Thursday, August 28, 2014

A Closer Look at the 100,000 Jobs in 1,000 Days

Tyson Smith, Regional Economist

In November of 2011, the Governor and the Governor’s Office of Management and Budget (GOMB) estimated that Utah’s economy could grow fast enough to create 100,000 jobs in 1,000 days. Last week, Governor Herbert announced that over the 32 month period, Utah exceeded the goal, and added 112,200 new jobs.

To better understand the impact of adding over 100,000 new jobs, it is necessary to understand the data source used by GOMB to estimate the employment growth. Each month, the U.S. Bureau of Labor Statistics (BLS) collects employment information from businesses through the Current Employment Statistics (CES) program. BLS uses the survey results to model employment totals at the state level. This process introduces significant survey error, which is why the CES employment totals are benchmarked annually to more accurate sources that come in later (BLS’ Quarterly Census of Employment and Wages [QCEW]). For the 1,000 day goal, GOMB used Utah’s seasonally adjusted CES estimates as the barometer for Utah’s employment gains, as they provide the most timely employment estimate available (as discussed here and here). The actual count of jobs over that period is yet to come through the QCEW data, but we do not anticipate it altering the outcome.

Let’s take a closer look at the data and discuss the progress in Utah’s labor market over the 1,000 days.

The following chart shows that total state employment has actually been accelerating since early 2010, a year before the trigger point. The labor market grew 4 percent from February 2010 – the employment nadir – to November 2011—the starting point for the 1,000 days. During that period, the economy added approximately 2,200 jobs per month, which equates to a monthly growth rate of 0.2 percent. The Utah economy accelerated even more in the six months prior to November 2011, adding around 2,900 jobs per month. After November 2011, the number of new jobs added to the economy continued to increase to a monthly average of roughly 3,600 new jobs per month—a monthly growth rate of 0.3 percent.

Click graph to enlarge

The image below highlights the number of jobs added to each industry according to the CES. Trade, transportation and utilities (the largest industry) added the most employees, while construction (the industry hardest hit by the recession) experienced the largest percentage increase over the 1,000 days. The overall 100,000 job gain was nicely spread across all of Utah’s industrial sectors, which each largely growing in proportion to is size.

  • Mining and Logging: added 600 jobs (5.0 percent)
  • Information: added 4,000 jobs (13.2 percent)
  • Other Services: added 3,200 jobs (9.3 percent)
  • Construction: added 13,800 jobs (20.8 percent)
  • Manufacturing: added 8,600 jobs (7.5 percent)
  • Leisure and Hospitality: added 15,000 jobs (13.2 percent)
  • Education and Health Services: added 16,600 jobs (10.4 percent)
  • Professional and Business Services: added 16,200 jobs (9.9 percent)
  • Government: added 10,200 jobs (4.6 percent)
  • Trade, Transportation, Utilities: added 19,300 jobs (8.2 percent)
Click graph to enlarge

Thursday, August 21, 2014

Income Pyramids

Mark Knold,  Supervising Economist

The Workforce Research and Analysis unit here at Workforce Services desires to be responsive to data requests that come our way. We try to anticipate what labor statistics/economics/demographics data are pertinent to an area, and we post tables, charts, and graphs on our website to make this available. But a recent request from one of Utah’s legislators asking for a wage pyramid for his area caught my eye. It turned out to be a simple procedure and analysis, and one I wish to share.

Individual wage data can’t be extracted from the data that DWS is proprietary to. There is nowhere one can go to get a list of everyone’s wages who live in a specified area. But a powerful substitute can be found in the U.S. Census Bureau’s American Community Survey (ACS). A household income estimate is available for each county, and this can be compartmentalized and stacked as a pyramid.

Click graph to enlarge

The figure above shows the income pyramid for the state of Utah. Income categories are presented at left, and the percent of households that fall into these categories are quantified as horizontal bars. For example, 22 percent of Utah’s households have incomes in the $50,000 to $74,999 range, the largest category of representation. There is congregation immediately above and below this level, with
noticeable tapering at the top and bottom.

The legislator’s request came through our eastern region DWS office. That office broadened the
request to include all of the counties in Utah’s eastern counties. This was easily done, and since it was produced, I decided to also present it here.

Click graphs to enlarge
Utah’s eastern counties are Carbon, Daggett, Duchesne, Emery, Grand, San Juan, and Uintah. Carbon, Duchesne, and Emery county’s pyramids show little difference from the Utah statewide pyramid.

The other four, though, show difference from the state average and reflect each county’s individuality.

Daggett and Grand counties are tourism-supported counties. Many tourism jobs tend to pay below average and/or are often seasonal. These features make those county’s pyramids somewhat bottom heavy.

