WIOA State Plan Common Elements

Arizona’s economy consists of a wide range of industries offering opportunities for individuals seeking employment of all types. Since the end of the Great Recession, employment growth has rebounded in a majority of sectors, and Calendar Year (CY) 2018 personal income levels and state Gross Domestic Product (GDP) have both increased over CY 2017 levels. Other indicators of economic importance also show positive improvements for the Arizona economy:

• Population levels continue to increase across the state as individuals from other states and countries seek increased economic opportunities in Arizona.
• The rate of unemployment among Arizona residents remained consistent throughout Program Year (PY) 2018.
• Labor force participation levels have remained steady throughout PY 2018.
• The Construction industry is growing at a significant, yet sustainable pace.
• Total employment is projected to increase by 2.8 percent from PY 2018 through PY 2019; however, these gains will not be shared equally among all industry supersectors.
• Arizona gained 78,000 nonfarm jobs in PY 2018.
• The State Coincident Index for Arizona, an indicator for measuring economic activity, has increased and exceeded its prior peak in October of 2007.
• Per capita personal income growth in Arizona still lags the national average, but it is growing.

This section summarizes labor market and workforce trends occurring within the Arizona economy to help address and manage future workforce challenges.

1.In-Demand Industries (including existing and emerging industries)

An In-Demand industry, as defined under the WIOA, is a sector that has a substantial current or potential impact on the state economy and contributes to the growth or stability of other supporting businesses. The Council approved a list of In-Demand industries, which consist of industries that are large and strong (existing industries) and industries that are smaller but fast growing (emerging). The Council identified seven In-Demand industry sectors that included six existing industries and one emerging industry to target over the next four years. These sectors represent a significant source of economic opportunity for both job seekers and employers. Each industry was selected based on current and projected employment opportunities, favorable wages, and industry competitiveness. Analysis of local labor market trends and the In-Demand industries identified in the local workforce plans were also considered[1]. With Arizona’s employment concentrated in two Metropolitan Statistical Areas (MSAs), the Phoenix-Mesa-Scottsdale MSA (Maricopa County) and the Tucson MSA (Pima County), it was important to select industries that represented the differing employment needs across the state. While not every industry may be strong in every area, the resulting selections included significant industries in each local workforce area[2].

Industries were identified in part as “In-Demand” based on strong employment and wage growth. From CY 2015 to 2018, In-Demand industry employment grew by 5.0 percent annually compared to Arizona total private sector employment, which grew by only 3.1 percent.  In-Demand industry employment growth is projected to outpace Arizona total private sector growth through 2020, growing 4.3 percent annually. By comparison, Arizona total private employment is projected to only increase by 2.7 percent annually from 2018 to 2020. In-Demand industries have also provided above-state-average wages. The average annual wage for all industries was $52,676 in the fourth quarter (Q4) of 2018, while the average wage for all In-Demand industries combined was $71,101.

Table 1: In-Demand Industries – Average Wage

NAICS Code	Industry Title	Average Annual Wages (2018 Q4)	Average Annual Wage LQ (2018 Q4)*	Annual Wages Percent Change (2015-2018)
23	Construction	$61,100	1.01	3.5%
62	Health care and social assistance	$54,496	1.15	0.4%
54	Professional, scientific, and technical services	$86,736	0.92	1.0%
52	Finance and insurance	$74,256	0.79	1.8%
31-33	Manufacturing	$74,828	1.20	0.3%
48-49	Transportation and warehousing	$50,128	1.06	-1.0%
*	Information technology**	$96,166	0.65	3.4%

* A wage Location Quotient (LQ) allows for wages within one industry to be compared across different geographic areas.  An industry with an above-average wage LQ (where LQ>1.0) is an indication that industry employees within the local area receive higher wages than employees working in the same industry elsewhere. 

** Information technology is an emerging industry in Arizona.  All other industries are existing.

Source: ACA/OEO

Table 2: In-Demand Industries – Individuals Employed

Rank	NAICS Code	Industry Title	Employ-ment (2018 Q4)	Employ-ment LQ (2018 Q4)*	Employ-ment Percent Change (2015-2018)	Average Projected Growth (2018-2020)
1	23	Construction	163,287	1.12	8.0%	5.8%
2	62	Health care and social assistance	383,510	0.97	3.9%	3.9%
3	54	Professional, scientific, and technical services	157,899	0.85	5.3%	4.6%
4	52	Finance and insurance	163,279	1.38	4.0%	2.5%
5	31-33	Manufacturing	172,329	0.68	2.8%	3.6%
6	48-49	Transportation and warehousing	101,490	0.94	9.2%	4.8%
N/A	N/A	Information technology	20,897	0.97	9.6%	8.9%

* An employment LQ is a powerful indicator which allow a local region to identify which industries they hold a competitive advantage in (where LQ >1.0).  An employment LQ compares the industry employment concentration of a region with the employment density of that industry nationwide.

