By Staff Reporter |

Arizona’s unemployment rate has now hit a new high following the COVID-19 pandemic.

The state’s unemployment rate neared 5% according to a new data analysis report from the Common Sense Institute of Arizona (CSI). Based on this newly calculated rate, Arizona has the 12th-highest unemployment rate in the nation.

Unemployment hit 4.8% in May, with CSI saying broader data indicators have revealed the state’s labor market to be cooling despite job growth. 

The addition of 2,000 non-farm jobs in May put Arizona at 30th for national job growth. Overall, the nation experienced growth with the addition of 172,000 jobs.

As for job growth year-over-year, Arizona added over 21,200 jobs. That qualified the state as the 10th best in the nation for job growth year-over-year. 

Mining jobs increased by about 1,300 over the past year. CSI attributed this growth to the increased demand for copper by electric vehicles, artificial intelligence technology, and data centers. 

Manufacturing jobs also increased by 500 over the past year. Trade, transportation, and utility jobs declined by 1,600 over the past year. 

Arizona’s labor participation also hit a post-pandemic milestone. The state’s labor force participation rate fell just below 61 percent: the lowest level seen since 2020. Last May, the labor force participation rate was over 62 percent. 

Along with rising unemployment and compressed labor participation, Arizona’s private-sector wages increased by over three percent over the year to $35.78. However, that total lags behind the national average of $37.53.

Arizonans may have felt these changes to Arizona’s employment climate more acutely due to major year-over-year changes with state spending. 

CSI attributed the state’s budget shortfall to overspending.

Another recent analysis released earlier this month by CSI found that the state budget has experienced rapid growth over the past decade.

In just 10 years, the state budget doubled and now amounts to more than 10% of the state’s gross domestic product. 

Per CSI, spending pressures have remained elevated despite normalized revenue growth. 

Some items that CSI said to blame were the disparities between Arizona Health Care Cost Containment System (AHCCCS) enrollment and member costs, elevated demands from the Development Disabilities Program (DDP), and federal payment error rates impacting Supplemental Nutrition Assistance Program (SNAP) obligations. 

AHCCCS enrollment fell by about 10% (over 200,000 people) but average per-member costs increased by 14%. 

DDP was projected to require an additional $400 million in state spending by next year. 

And the state may have to cover $300 million in annual SNAP cost-sharing obligations should federal payment error rates fail to be reduced in the near future. 

Total state spending reached over $70 billion in the 2026 fiscal year, and estimates projected spending to approach $75 billion in the 2027 fiscal year. Of the 2026 fiscal year total state spending, close to $50 billion is expected to come from non-appropriated funds. 

CSI found that spending not subject to regular legislative appropriations has grown by more than 150% over the past decade, though appropriated spending grew by about 100%.

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