An illustration depicting the economic challenges faced by Arizona's job market amid layoffs.
Arizona’s Department of Economic Security is set to lay off 467 employees due to federal funding cuts by the Department of Government Efficiency (DOGE). These cuts are part of a broader trend of job losses as the state’s economy grapples with a sluggish labor market. The unemployment rate has increased slightly, and the Attorney General is leading a lawsuit challenging the federal government’s revocation of essential grant funding. As Arizona navigates these economic hurdles, the future job market appears uncertain.
Arizona is experiencing significant job losses as a direct result of cuts to federally funded programs by the Department of Government Efficiency (DOGE). The state’s Department of Economic Security has announced plans to lay off 467 employees due to these funding cuts, further impacting the labor market during an already challenging economic period.
The layoffs were made public through a Worker Readjustment and Retraining Notification (WARN) posted on the department’s website, as required by law for companies with 100 or more employees before implementing mass layoffs. These cuts come amidst a backdrop of a weakening labor market in Arizona, as indicated by recent employment reports that signal year-over-year job losses and a slight uptick in the unemployment rate.
Arizona’s unemployment rate saw a modest increase from 3.8% in December to 3.9% in January, although it was recorded at 3.5% in January 2024. The state’s labor report suggests that job growth last year had been weaker than previously anticipated. Despite job losses, the overall employment rate remains relatively low at 3.9%. Interestingly, while the construction industry has begun to show signs of a slowdown, job gains in other sectors—including private education and health services, trade, transportation, and construction—are still contributing to the economy.
In addition to the layoffs, Arizona Attorney General Kris Mayes is part of a coalition of 22 states that filed a lawsuit against the federal government on June 24. This legal action contests the validity of the Trump Administration’s decision to revoke billions in federal grants across the United States, including significant funding for Arizona’s state programs.
According to recent data, Arizona added 14,200 seasonally adjusted nonfarm payroll jobs in April, while job gains from March were revised down to a total of 9,700. The seasonally adjusted unemployment rate has remained stable at 4.1% in April, slightly below the national rate of 4.2%. Job growth in April was primarily driven by sectors such as private education, health services, trade, and other services, even though leisure and hospitality jobs experienced a decline of 500, along with a 200-job loss in government employment.
Further analysis reveals that in April, Arizona achieved a total of 18,100 non-seasonally adjusted jobs compared to the previous year, corresponding to a growth of 0.6%. The job gains were largely concentrated in private sectors, namely education and health services; however, some industries—including trade, transportation, professional services, and manufacturing—reported job losses during the same period.
From April 2024 to April 2025, Arizona’s job market has seen a decline of 7,300 jobs, or 0.2% compared to the same time last year. The Phoenix Metropolitan Statistical Area (MSA) added 15,100 jobs over the year, contributing significantly to statewide job growth. Conversely, the Tucson MSA recorded a slight increase of 300 jobs, while the Prescott MSA faced a more substantial decline of 1,000 jobs, marking a 1.4% decrease year-over-year.
The slow start to job growth in Arizona this year is attributed, in part, to an unusually high level of jobs at the beginning of 2024. Unless job growth accelerates significantly in the upcoming months, projections indicate that the state will continue to experience soft annual average job growth for the rest of the year.
As Arizona confronts these challenges—including planned layoffs, a lawsuit against federal funding cuts, and a cooling job market—the state’s economic landscape continues to evolve as officials monitor the situation closely.
News Summary Arizona Governor Katie Hobbs has vetoed House Bill 2867, which aimed to ban…
News Summary Arizona's House of Representatives has successfully passed a bipartisan budget package worth $17.6…
News Summary Arizona is confronting substantial workforce challenges with over 450 layoffs at a key…
News Summary This weekend, multiple freeway restrictions will affect north and northwest Phoenix due to…
News Summary Phoenix is confronting a significant rise in traffic fatalities, prompting demands for enhanced…
News Summary Robert Thornton, the executive director of Cloud Covered Streets, emphasizes the vital role…