Tucson is slightly more insulated from economic downturns than other metros due to its relatively large share of government jobs, which account for 20% of the metro’s employment. As the seat of Pima County, Tucson’s public sector jobs include state and local government employees, as well as university workers and those who operate Davis-Monthan Air Force Base. The local labor market recouped all positions lost during the COVID disruption by November 2022, which only slightly lagged the pace of recovery for the overall nation.

Tucson now has about 8,700 more jobs than before the pandemic, and income growth has steadily risen. After drifting up to the 4% range last summer, the unemployment rate has re-compressed and stands at 3.4% as of April 2024. The joblessness rate remains below pre-pandemic levels and is outpacing the overall United States.

Employers are attracted to the labor pool generated by Tucson’s colleges and universities. The University of Arizona serves as an economic engine for the region. Total enrollment at the university exceeded 50,000 students during the fall 2023 semester, with more than 40,500 students at the main Tucson campus. U of A operates an annual budget of about $2.3 billion and is one of southern Arizona’s largest employers. About 16,000 faculty and staff work at the school, supporting economic growth for the region.

A key driver for Tucson’s strong demographic and economic performance over the past decade is the affordable cost of living. According to the AdvisorSmith Cost of Living Index, Tucson has a cost of living that is comparable to smaller markets like Midland, Texas, and Gainesville, Florida. The Tucson population base and labor market, however, are more than double the size of those areas. As a result, Tucson has the unique advantage of combining the affordability of a small market while retaining the employment base and economic engine of a midsize market.

Employer expansions over the past decade are for backoffice, call center, and distribution operations. Several recent job announcements, however, have generated more value-add, high-paying positions. For example, American Battery Factory recently broke ground on a $1.2 billion investment to build a 2 million-SF gigafactory in Pima County. The lithium iron phosphate battery cell plant will provide an estimated 1,000 jobs and $3.1 billion in economic impact. The first phase is expected to be completed by 2025.