Click graphs to enlarge
San Juan County has a roughly average income distribution with the exception of the lowest income category. San Juan County has a large Native American makeup, which factors into its shape. Census Bureau data reveals that tribal incomes are low.

Uintah County is an energy/mining-industry dominated county, and that industry tends to pay high wages across the occupational matrix energy creates. Therefore, Uintah County’s pyramid is more top heavy than the state average.

Income pyramids are strong proxies for the wealth of a local economy and are a gauge of an area’s economic endowment. Many counties are average in this respect, but when not, the wage pyramids visually present the differences.

Friday, August 15, 2014

Beyond Recovery

Carrie Mayne, Chief Economist

In November of 2012 Utah had finally crawled out of the job deficit hole created by the Great Recession. The full volume of job loss, roughly 79,000 was gained back by that time and since then our economy has grown by another 75,000 jobs. The contraction took roughly 21 months to play itself out, and recovery occurred over the next 30. Since then, job growth rates have been strong and employment expansion has happened across the full spectrum of business sectors.

Utah’s Great Recession story has been told many times, but what may be news to some is that the recovery hasn’t played out equally in all the different employment industries. Of the 17 private sector industries, eight of them followed a similar pattern as the full job market: recession, recovery, and now expansion. The Natural Resources and Mining industry, thanks to strong oil and gas markets, has just recently returned to its pre-recession employment level. Three industries were blind to the recession and experienced no job losses: Education, Health Care, and Arts, Entertainment, and Recreation.

Despite strong job growth as of late, five industries still show net deficits compared to their pre-recession peaks. Three of the five (Construction, Finance and Insurance, and Real Estate) have clear ties to housing and were likely overheated prior to the recession. As such it is no surprise the employment levels in these industries have not returned. Due to significant structural changes that occurred before and during the recession, Manufacturing is also in a job deficit that will likely not fully recuperate given the new industry conditions.

So while job growth accelerates and the Great Recession has become distant memory for the Utah economy, there are some devils in these details that help us appreciate that not all things are equal in the state’s job market.

Click graph to enlarge

Thursday, August 14, 2014

Personal Consumption Expenditures: A new tool to add to your economic-analysis repertoire

Economists evaluating a local economy like to track the indicators that provide vital insights into the business cycle. Luckily for us, the U.S. Bureau of Economic Analysis has just released prototype estimates of personal consumption expenditures for states, a product that until now was only available at the United States level.

In the national arena, this particular data piece is a subset of the national income and product accounts that measure gross domestic product. According to Mark Doms, Under Secretary of Commerce for Economic Affairs, “The creation of these new economic statistics makes clear how much consumers in each state are spending, as well as what they are buying, in a geographically detailed picture that didn't exist before."

What exactly are personal consumption expenditures (PCE)? They represent actual and imputed household consumer spending for goods and services. In other words, PCE is a measure of goods and services consumed by individuals (as opposed to businesses or governments). It accounts for roughly two-thirds of gross domestic product and is obviously the primary engine of the country’s economic growth. Yeah, it’s important.

Previously, this data item has only been available for the United States in total. However, the Bureau of Economic Analysis has just provided state-level estimates for review and comment. The results are certainly interesting.

There is a caveat though. As with much of the Bureau’s local-level information, personal expenditure estimates for states are rather dated. It takes a significant amount of time to collect and tabulate the information. The most current estimates are for 2012. However, as the past performance of the economy is a relatively good predictor of future patterns, we can learn a lot from the trends of the previous business cycle.

A few interesting points from the recently-distributed personal consumption expenditures for Utah follow:

Tuesday, August 12, 2014

State and Local Government Job Growth 2000 to 2013

By Jim Robson, Senior Economist

Over the past 13 years, the Utah economy has grown by 20.1 percent—a period that included two recessions. Over this same period, state and local government payrolls increased by 26.2 percent. In spite of two recessions, state and local governments recorded job increases in each of the 13 years. How do we account for a 13 year job growth rate for state and local government of 26.2 percent when overall payroll jobs in Utah grew at a lesser amount of 20.1 percent? The key is understanding that most education in Utah is provided by government entities, and with Utah’s continually growing youthful population and expanding education needs, education accelerates the government job growth.

Education is a dominating proportion of both state and local governments. Most of the state’s K-12 school districts are local government entities. Also, most of the state’s higher education facilities are state government-owned. Therefore, education is a large part of the state and local government employment makeup.

Click graph to enlarge
The figure at left profiles the major components of state government. State government comprises around 5.5 percent of all Utah employment, and over half of this is in higher education. This includes state colleges, universities and applied technology centers. These education institutions, while receiving state government revenue support, obtain a majority of their funding from tuition and fees. Since 2010, state higher education employment has been moving up, with its highest level in 2013 of 3.27 percent.

