damn high?

Well, at least that isn't happening in Portland..........

[INPHX]

GREAT series on California's $45 billion dollar (and ticking) pension crisis:

http://www.latimes.com/projects/la-me-pension-crisis-davis-deal/

Where's that money coming from?

[Mark in Scottsdale]

INPHX, I don't think anyone has the political capital to come up with the billions and billions owed to retirees present and future in states like IL and CA via legislative means.

To resolve those issues with actual dollars would take too many votes from too many politicians for huge tax hikes or service cuts, which they know would get them all voted out of office.

Therefore, it seems like they are going to continue to laissez-faire it, until eventually things get so fiscally absurd and dire that they either find a way to default (tricky in IL, legally speaking) or talk the pensions into taking major haircuts because it's clear there's no will or way to pay them what they're owed.

Additionally, in terms of what wins votes...as fewer, and fewer, Americans have any sort of pension themselves...it becomes easier and easier to convince them to vote against public pensions, or to convince them that it's okay for the government to haircut or otherwise not honor those obligations.

I am so pessimistic on the future of state pensions actually getting paid out as written, that I would be kind of afraid to be a young government worker who doesn't qualify for Social Security.

In fifty years, will young people even know what a pension is? They may not even exist.

[Cal Lash]

And Darwin said. ....

[INPHX]

Mark:

Yep- in Illinois, it would appear that some type of constitutional fix might be in order because of the Illinois constitutional amendment.

And all of that money, providing little or no current benefit to those states.

My concern is that the only answer is a full or partial federal bail out, which means taxpayers in Arizona will be paying for the foolish promises of lawmakers in Illinois and California.

Good summary here:

http://chicagotonight.wttw.com/2016/01/27/saving-illinois-pension-system

Seems to be more of a problem in Democrat states where the unions exert more influence.

I share your concern about young government workers who think they'll wind up with a pension; I also wonder if people ever consider where to live based upon state finances.

Since about the mid 60's, a guaranty of a lifetime pension or lifetime medical care is a fools game. As you pointed out, politicians are pretty good at promising the benefits but no so good at actually funding them.

[Cal Lash]

Are civil service pension systems less important than the banks?
http://www.investopedia.com/articles/economics/08/government-financial-bailout.asp

Historically the banking industry is corruption gone wild as it robs the poor and gives to the rich. Wells Fargo's CEO's belong in prison and not a white collar boy scout camp but a real prison like Rikers.

I think pension systems will eventually give way to a basic minimal survival income guarantee. OH that's Social security?

That said world wide even such a system would collapse under the weight of the burdening population. So each for himself.
As for Arizona's pension systems, almost daily I get notice of another fellow police officer that has died, saving INPHX at least $50000 apiece per year.

Over the week end I traveled 500 miles in
Arizona. Flagstaff was busy but not yet completely over populated. Prescott and Prescott Valley housing boom is out of control and there and in Wickenburg, ADOT has destroyed a good drive. Keep pouring that concrete boys. And soon you will be able to pay LDS private enterprise for your Disney tour of the Grand Canyon.

Tunneling under Lees Ferry:
"The game is being played more cagily in Utah. There, lawmakers approved legislation in March that authorized and partly funded the state’s attorney general to sue the federal government for title to approximately 30 million acres of Utah public lands. The suit would pursue strategies advanced via a study produced by a New Orleans law firm outlining “legitimate legal theories” that, it contended, might lead to the wholesale transfer of lands to the state".
http://www.commondreams.org/views/2016/05/17/privatizing-americas-public-land

[Rogue Columnist]

OT, but this is a must-read on the public-pension situation:

http://cepr.net/documents/publications/pensions-2011-02.pdf

[phxSUNSfan]

Just a quick tidbit, I'll make a lengthier comment over the weekend. I must say, that in my current management position, my salary in Phoenix takes me much further than my peers. Many of my closest friend, those I went through grad school with at ASU, are struggling in cities like San Fran and Seattle, while I'm planning on buying a summer home in Washington to escape the Phoenix heat. Some of my friends make more than me but are still struggling with rent and taxes in places like California. I don't really envy them.

