Friday, July 20, 2018

Utah: A Tale of Two Economies

Mark Knold, Supervising Economist

The Utah economy consistently performs well. At times, recessions do arise; but, once they are done, Utah’s upward economic trajectory resumes. The nation’s last recession was 10 years ago. It was rather dramatic given its “Great Recession” label. But that was 10 years ago; Utah has fared well since.

Every state experienced employment loss in the 2008–2010 period. That means every state had an employment count higher in 2007 than in 2009. Those 2007 levels are each state’s pre-recession employment high point (with a few exceptions). To eventually return to that level thereafter means a state has matched its employment count achieved before the recession began. But that level is just economic recovery. What about going over-and-above? To go above is to add prosperity.
The following graphic shows where each state’s current employment count is in relation to each state’s pre-recession employment peak; in other words, each state’s prosperity. Utah tops the national list with an 18.5 percent gain. Utah’s employment peak came in 2008; and, thereafter, job loss occurred. By 2011, Utah had stabilized; and by 2013, it had recovered its job count. Since then, the Utah employment base has increased by 18.5 percent.

Yet the Utah economy itself can be a tale of two economies. Utah has both a metropolitan and a rural component. Economically, rural is not defined by what the eye can see but instead by economic isolation — meaning no discernible interaction with a metropolitan hub. Some Utah areas that appear rural are actually classified within a metropolitan economy. For example, there is much economic interaction between the geographically rural Morgan County and the nearby Ogden metropolitan area. Although Morgan County does not have a lot of industry but does have much farmland, many of its residents commute and work in the nearby metropolitan corridor. Therefore, Morgan becomes classified within the metropolitan sphere. Other Utah counties with a similar classification are Box Elder, Tooele and Juab.

Friday, May 11, 2018

New Utah IT Labor Study

Mark Knold, Supervising Economist

Our Workforce Research and Analysis Division recently released a study looking at the labor structure of the Utah information technology (IT) industry. At the core of any IT industry are the coding workers — those who design and build a company’s product. We identified industries that can be labeled as Utah’s IT nucleus, and then focused upon that industry’s occupational core — its coding workers.

Utah’s IT industry is dynamic and fast-growing. Industry leaders regularly speak of the industry’s need for additional workers — on top of Utah’s strong and consistent IT industry growth. The call for supplying labor to this key Utah industry can, at times, bring pressure upon Utah’s education system. But, what about in-migration as a labor source? It was to gauge labor in-migration that our study took root. But as economic studies often do, it grew into something bigger.

In discovery, in-migration is not a defining labor source for the Utah IT industry. Yes, labor does migrate in; but, each year a roughly equal number migrates out. What migration does do is produce a bit of an education exchange. In general, about half of the Utah IT labor in-migration comes with a bachelor’s degree or higher. Conversely, nearly three-quarters of those who migrate out have a bachelor’s degree or higher.

On a consistent basis though, the majority (more than 90 percent) of Utah core IT new hires come from workers already employed within Utah. Utah workers migrate from other industries to enter the core IT industry. This implies that the vast majority of the education behind these workers is obtained within Utah.

The Utah IT market employs coders with a bachelor’s degree or higher. But it does not do it as extensively as seen in other national IT markets. Nationally, about 68 percent of IT labor has a bachelor’s degree or higher. In Utah, that percentage is 52 percent. This reality places a greater appreciation of the role and support the technical and vocational training pathways provide in sustaining Utah’s IT industry growth.

The Utah IT market is rapidly growing and successful with its near-balanced mix of higher and lesser education levels. This balance creates attractive work and income opportunities for those who have not attained an advanced degree, or whose innate interest or capacity may not align with an advanced degree. The median earnings of these IT occupations can reach upwards $85,000 or more — even for workers without a bachelor’s degree or higher. This is an integral industry in Utah that provides high, middle-income earnings for workers with less than an advanced college degree.

