Wednesday, October 12, 2016

Utah Industrial Diversity and Job Growth through the Years

Cory Stahle, Economist

Recent annual employment data from the Bureau of Labor Statistics shows that Utah ranked fourth in the nation for industrial diversity in 2015. This means that employment is distributed among a diverse number of industries in Utah. Having employment across several industries provides stability to the economy as struggling industries may be offset by strong performers. The Hachman Index, a statistical measure of diversity, was used for this analysis.

The Hachman Index compares the ratio of industry employment in a state to the same ratio at the national level. It goes one step further and gives influence upon the size of the industry. In other words, the big industries should have a big influence on the overall Hachman outcome, and the little industries should have a little influence.

As an example, across the United States, the mining industry employs 0.5 percent of all workers, while the analogous number for Alaska is over 5 percent. Dividing the national share into the Alaskan share tells us that mining jobs are 10 times more concentrated in Alaska then across the rest of the nation.

Conversely, ratios for the agriculture, manufacturing and wholesale trade industries are less than half as concentrated in Alaska. Once calculated, the ratios for all industries are weighted, summed and inversed to produce a value between zero and one; or the Hachman Index. The closer a states’ index value is to one, the more diverse it is.

In addition to diverse industry employment, Utah also ranked first for job growth in 2015. The only other state to rank in the top 10 for diversity and growth was Georgia. The visualization below shows the Hachman Index and year-over employment growth by state for the past 14 years. Some of the highlights include:

  • The Hachman Index for Utah remained virtually unchanged from 2014 to 2015.
  • Utah’s Hachman Index ranked in the top 10 every year between 2002 and 2015.
  • 2015 marks the seventh consecutive year of top five Hachman Indexes for Utah.
  • Utah ranked first for year-over job growth in 2015. The last time this occurred was in 2007 prior to the recession.
  • Utah’s employment growth ranked in the top 10 in nine of the last 14 years, with eight of those years in the top 5.


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