Workers in Tucson have some reason to celebrate this Labor Day: The Old Pueblo has recovered nearly all of the jobs it lost during the height of the COVID-19 pandemic in 2020.
By the end of July, Tucson had recovered 98.2% of the non-farm jobs it lost from February through April of 2020, according to new federal data cited by economists at the University of Arizona’s Economic and Business Research Center.
Tucson has been lagging the state and nation in recovering jobs lost during the worst of the pandemic in 2020, with an estimated job-recovery rate of 88.4% as of April.
Statewide, the number of jobs in Arizona recovered through July surpassed pre-pandemic levels by 25%, while Phoenix-area jobs were up 36.6%.
The UA economists noted that Tucson’s accelerated job recovery puts the city roughly on par with the nationwide pandemic job-recovery rate, which just topped 100% in July.
Besides Tucson, only two other Arizona metro areas were short of recovering their pre-pandemic job levels through July: Sierra Vista-Douglas with an 86.4% recovery rate and Flagstaff at 96.9%.
Jobs surge
Overall, Arizona added 22,900 jobs over the month in July, up from a revised 11,600 in June, while Tucson added 3,300 jobs on a seasonally-adjusted basis, the UA economists said.
The statewide job growth in July was nearly quadruple the average monthly job gain during the five years before the pandemic began.
Statewide, Arizona had 87,000 more jobs than the pre-pandemic level – but even with those additional jobs the state is more than 100,000 jobs behind the job-growth trend it was on before COVID-19 hit, the UA economists said.
Meanwhile, the state’s seasonally-adjusted unemployment rate was stable at 3.3%, just below the national rate of 3.5% and still suggesting a tight labor market.
Labor easing?
UA economist George Hammond, director of the Economic and Business Research Center, said he expects the U.S. and state economies to slow in the coming months amid the headwinds of higher interest rates, inflation and the Ukraine war.
That will cool labor demand, Hammond said, perhaps providing relief to employers that are now finding hiring difficult.
“People who are still able to hire, whose demand hasn’t fallen, they’re going to have an easier time hiring workers,” he said.
Job openings in Arizona peaked at 259,000 in March but had dropped to about 200,000 by May, Hammond noted.
Job drivers
Statewide, job growth since the start of the pandemic in February 2020 has been driven by the trade, transportation and utilities sector, which has added 55,600 jobs; financial activities (up 13,200), manufacturing (12,200); education and health services (9,900), construction, professional and business services, and information.
Jobs in other services and natural resources and mining were roughly back to pre-pandemic levels, while leisure and hospitality and government remained well below their February 2020 level on a statewide basis.
But the story in leisure and hospitality employment — including jobs at hotels, bars, restaurants, entertainment and attractions — is much different in Tucson and Phoenix.
Leisure and hospitality jobs in Tucson through July were 1,000 above their February 2020 level, while in Phoenix they were 1,600 above their pre-pandemic level, the UA economists noted.
Forecast ahead
The UA Business and Economic Research Center plans to issue its latest economic forecast update and data on Wednesday, Sept. 7, online at azeconomy.org.
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