Arizona is “underprepared” for the disruption that technology will bring to its economy and society in general over the next two decades, Arizona State University President Michael Crow warned recently.
Addressing attendees at the East Valley Partnership’s annual economic outlook presentation last month, Crow presented a series of dismal slides on Arizona’s economy as he urged the audience to look “with cold, steely eyes at how competitive you are and not how competitive you were.”
He recounted a conversation he had had earlier with the second-highest executive in Google X, who predicted that technology will replace 30% of all current jobs within the next 10 years, and said that those most vulnerable in Arizona are workers with only a high school diploma.
Using graphs based on information from a variety of U.S. Census updates and other government and foundation studies, Crow presented a dim picture of the state’s economic position.
To stress the relationship between economic performance and education, Crow presented graphics showing that among Western states, only New Mexico had a lower rate than Arizona of people over 25 with a bachelor’s degree.
The highest rate is in Colorado, followed by Washington and California.
“College graduates come here to retire, not to work,” Crow said, noting that Arizona is the second-lowest state in the nation for per-capita support of higher education. New Hampshire is at the bottom.
Crow outlined the connection between research and education and overall economic prosperity with a series of graphics that showed:
“Inventiveness in this region is too small,” Crow asserted, noting that Phoenix was second-last in the percentage of change since 2001 in the number of patents granted in metropolitan areas. Seattle, San Diego and Provo, Utah, recorded the top three most positive changes.
“The community hasn’t grasped this,” Crow said of the Phoenix area.
Just as disturbing, he said, is that the number of Arizona companies in 2014, the latest available year, was below the total that existed at the turn of the century.
Likewise, the value of venture capital deals in Arizona totaled $987 million in 2015. Not only was that the lowest among Western states, but it was more than 40% below the $1.4 billion in venture capital deals recorded in the state of Washington last year.
Those numbers in turn affected the value of exports from Arizona, which ranked well below 15 states, including Texas, California and Washington, the top three states for exports.
“It’s nowhere near where it has to be for a robust economy,” Crow said.
Crow also said, “We’re not doing a good enough job with job creation.”
He displayed a graphic showing that over the last 40 years, net job creation was relatively flat.
“We are one of the most vulnerable states for the technological replacement of jobs,” Crow said, noting that Wal-Mart—one of the state’s biggest employers of people with only a high school diploma or less—will soon have robots taking packages to customers’ cars rather than human beings.
He added that Arizona was indeed facing a threat from immigration—but by technology and not human beings.
Crow said there is still hope that Arizona can turn around these bleak economic trends, but only if it changes its mindset in the next five years by launching a “world-class engineering school” and developing strategies to build a strong investment strategy and unify the business community around it.
He said that over the next five to 15 years, Arizona could develop a leading economy in the United States if it develops “an innovation ecosystem” on par with the communities that surround the Massachusetts Institute of Technology and Stanford University.
“All we have to do is decide that we want to do it,” he said, adding that the East Valley possesses the human resources to achieve those goals.