Source: ACA/OEO

Construction

The Construction industry has recorded steady and sustained employment growth following the dramatic declines that occurred during the Great Recession (2007 to 2009). From 2015 to 2018, the Construction industry recorded the third largest employment increase of all the In-Demand industries selected, growing by 8.0 percent annually. Both commercial and residential building demands were responsible for the increase in construction activity. Commercial building was strengthened by the increase in business activity occurring around the state. The total number of Arizona business establishments increased by 13,021 establishments (2.8 percent annually) from 2015 to 2018 and real state GDP increased by 3.6 percent annually over the same period^[3]. Within residential construction, new homes were needed to meet the demands of new residents moving into the state. In 2018, Arizona recorded the fourth fastest growing population in the nation, primarily due to national and international migration into the state^[4].

Health Care and Social Assistance

Health Care and Social Assistance is one of the largest and most reliable industries within the state. It is the only Arizona industry that continued recording employment growth through the Great Recession and has recorded positive year-over-year employment gains since industry employment data was first collected back in 1990. In 2018 Q4, Health Care and Social Assistance had the second highest wage LQ among the seven In-Demand industries. Health Care and Social Assistance employment is projected to increase by 3.9 percent annually through 2020.

Professional, Scientific, and Technical Services

The Professional, Scientific, and Technical Services industry provides a wide range of employment opportunities throughout the Arizona economy. The largest subsectors within this industry include Computer System Design Services (37,959 employees); Architectural and Engineering Services (26,017 employees); and Management, Scientific, and Technical Consulting Services (25,553 employees)^[5]. Compared to the other In-Demand industries, Professional, Scientific, and Technical Services had the second highest wages in 2018 Q4 and fourth largest wage growth from 2015 to 2018. Professional, Scientific, and Technical Services was selected as an In-Demand industry due to high wages, high wage growth, and a preponderance of high-skilled occupations.

Finance and Insurance

The Finance and Insurance industry has a strong presence within the Arizona economy. Finance and Insurance recorded the largest employment LQ among the In-Demand industries selected. Industries with LQ values above 1.0 are generally defined as export-oriented industries because they supply goods or services to consumers outside of the Arizona economy. Several large finance and insurance companies that serve an international client base have a significant presence within the Arizona economy, and the Finance and Insurance industry is considered an export industry because of this.  The Finance and Insurance industry also provided the third highest wages in 2018 Q4 and recorded the third fastest wage growth from 2015 to 2018 among the In-Demand industries.

Manufacturing

Arizona Manufacturing has made a remarkable recovery after years of decline in the early 2000s. Manufacturing employment peaked at 210,000 jobs in 1998 before steadily declining to 148,000 jobs by 2010^[6]. Over the past 19 years, the Manufacturing industry in Arizona grew by 27,000 jobs, more than half of which were created within the past two years, 2018 and 2019. Aerospace Product and Parts Manufacturing is the largest sub sector within Manufacturing and was partially responsible for the employment gains within Manufacturing. From 2015 to 2018, Aerospace Product and Parts Manufacturing gained 3,881 jobs and averaged 5.0 percent growth per year. Other subsectors that recorded strong growth from 2015 to 2018 include Other Food Manufacturing (1,267 jobs; 12.1 percent annual growth); Plastics Product Manufacturing (1,260 jobs; 10.4 percent annual growth); and Pharmaceutical and Medicine Manufacturing (1,127 jobs; 14.5 percent annual growth)^[7].

Transportation and Warehousing

The importance of Transportation and Warehousing within the Arizona economy has increased within the past several years. Transportation and Warehousing employment grew at an annual rate of 9.2 percent from 2015 to 2018, the second largest growth rate among the In-Demand industries selected. The increase in popularity of online e-commerce is in part responsible for the strong employment growth within the Transportation and Warehousing industry. U.S. e-commerce sales represented over 10.5 percent of total sales in the first quarter of 2019, which is up from just 3.5 percent of total sales in the first quarter of 2009. As consumers have become more comfortable shopping online^[8], demand for warehousing and shipping employment has increased. Within the Transportation and Warehousing industry, the subsectors that experienced the largest employment growth from 2015 to 2018 include Warehousing and Storage (14,356 jobs); Couriers and Express Delivery Services (2,726 jobs); and Specialized Freight Trucking (1,413 jobs).

Information Technology

The Information Technology industry is an emerging field with employment needs that can change from year to year. While the Information Technology industry is not officially defined under the North American Industrial Classification System (NAICS), the employment growth for specific high-tech subsectors was large enough that a portion of the larger Information industry was targeted as an In-Demand industry. Information Technology employment increased by 9.6 percent annually from 2015 to 2018; the largest employment growth rate of all the In-Demand industries. Within Information Technology, employment growth occurred within Satellite Telecommunications (1,375 jobs); Internet Publishing (1,140 jobs); Software Publishers (1,077 jobs); and Data Processing Services (1,021 jobs).

In-Demand Occupations

An In-Demand occupation, as defined under WIOA, is an occupation that currently has or is projected to have a number of positions that lead to economic self-sufficiency and opportunities for advancement in an industry that is significant to the state. The Council identified a list of 132 In-Demand occupations which have strong projected employment, above-average wages, medium to high skill requirements, and large projected vacancy needs. In-Demand occupations identify career opportunities within each of the In-Demand industries and across education levels.