[B. Franklin]

Hey INPHX, regarding "taxpayers in Arizona will be paying for the foolish promises of lawmakers in Illinois and California", 'bout time Arizona's taxpayers paid more than they take, huh?

Enough Red state welfare, I say. We've been on the Federal teat for far too long.

Living within our means will make us better people. Well, not all of us.

[Cal Lash]

sounds like U make enough to purchase a Blackrock Mountain.

[phxSUNSfan]

Brokeback Mountain?

[Cal Lash]

http://hearthstone.gamepedia.com/Blackrock_Mountain

[phxSUNSfan]

Cal, my VPN did not allow me to access that site.

[INPHX]

Re: Rogue's 2011 pension report

Go to the LA Times article that I posted.

Abut 1/2 through, there is a graph that shows the gap between what the assets would be with the projected 8.25% return and what the actual returns were. The graph points out the 01-02 and 08-09 difficult times. But that's not REALLY the problem; the problem is the lack of a catch up after 2009. Amazingly, there might actually be COSTS related to lower interest rates.

Thanks, Obama.

The gap hasn't gotten any better since that article was written; it's actually gotten much worse.

Not to worry, though. 8 years or so of 15% plus returns will most likely true everything up just swell.

I'm sure there's a couple of hedge funds that will take the whole enchilada.

Who's in?

[Cal Lash]

No le hace

[B. Franklin]

Oh, that's right, Obama sets the Fed's interest rates. I forgot.

Do you think maybe, just maybe, having a Congress hamstrung by Republican Do-Nothings for the past 6 years has had some effect on our economy?

You know who really makes consistent money on a hedge fund? The guys who run the hedge fund.

[INPHX]

Ben:

Yep.

Always (racist) Republican's fault.

Good point on the hedge fund managers. But just how are those pension funds going to make up those deficits?

Gotta stick your neck out a little.... you know, the whole risk/ return deal.

[Cal Lash]

Inphx, simple answer.
We R going screw U youngsters.
Keep in mind I'm a 76 year old Arizona Republican with a life expectancy of 78.
So I suggest U buy a lot of socks and coffee cans.
Arizona Sonoran back yard desert is a good place to bury them cans as its a dry heat and your money doesn't get moldy.

[B. Franklin]

INPHX, of course not all Republicans are racists.

And not all racists are Republicans.

But the Republican Party has spent decades pandering to racists and religious imbeciles--just to win elections.

Now, you can continue to deny that if it helps you sleep at night.

But that doesn't change the facts.

[soleri]

I think B. Franklin's formulation is a good one, but one still want to add an asterisk: with the rise of Trump, racism has both been mainstreamed and brought to the center of GOP values. Its nominee for president plays footsie with white supremacists, retweeting their comments, etc. David Duke adores him for a reason. Trump rallies are pretty ugly events where Americans dumbest and crudest seem to channel Ted Nugent. Trump's explicitly alt-right campaign now even has Donald Jr making racist tweets. If you find none of this vile, you are likely a Republican.

Donald Trump is the King of Dumb White Trash, and the Republican Party is now the semi-official Neo-Confederate Party. As B. Franklin notes, this has been going for decades but Trump has made it the dominant strain inside the party. Even if he loses, which seems likely, it's hard to see the party returning to a more genteel nominee anytime in the near future. The pathology has now metastasized.

George HW Bush is voting for Hillary Clinton although he can't quite muster the strength to endorse her. I understand the feint here but applaud him anyway for reminding citizens that the Republican Party used to be decent and responsible. His gene expression is probably more Greenwich than Midland, so it makes sense. I'd like to see a few others (John Kasich, Christie Todd Whitman, Susan Collins, Mitt Romney, e.g.) take that step. You do not compromise with virtual evil. Trump is not merely an outlier. he needs to be explicitly repudiated. Anything less will make America weaker and more susceptible to demagogues. I'm not sure we can put this genie back in the bottle but we better try. There aren't many moral Republicans left but they should make a stand if they think their party can be saved. Just to be clear: I think it's too late but a noble gesture, even a failed one, is infinitely preferable to the capitulation to the ugliness and moral squalor we see in the nominee, his ardent fans, and lickspittles like Chris Christie and Rudy Giuliani.