Monday, May 7, 2018

Moving on: Why Do Workers Move to Washington County?

Which comes first, jobs or workers?

By Lecia Parks Langston, Senior Economist

“The world is moved along, not only by the mighty shoves of its heroes, but also by the aggregate of tiny pushes of each honest worker.” Helen Keller

The Chicken or the Egg?

It’s a chicken and egg conundrum. Do workers move to Washington County for jobs and then enjoy the area or do they move to Washington County for the quality of life and then find a job? The answer to this question most likely lies somewhere in the middle — they do both. Short of an extensive and expensive survey, economists have been left with little concrete evidence of which reason predominates. However, analysis of recently developed job-to-job flow data suggests that a large portion of workers move to the St. George, UT MSA (Washington County) for nonmonetary reasons.

The Job-to-Job Flows (J2J) data series, from the U.S. Census Bureau’s Local Employment Dynamics program, provides never-before-available information to help economists analyze the movement of workers. This article outlines what this new data set reveals about the workers who have moved to Washington County in recent years.

Quick Takeaways

  • In Washington County, rapid population growth and robust job expansion go hand in hand. 
  • From 1970 to 2000, Washington County’s population almost doubled every decade, with employment growth reaching almost 20 percent in one year (1994).
  • Job opportunities attract employees from other areas, but workers may also be motivated to move to the area for nonmonetary reasons.
  • New data provides some clues to the employment or quality-of-life motivations of in-migrating workers.
  • Between 2012 and 2016, roughly 15 percent of all Washington County in-migrants were age 65 or older.
  • Another 25 percent were under the age of 18. In-migrants between the ages of 18 and 64, the typical working years, accounted for 60 percent of total move-ins.
  • Those 65 years and older most likely moved to Washington County to take advantage of the quality of life and mild climate in the area.
  • Workers both move from Washington County and to Washington County for employment purposes. The retail trade industry consistently hires the highest number of out-of-area workers, followed by healthcare/social assistance and accommodations/food services.
  • Retail trade and accommodations/food services positions don’t pay particularly well and are plentiful in other areas.
  • Since jobs in these industries are relatively low-paying and abundant elsewhere, it would appear that many workers prime purpose in moving to Washington County is not employment related.
  • The healthcare and social assistance industry generally hires the second-highest number of out-of-state workers.
  • Healthcare/social services pays 30 percent higher than the average Washington County wage and its wages are on par with salaries statewide.
  • Out-of-state female workers are particularly prone to take healthcare/social assistance jobs.
  • Despite the widespread availability of healthcare/social service positions nationwide, many workers may have moved to the county for these employment opportunities.
  • Construction industry hiring of out-of-state workers ebbs and flows with the building cycle.
  • Most workers moving to Washington County had a fairly short move.
  • Roughly 65 percent came from other Utah counties, with the Las Vegas-Henderson-Paradise, NV MSA also providing a large number of workers.
  • The larger metropolitan areas generally create far more employment opportunities, have lower unemployment and pay higher wages than Washington County, suggesting workers are moving to Washington County for quality of life upgrades.
  • In contrast, for the 16-percent share of out-of-area workers moving from non-metro Utah, the ready availability of Washington County jobs may certainly be the driving force in obtaining Washington County employment.
  • On an area-by-area basis, net flows of workers typically favor Washington County. The Las Vegas-Henderson-Paradise, NV MSA is often the exception to this rule.
  • Washington County wages register much lower than the U.S. and Utah averages suggesting most nonurban in-migrators are not moving for a job with better wages.
  • Out-of-area new hire wages also run consistently below the new hire wages of the large metro areas.
  • Hire wages of out-of-state workers register lower than the hire wages of in-area workers, as well.
  • The large differentials in hiring wages suggest that many workers in metro regions have nonmonetary reasons for moving house and job.
  • In general, out-of-area workers taking jobs in wholesale trade, utilities, finance/insurance and healthcare/social services receive the highest wages.
  • Workers moving to Washington County are most likely to be hired in the summer months and least likely to be hired in the winter months.
  • In general, working in-migrants outnumber working out-migrants, although a downturn in the business cycle can supersede this relationship.
  • During times of rapid expansion, in-migrant workers far outnumber those who leave Washington County for employment.
  • Throughout the recession, Washington County experienced a net outflow of workers.
  • The majority of out-of-area workers starting a job in Washington County either had a position before moving or shortly thereafter.
  • The gap between the number of workers with continuous employment and those with a break proved much larger during economic expansions.
  • Workers with continuous employment typically were hired at higher wages than those with discontinuous employment.
  • The educational attainment of recent out-of-area worker hires (25 years and older) roughly mirrors the attainment of workers already in the county.
  • Workers between the ages of 25 and 34 make up the largest share of out-of-area hires by age.
  • While older workers still make up a relatively small share of out-of-area transplants, the oldest workers (55 and older) have steadily increased their share of total out-of-area hires since 2000.
  • More out-of-area male hires are the norm, but the difference between male and female hires remains fairly close.
  • Latino hires make up a fairly small share of out-of-area hires in Washington County; nevertheless, that share has been expanding, reflecting parallel population changes.