In 2018, there were 1,231,769 individuals employed within In-Demand occupations, roughly 44.2 percent of total Arizona employment. Employment within In-Demand occupations is projected to increase by 80,358 jobs from 2018 to 2020, growing 3.2 percent annually. In comparison, all Arizona occupations are projected to grow by 2.7 percent annually. The In-Demand occupations also provide above-average wages for employees. In 2018, the average annual wage for In-Demand occupations was $52,572, while average wage for all industries was $49,290.

In-Demand occupations are well distributed throughout the seven In-Demand industries. Table 4 shows the number of In-Demand occupations within each of the In-Demand industries. Health Care and Social Assistance has 51 occupations that were identified as In-Demand, the most of all the In-Demand industries. Information Technology, the smallest of the seven In-Demand industries, has the fewest In-Demand occupations with only 22.

Providing opportunities for job seekers across all education levels was a factor considered when selecting In-Demand occupations. Table 5 categorizes In-Demand occupations by minimum education requirements. Forty-eight occupations require at least a high school diploma; this is the most common educational requirement among these 132 occupations. Six occupations require a master’s degree; this is the least common educational requirement among these 132 occupations. The complete list of 132 occupations is available in the appendix.

Table 3: In-Demand Occupations – Employment & Wages

# of Occupations	Average Wage	Total Employment	Share of 2018 Total Employment	Projected Growth Rate
132	$52,572	1,231,769	44.2%	3.2%

Source: ACA/OEO

Table 4: In-Demand Occupations – Count of Occupations within Industries

Industry	Count of In-Demand Occupations[9]
Construction	46
Finance and Insurance	30
Health Care and Social Assistance	51
Information Technology	22
Manufacturing	59
Professional and technical services	49
Transportation and warehousing	24

Source: ACA/OEO

Table 5: In-Demand Occupations – Count of Occupations by Education Requirement

Education Requirement	Count of In-Demand Occupations
Less than high school	20
High school diploma	48
Postsecondary non-degree award	9
Associate degree	15
Bachelor’s degree	26
Master’s degree	6
Doctoral or professional degree	8

Source: ACA/OEO

2. Employers’ Employment Needs

Identifying future employment demands can ensure that individuals are investing time and energy into the right skill sets to meet the needs of employers.  Table 6 identifies the most common knowledge, skills, and abilities required for employment within Arizona In-Demand occupations^[10].  Fundamental communication skills including writing, listening, and speaking were required in numerous In-Demand occupations and are critical skills for job seekers to focus on improving.   Hard skills such as mechanical, mathematics, and computers and electronics are also valuable skills for job seekers to learn.

Table 6: In-Demand Occupations Top Required Knowledge, Skills and Abilities

Knowledge	Skills	Abilities
Customer and Personal Service	Reading Comprehension	Oral Comprehension
English Language	Active Listening	Oral Expression
Mechanical	Critical Thinking	Near Vision
Mathematics	Speaking	Problem Sensitivity
Computers and Electronics	Operation and Control	Written Comprehension

Source: Produced by the Arizona Office of Economic Opportunity in cooperation with the U.S. Department of Labor, Bureau of Labor Statistics

Certifications and licenses are often occupation specific. They can be found for all occupations, including Arizona’s In-Demand occupations, on the CareerOneStop website.

For Certifications go to the ‘Find Certifications’ tool:https://www.careeronestop.org/Toolkit/Training/find-certifications.aspx

For Licenses go to the ‘Find Certifications’ tool: https://www.careeronestop.org/Toolkit/Training/find-licenses.aspx

As ARIZONA@WORK pursues its strategies to develop a career pathway model and support transferrable skills, more research and information on In-Demand credentials and licenses will be developed.

[1] For example, the industries identified by the Nineteen Tribal Nations workforce board in their 2018 Modified Workforce Plan were reviewed during the development of this list. For a complete list of any local board’s identified In-Demand Industries, please see their four-year local workforce plan.

[2] The Office of Economic Opportunity provides custom labor market analysis by workforce area that can be accessed on their website. The local workforce boards will identify In-Demand Industries and Occupations in their local workforce area using the latest available labor market data and workforce trends.

[3] U.S. Bureau of Economic Analysis Percent Change in Real Gross Domestic Product (GDP) by State and Region

[4] U.S. Dept. of Commerce Census Bureau American Community Survey Population program

[5] U.S. Dept. of Labor Bureau of Labor Statistics Quarterly Census of Employment and Wage program

[6] U.S. Dept. of Labor Bureau of Labor Statistics Current Employment Statistics program

[7] U.S. Dept. of Labor Bureau of Labor Statistics Quarterly Census of Employment and Wage program

[8] U.S. Dept. of Commerce Census Bureau Quarterly Retail E-Commerce Sales report

[9] Many individual, In-Demand Occupations are present within multiple industries.

[10] In-demand occupations are defined in the Economic Analysis section of the state plan