[Jerry McKenzie]

The REIC shill for the AZ Repub was on Horizon Monday (Regan?) and was giddy about Phoenix's No. 2 rank is the National RE hustle. I don't think round two of the bubble economy will end better than round one.

[Bradley Dranka]

Rogue Columnist,

Two quips:

"They will come no matter what."
Will that still happen when Summer temperatures regularly get closer to 120 degrees?

Will business still come if others don't want to come here because of the above?

[B. Franklin]

As long as there's adequate power for air conditioning, that 120 degree mark really only affects people working outside.

And when have the powers that be in Arizona ever cared about the people who have to work outside? Mostly, they're considered to be expendable and easily replaceable.

Maybe it's the cynic in me, but I'm afraid that 120 will just mean earlier tee times for some of them and higher electric bills for all of us.

[INPHX]

More good news for those pensions and the economy in general:

http://money.cnn.com/2016/09/21/news/economy/federal-reserve-september-meeting/index.html?iid=hp-stack-dom

Thanks Obama

[B. Franklin]

INPHX, you sure it's not Fear Of A Trump Planet that's frightening the Fed and causing uncertainty in the economy?

Nah. Couldn't be. After all, he's a very successful businessman.

So, in addition to setting the Fed's rates, Obama outsourced all those jobs overseas, invented collateralized debt obligations, gave out a million bad mortgages, refused to fund infrastructure programs, and causes innocent policemen to gun down unarmed blacks. He's just that powerful!

And boy, are you gonna miss him!

[Cal Lash]

Soon Obama returns to being Clark Kent.
I do appreciate his Preserving Wilderness as did Republicans Nixon and T.R.

[B. Franklin]

All this Chamber of Commerce talk about Phoenix attracting new, exciting, cutting edge businesses...

I'm wondering what kind of businesses would willingly come to Joe Arpaio territory?

The kind that wants to pay low wages and low taxes. And either doesn't care about what Arpaio--and his ilk--do, or supports it.

The kind that doesn't require an educated workforce--just a large pool of desperate, docile, disposable widgets to draw from.

Remember, everywhere else on the West Coast this is the 21st Century. Not here, though.

[Mike Doughty]

How did we get off on a tangent about Ill. and Ca. pension problems?The problem here is our state legislature and other leaders."Where there is no vision,the people perish" and there is no vision here,other than low taxes will cure all ills.We are missing the corporate home offices that would furnish us leaders that can develop and execute a good future for our state.Intel has said the first thing they look at is a good school system.
Obviously,we wouldn't be here if we didn't want to see Az. succeed.If all the wealth went to the top 1%,it should be pretty obvious who should see the first tax increases.

[Cal Lash]

1.5 Billion for the Arizons Public Safety Petsonal Retirement System (PSPRS).
I believe Obama was wrong to sign off on the Saudi Arabia Wasabi arms deal but since he did the proceeds should go to my pension system.

[INPHX]

Ben:

In the initial posting, Rogue thanked Obama for the income growth.

Funny how you didn't suggest that that was misleading when you impugned everything I wrote about an Obama economy link.

Also, if there's something in the Fed minutes about the fear of Trump influencing the Fed, please post it. Otherwise, put the tin foil hat aside.

Cal:

I really don't care how ridiculous retirement benefits are at the federal or state levels.

As long as they're currently funded.

Which they're not.

Which if they were, maybe they wouldn't be so ridiculous.

That LA Times series is terrific. Taxpayers wouldn't have to contribute a dime, unless the returns cratered (which they did). And now taxpayers are on the hook for billions.

Want it? Fund it.

[Rogue Columnist]

"Thanks, Obama" has been a sarcastic meme of the president's critics. INPHX just wants any excuse to troll off topic, as usual, rather than engage with the main subject of the column.

