Job gains seen in suffering 'sand states'

The four states hit hardest by the housing bust — Arizona, California, Florida and Nevada — have seen job growth pick up noticeably in recent months. And that bodes well for the nation's employment picture.

By Andrew Wardlow, AP

Spring Breakers pack the beach in Panama City Beach, Fla.. on March 15, 2012.

All four states are tourism and retirement meccas. They're benefiting as the housing crisis eases, Americans travel more amid the improving economy, and the flow of retirees to Sunbelt states picks up modestly after slowing to a trickle in the downturn, says Mark Zandi, chief economist of Moody's Analytics.

The states "were huge drags on the job market, and now, they're contributing to growth," Zandi says.

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From August through January, the rate of job gains in three of the four states equaled or exceeded the U.S. overall. Florida had been surpassing the nation until it lost 38,600 jobs in January, according to Labor Department figures released March 13. Still, the nearly 250,000 jobs added in the "sand states" in the six-month period account for nearly a quarter of the U.S. total, and Moody's expects their rate of payroll growth to exceed the nation's this year.

That marks a dramatic turnaround. Job growth in all four states was slower than the nation's from early 2010 until last July, as falling home values slammed household wealth and the construction business.

The states' unemployment rates still exceed the nation's 8.3%. Nevada had the nation's highest jobless rate in January at 12.7%. California was at 10.9%; Florida, 9.6%; and Arizona, 8.7%.

They also face other formidable challenges as they continue to work through numerous foreclosures this year, and real estate prices fall further. But the housing price declines have eased, and both residential and commercial building are rebounding modestly.

Moody's expects housing permits to total about 164,000 this year in the four states, up from 106,000 in 2011, though that's far below levels reached during the real estate bubble. Permits will fall in Nevada this year before rising sharply in 2013, Moody's says.

"The spillovers from the housing bust are diminishing," Goldman Sachs said in a recent report on the four states.

The sand states' rebound is good news because they have potential to power U.S. job growth, economists say. Zandi expects the sand states to lead the U.S. when their construction employment picks up more sharply next year.

Meanwhile, their leisure and hospitality employment growth averaged 3.3% in 2011, vs. 2.3% in the U.S., as vacationers flocked to Florida beaches, Las Vegas casinos and Scottsdale, Ariz., resorts. Also, older Americans who had put off retirement began moving to the Sunbelt again, as their investment portfolios recovered and stabilizing real estate prices allowed some to sell their homes, Zandi says.

About 286,000 more residents moved into the four states than moved out in the year ending July 1, up from 172,000 two years earlier, according to the Census Bureau.

Other sectors are also growing. In California, booming social media, cloud computing and smartphone firms are hiring. Dan Losito, 31, recently quit his job as a stock compensation specialist at Fidelity Investments in Kentucky to take a similar position at Motorola Mobility in San Diego. There are "a lot more companies in the tech industry that give equity to employees," he says.

The tech job boom is having ripple effects. The Iron Cactus/Creamery, a San Francisco café and sports bar, saw sales rise 35% last year, prompting it to hire 12 employees, says general manager Ivor Bradley.

In Tampa, biomedical firms are investing and hiring, says Bob Rohrlack, CEO of the Greater Tampa Chamber of Commerce. "When the economy went down, everyone was hunkering down," he says.

Recently, there's been a shift, he says, with businesses saying, "We're not going to wait for others to pull us out."