Utah’s economic tide is not lifting all boats

23 April 2015 Written by  

This op-ed by Matthew Weinstein of Voices for Utah Children was originally published in the Salt Lake Tribune on February 14, 2015.


 

tideEvaluating the performance of Utah's economy from the perspective of Utah's families and children is a matter of examining both the quantity and quality of jobs created since the Great Recession. In a joint research project with the University of Utah Department of Economics, Voices for Utah Children compared Utah and the nation for the performance of their job markets. Our findings include some surprises, but they tell an interesting story about the state of Utah's economy today.

Quantity of Jobs The conventional wisdom is that Utah's economy is booming. Indeed, the job growth rate of 3.9 percent in 2014 certainly ranks as one of the fastest. But the conventional wisdom leaves out one crucial consideration: Utah's population is also one of the fastest growing in the nation. That means two things are true about Utah that aren't as true elsewhere: 1) Jobs grow faster because of our faster population growth, and 2) Jobs have to grow faster just to keep up with our growing population.

In our study, to get a more meaningful measure of job growth relative to population growth, we looked at the ratio of jobs to population for Utah and the nation in 2007 (pre-recession) and 2014, and the ratio of job growth to population growth for the last four years, 2011-2014. The findings were surprising. Where we expected to find Utah outperforming the nation, we instead found that Utah's rate of job creation relative to population growth has actually been slower than the nation's. To be sure, it's been fast enough to bring down the unemployment rate more quickly, but that's also because more people dropped out of the labor force in Utah than nationally, percentage-wise. During 2011-2014, Utah created new jobs at a pace of 88 for every 100 new Utahns, but the U.S. created 92 new jobs for every 100 new Americans.

Quality of Jobs To compare wages before the recession to wages today, we applied two methodologies created for national level job quality studies that to our knowledge had never before been applied at the state level. Again, the results may surprise many readers. Utah is clearly outperforming the nation in recovering from the Great Recession's wage losses. Where the U.S. median wage in 2013 was 3.4 percent below the previous peak year (2009), in Utah it was only 2.7 percent below the 2009 level (after adjusting for inflation).

This finding of more rapidly recovering wages in Utah is consistent with the announcement last year that Utah's 2013 median household income rose at one of the fastest rates in the nation, vaulting Utah into 11th place, our highest standing in many years. It is also consistent with the laudatory attention Utah is receiving for its fast-growing tech sector, such as a recent New Yorker article headlined, "How Utah Became the Next Silicon Valley."

But there is an important caveat to this finding of recovering wages: Inequality in Utah is worsening. We found a large gap between the lower two quintiles of the income distribution (the lower 40 percent — those earning up to about $13.42/hour) and the upper three quintiles (the top 60 percent). Wages for the lower 40 percent in 2013 remained more than 5 percent below 2009 levels, which is a worse performance than for the lower 40 percent nationally. But wages for the upper 60 percent of Utah earners were only down below 2009 levels by about 1 percent, a better performance than for the upper 60 percent nationally.

This finding of sharply lower wages for lower-income Utahns is consistent with other data showing a persistently elevated poverty rate – 12.7 percent in 2013. At the same point in the last economic expansion a decade ago, Utah's poverty rate was 10.6 percent.

Thus, the findings of our report are an unexpected mix of good and not-so-good news about the performance of Utah's economy – underperforming the nation just slightly in quantity (relative to population growth), outperforming in quality (for most), but with a growing divergence of pay that is leaving more of our neighbors and their children in poverty and struggling to make ends meet on wages that are still much lower than before the Great Recession.

The data in this op-ed comes from the report: Utah Jobs: Quantity vs. Quality.

Matthew Weinstein 300Matthew Weinstein, State Priorities Partnership Director, joined the organization in 2014. As State Fiscal Policy Director, he conducts analysis and advocacy focused on the state budget from the perspective of what's best for Utah's children. He holds a Master of Public Policy degree from Georgetown University and a B.A. in Political Science from Amherst College.