[INPHX]

From the OP:

For example, backlogs in road repairs alone are estimated to cost drivers $1.5 billion a year in repairs and extra maintenance. The state is billions of dollars in the hole for the costs of growth in the 1980s, 1990s, 2000s — always kicking the can forward.

I have presented some objective data that indicate that Arizona is in no where near the fiscal dilemma that many other states are in, and public pensions are a significant component of those problems.

If that's off topic, guilty as charged.

How's this---'Phoenix and Arizona Suck"

Does that fit in a little better, or should we talk about some data?

[B. Franklin]

INPHX, you know, you're right. We really shouldn't ever compare Arizona with California. It's not fair to either state.

Alabama and Mississippi are much better fits for the Grand Canyon state.

Their social programs, culture, care for the environment, minority outreach, legal and educational systems, and dependency on Federal handouts are more in keeping with what we're trying to do here.

[cal lash]

Tunneling bullshit by ADOT:
http://www.ahwatukee.com/communitylife/article_43eedd3a-6f0e-11e6-abaf-97a36160b694.html#.V9W33F1dVc4.twitter

[INPHX]

Cal:

http://archive.azcentral.com/news/election/special1/articles/0916Prop400QampA.html

Light rail expansion and the 202 expansion were all part of the same vote on Proposition 400.

We're gonna build it, you bastards.

[B. Franklin]

That's what we really need! More miles of freeway.

To open up more and more land to development. That's how we'll grow our economy for the new millennium. Tract homes and strip malls farther and farther out.

Gosh, we're so smart!

And who will pay for all the infrastructure needed by these "new" communities? The developers? Hahaha, that's a good one!

Hopefully, this new freeway will be built with the same care and attention to detail as the earlier ones.

You know, the ones with just one ramp to merge onto another freeway. So traffic can back up a half mile during rush hour. So the cars can inch forward, burning some of our inexhaustible supply of fossil fuels.

And the drivers have enough time to contemplate just exactly where their lives went so tragically wrong that they have chosen to spend hours in traffic each day.

Or just re-load...whichever.

[Ruben Perez]

with the thread winding down , I'd like to take this opportunity to nominate Kunstler for the quote of the week.

"How could these two institutions, the Republican party and the Democratic party cough up these two human hairballs."

I've been asking myself that question for months.

[Cal Lash]

Ruben is that like the Libertarians that tossed up that, Casper Milquetoast goofball, Gary Johnson.
vote for Bernie and Jose Mujica

[B. Franklin]

Since Libertarians don't really believe in government, why would anyone expect them to nominate a competent person to govern? They'd get kicked out of the Ayn Rand Fan Club.

Getting back to the original topic, any thoughts on what part being a Right to Work state plays in depressed wages?

[Cal Lash]

Tunneling to civilization.

“Where men in fear and hunger destroy their stomachs in their fight to secure certain food, where men hungering for love destroy everything lovable about them.”
Steinbeck.

"Wilderness is not a luxury but a necessity of the human spirit".
Ed Abbey.

[Ruben Perez]

B, It's called A right to starve state.

Plus, that should answer your question about depressed wages.

[Mark in Scottsdale]

Thanks for the link Cal, nice summary article of recent goings-on with the 202 project. I look forward to trying out a divergent diamond interchange. I can see where it would be safer than a traditional interchange.

I look forward to the freeway's completion. We paid for it, now they're finally building it.

[Jordan Smith]

Arizona really contributed 1/5th (29,600) of the new US jobs in August? Even ignoring the national level (151,000), that is 1/2 of California's amount. (Washington state, the 2nd most populous state west of Texas, in the middle of busy summer tourist season and Amazon job boom, only added 2,600 new non-farm jobs in August).

"It's telling that California, with its reputation for regulations and taxes, added 63,000 jobs in August, 42 percent of the U.S. total. Arizona added 29,600..."

There's something to be said about a real difference between people going back to work for the school year and 29,600 NEW jobs being created. If Arizona had 29,600 NEW jobs created in one month, the economic situation in Arizona on the ground would be far different than it really is. It seems like the news outlets in Arizona glorify statistics they don't even understand just to be able to brag about something.