Thursday, August 7, 2014

GDP UPDATE: Rebound in Q2

Tyson Smith, Regional Economist

In a blog post last month, I dug into the implications of the decline in first-quarter Gross Domestic Product (GDP).

The article suggested that readers should not panic over the single quarter drop of 2.9 percent, while at the same time it cautioned that the significant drop should not be dismissed. The argument is that changes in quarterly GDP are erratic and prone to large variations from the initial estimate to the second (and final) quarterly revision. However, quarterly GDP declines of 2 percent or larger are somewhat rare, and in the past have been correlated with recessionary trends.

Ultimately, the article pointed to extreme weather and positive economic data in several other areas – most notably the labor market – as reasons for optimism that GDP would rebound. 

Last week’s GDP press release seems to support the notion that the first quarter drop in GDP was an anomaly, and not a trend. Second-quarter GDP estimates rebounded strongly, showing 4 percent growth from the previous period (seasonally adjusted). And the final revision of the first-quarter GDP data revealed an upward revision to negative 2.1 percent.

Tuesday, August 5, 2014

For Rent: Rental Vacancy Rates in Utah

John Krantz, Research Economist

The housing market is a key component of the economy. A strong housing market (construction and sales) contributes to robust economic growth while an interruption can pull the economy into a recession, as occurred preceding the Great Recession.  Two measures of a housing market’s health are homeowner and rental vacancy rates. Low rates signal to investors that additional housing or rental stock may be necessary, and the resultant construction helps empower economic growth.

Click to enlarge

Tuesday, July 29, 2014

Public Assistance Usage and Employment Patterns in Utah’s Refugee Population

Natalie Torosyan, Research Economist

Each year, hundreds of refugees are resettled in Utah and receive assistance from a variety of sources. Among those sources is the Department of Workforce Services (DWS), which provides some form of public assistance or employment service to the majority of refugees in Utah. The Workforce Research and Analysis division at DWS recently published a research paper that profiles the segment of the refugee community in Utah served by DWS.

Refugees can access a number of public assistance programs through DWS. The public assistance programs that are described in this research paper are the following:
  • Supplement Nutritional Assistance Program, commonly known as food stamps
  • Medical
  • Child Care
  • Unemployment Insurance
  • Financial, which includes the Family Employment Program, Refugee Cash Assistance and General Assistance Cash Program
During the first four years after arrival in Utah, a refugee could have potentially received 48 months of public assistance from each of the programs listed above, or 240 overlapping months if taking each program individually. When summing the total number of months of public assistance across all of the different programs, refugees’ average public assistance usage was 42 months. The figure below, taken from the paper, plots the average public assistance usage and average four-year wages by country of origin. The size of the bubble indicates the proportion of the total refugee population that comes from a particular country of origin. The plot shows that Iraqis, the largest group of refugees, receive the most public assistance on average. The relatively small population of refugees from Cambodia tends to earn the highest wages during the first four years.

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The research paper also includes an analysis of industry sectors of employment, out-migration from the state, and the impact of the recession on the refugee population of Utah.

The full report can be accessed here.

Thursday, July 24, 2014

An Alternate Look at Utah’s Per Capita Personal Income

Mark Knold, Supervising Economist

In listings of the 50 states, Utah consistently ranks near the bottom in yearly per capita personal income. The knee-jerk conclusion is that Utah has low wages, or that what you can earn in Utah is muted. But is that a fair perception? What Utah’s per capita measure needs is a more transparent look.

Quickly we’ll define some terms. Personal income is the total income earned throughout Utah in a given year. In all states, the most prevalent way to generate income is through earnings from a job. But income can also come from retirement payments, dividends from investments, rental income, unemployment benefits, social security payments, or selling other assets (to pawnshops and on eBay, among others). It is the total extent of income amassed by Utah residents. Per capita is to take that total income and divide it by Utah’s total population. That brings it down to an individualized level that can be compared to other states. But what if you have the highest proportion of children in your population than any other state, as Utah does? Children generally don’t earn income. That is naturally going to lower your per capita calculation in relation to other states.

Generally, people 18 and over are the ones who generate a state’s total income, so let’s divide each state’s total income by the 18-and-over population. That way, we are only including the population segment that contributes to total income. Adjusting for age noticeably improves the picture for Utah.

Click image to enlarge
The image to the right has two graphs: the graph on the left highlights Utah’s position within the total-population per capita ranking in yellow; the graph on the right readjusts Utah’s position with just the 18-and-over population. Utah noticeably moves up in the rankings. In fact, Utah’s 45% increase between its general per capita value ($36,274) and its 18-and-over value ($52,501) is the largest percentage gain for any state. The more children you remove from the equation’s denominator, the more gain in per capita value.