Manufacturing and tourism, traditionally the base of the city's economy, continue to be important to Phoenix. Major industrial products manufactured by companies located in the metropolitan area include aircraft parts, electronic equipment, agricultural chemicals, radios, air-conditioning equipment, leather goods, and native American crafts.
Tourism is an especially vital part of the economy. With more than 10 million visitors from the throughout the United States and Canada annually visiting for the warm weather and sunshine in the Valley of the Sun, Phoenix continues to be an important resort center. Flights from Phoenix travel to 89 locations within the United States and 17 cities internationally including destinations in Norway, Sweden, Greenland, Mexico, India, and Canada. The airport is constantly seeking to improve its facilities as is demonstrated by the nearly 80 ongoing slated projects costing an upwards of $600 million.
As the result of the population boom, the economy of Phoenix has taken on new dimensions in recent decades by moving into technology and service industries. Tourism and business services in particular now account for nearly 77 percent of the area's total employment. Another sector of growth has been financial services and banking as several significant processing and/or regional headquarters operations call Phoenix home: American Express, Chase Bank, Bank of America, Discover Card Services, and Wells Fargo Bank. High technology and aerospace firms hold a considerable share of the manufacturing jobs throughout the state (56 percent).
Population and economic growth have made Phoenix the center of the state's economy. More than a third of the state's entire labor force works in the Phoenix metropolitan area. Further, many Fortune 500 companies operate within the area such as Boeing, Bank of America, Time Warner Telecom, IBM, and Intel.
Items and goods produced: aircraft and aircraft parts, electronic equipment, steel castings and fabrications, flour, boxes, agricultural chemicals, aluminum products, radios, mobile homes, air conditioning machinery, creamery products, beer, liquor, saddles and leather goods, apparel, native American and Mexican novelties
Funding and assistance for business development in Phoenix are available through the Business Development Finance Corporation, Southwestern Business Financing Corp., the Phoenix Industrial Development Authority (PIDA), the Small Business Innovation Research Program (SBIR), and the Arizona Commerce and Economic Development Commission.
Employers locating facilities in the 100-square-mile City of Phoenix Enterprise Zone (COPEZ), as designated by the Arizona Department of Commerce, can earn state corporate income tax credit for each net new job created in the zone. Tax credits can total up to $3,000 per hire (with a maximum of 200 annually) over a three-year period. The city of Phoenix is the administrator of Foreign Trade Zone #75, which allows companies to reduce or defer payment of customs duties on imported products; companies operating in the zone can benefit from an 80 percent reduction in real and personal property tax. EXPAND (Expansion Assistance and Development Program) was formed to facilitate a growing company's need for funds to acquire capital.
Arizona has a favorable tax structure for businesses, collecting no corporate franchise tax; in addition, business inventories are exempt from property taxes. The State of Arizona has adopted a four-year accelerated depreciation schedule for certain personal property devoted to any commercial or industrial use. There are weight-distance tax exemptions and transaction privilege tax re-funds for the motion picture industry, and exemptions from taxation for secured and unsecured personal property relating to construction work in progress. Qualified employers that provide technical training for their employees are eligible for the Technology Training Tax Credit.
The Arizona Legislature has allocated $7 million for the administration of the Arizona Work Force Development and Job Training program, targeted at new and existing businesses. Funds are available on a grant basis and range from $2,000 to $5,000 per job. In addition, Arizona State University and the Maricopa Community College district work with area employers to maintain continuing education programs for local workers.
A rapidly growing young city, Phoenix has required more recent construction activities than more mature cities. The first phase of a $600-million construction project for the Phoenix Civic Plaza will, once all three phases are complete, boost the plaza's national rank from 67th to the top 25 by tripling its size. One new research institute (Translational Genomics Research Institute (TGEN) was built in the downtown area for $46 million while another large facility opened in late 2004 on the campus of Arizona State University.
Economic Development Information: City of Phoenix Community and Economic Development Office, 200 W. Washington St., 20th Fl., Phoenix AZ 85003; telephone (602)262-5040; fax (602)495-5097
Phoenix is located at the center of market areas stretching along interstate highways from southern California to western Texas, Colorado, Utah, and Mexico. More than 50 companies provide motor freight service. Rail service is available from two transcontinental rail lines. The Phoenix metropolitan area economy benefits from air cargo service through Phoenix Sky Harbor International Airport, where American Airlines and American West provide wide-body freight service.
The local labor force is described as young, plentiful, and well-educated. Arizona consistently ranks in the top five growth states, and workers are attracted by the quality of life to be enjoyed. A right-to-work state, Arizona has union membership of 3.6 percent in the private sector.
In March 2005 Manpower, Inc.'s employment outlook survey indicated that 36 percent of employers in the greater Phoenix area intend to expand their workforce in nearly all major categories including construction, durable goods manufacturing, transportation, trade, and finance. This exceeds the national average of 30 percent. In fact, the Arizona Department of Economic Security reported the area's labor force growth as 7.2 percent in 2003–2004 (with 1.8 million workers in 2004) while the national level was 0.6 percent. Growth is expected to top 550,000 jobs by 2012 with significant gains in the professional, service, and technical fields.
The following is a summary of data regarding the Phoenix-Mesa-Scottsdale metropolitan area non-agricultural labor force, 2004 annual averages.
Size of non-agricultural labor force: 1,674,800
Number of workers employed in . . .
natural resources and mining: 2,000
trade, transportation, and utilities: 339,600
financial activities: 137,400
professional and business services: 270,900
educational and health services: 172,600
leisure and hospitality: 160,500
other services: 64,200
Average hourly earnings of production workers employed in manufacturing: $13.84
Unemployment rate: 4.0% (January 2005)
|Largest employers||Number of employees|
|State of Arizona||50,363|
|Banner Health Systems||13,756|
|City of Phoenix||13,095|
|Honeywell International Inc.||12,000|
|U.S. Postal Service||11,406|
|Wells Fargo Company||11,000|
|Arizona State University||10,005|
The cost of living for the area is below that of the national average according to the Greater Phoenix Economic Council. Phoenix boasts affordable new and existing housing, with median-range homes at costs below the national average as reported by the Arizona State University Real Estate Center in April 2004.
The following is a summary of data regarding several key cost of living factors for the Phoenix area.
2004 (3rd Quarter) ACCRA Average House Price: $254,751
2004 (3rd Quarter) ACCRA Cost of Living Index: 99.2 (U.S. average = 100.0)
State income tax rate: Ranges from 2.87% to 5.04%
State sales tax rate: 5.6% (food and prescription drugs are exempt)
Local income tax rate: None
Local sales tax rate: 1.4% plus 0.7% county rate
Property tax rate: Varies by school district. The 2004 average was $16.95 per $100 of assessed valuation
Economic Information: Greater Phoenix Economic Council, Two N. Central Ave., Ste. 2500, Phoenix, AZ 85004; telephone (602)256-7700 or (800)421-4732; fax (602)256-7744; email email@example.com