Thursday, April 12, 2018

A Peek into the Economic Crystal Ball

Utah Releases New Short-Term Occupational Projections

By Lecia Parks Langston, Senior Economist

"I always avoid prophesying beforehand because it is much better to prophesy after the event has already taken place." Winston Churchill

In contrast to Winston Churchill, economists at the Utah Department of Workforce Services don’t have the luxury of projecting occupational trends after the fact. Our latest foray into the world of the unknown has produced the 2017 to 2019 occupational projections for Utah. You can find the full set of projections here.

New methodology

If you were to compare the number of total projected openings from our previous set of short-term projections (2016-2018) to the current 2017-2019 set, you might be perplexed. Why? In the new set, annual openings increase roughly 3.5 times compared to the previous projections. Do we really expect Utah’s economy to perform so much better in the next two years? Well, not so much. The economy is still expected to be strong, although the number of projected openings due to growth is actually expected to contract slightly.

What’s changed? Utah has adopted the U.S. Bureau of Labor Statistics (BLS) new methodology for estimating one of the components of projected occupational openings — replacement openings. These replacement openings occur as workers transfer to another occupation or exit the local labor market altogether. Research and anecdotal evidence suggests this new estimation methodology better reflects actual occupational changes made by workers in the labor market. This change also results in much higher numbers of overall projected openings. For a complete discussion of this new methodology, check out our previous blog post here.

Here are some highlights from our 2017 to 2019 occupational projections:

• Utah’s employment is expected to grow at an annual rate of 2.7 percent between 2015 and 2017, resulting in 41,400 openings for new jobs each year.

• Replacement needs created by workers changing occupations or leaving the labor market will result in more than 170,000 additional openings, for a total of 211,400 openings per year.

• Roughly 80 percent of openings are expected to be the result of occupational transfers and exits, leaving only 20 percent of openings due to growth.

• Replacement openings resulting from occupational transfers will result in a higher share of openings than occupational exits.

• All major occupational groups are expected to expand during the next two years. • Construction, personal care and architecture/engineering occupations are expected to experience the most rapid expansion.

• Construction employment is expected to continue improving beyond the heavy losses experienced during the Great Recession.

• Office/administrative support, sales and food preparation/serving occupations are projected to produce the highest number of openings. These are large occupational groups which also tend to show high transfer and exit rates.

• Individual occupations with the highest projected openings can typically be found in office/administrative support, sales and food preparation/serving groups. These occupations characteristically include large numbers of current workers, as well.

• Occupations typically requiring a high school education or less should produce the highest number of openings. • Computer and mathematical occupations show one of the highest rates of transfer openings.

• Education/training/library occupations show one of the lowest rates of transfer openings.