Wednesday, October 25, 2017

Economic Hurdles in Rural Utah

by Mark Knold

Utah is a geographically large state. Based on total area, it is the 13th largest state, implying there is room to spread out. Despite all this space, Utah’s population distribution is quite concentrated. According to the U.S. Census Bureau, Utah is the nation’s 9th most urbanized state. This dichotomy has shaped a state with two economic profiles — one urban, one rural. It can be challenging for a state dominated and prospering within the urban to extend its economic bounty to the betterment of the rural.

What is rural? It depends upon one’s objective behind the question. Most define rural by a visual scan of the landscape. A lot of open land and not many people — rural. Yet economically, the view can be different. An area may look rural, but if the economic vitality of its populace is strongly integrated with a nearby urban area, then this creates a different perspective. The latter is a preference of the federal government — an entity that often makes allocation or distribution decisions based upon economic factors.


No matter how one technically defines rural, the Governor’s Office recognizes a recent dichotomy in Utah’s economic prosperity. Since the Great Recession, Utah has had compelling economic success. Yet, most of this is concentrated in Utah’s urban centers. Portions of Utah’s rural communities are not seeing matching levels of success. Utah’s Lt. Governor recently observed, “Not all of Utah’s communities are full participants in this economic success. Many counties off the Wasatch Front are experiencing challenges.”

In response to this economic disparity, the Governor’s Office has launched the 25k Jobs initiative — an effort for businesses to create 25,000 new jobs in 25 Utah counties by 2020. With this spotlight on rural Utah’s economics, let’s take a look at some of these rural challenges.

To most, jobs deliver their income and means for living sustenance. Therefore, employment, and peripheral variables associated with employment, becomes the strongest proxy for measuring the Utah economy’s health. We will look at Utah’s counties through the lens of employment, unemployment, the labor force and how the industry structure speaks to the underlying performance of these variables.

A profile of job growth becomes a starting point. Economic performance needs to be viewed with a somewhat long lens. The Governor’s 25k Jobs initiative was not born from a short-term disorder, but instead is recognition of weak longer-term fundamentals. To illustrate this perspective, one needs to backdrop the short-term mechanics against the longer-term dynamics.

The County Job Profile chart is an intersection of the short-term trend with the moderate-term. Each county is a bubble, and the bubble size reflects job counts. The chart is divided into four quadrants. The quadrants tell the story of the intersection of the short and moderate-term trends (growth or contraction) and the general health of the county’s economy.


There are two axes of measure. First, the vertical axis represents the short-term. It is the percentage of county job change between 2015 and 2016. Above the horizontal axis is growth — below is contraction.

Second, the horizontal axis measures the moderate-term. It is the percentage of job change over the past five years (2011-2016). To the right of the vertical axis is growth — to the left is contraction. Where a bubble lies is the intersection of the short and the moderate term.

To illustrate, find Beaver County on the chart. Beaver aligns with around -4.0 percent on the vertical axis, and 8.0 percent on the horizontal axis. This says that over the past five years, Beaver County’s job count has grown by 8.0 percent, but over the past year it has contracted by around 4.0 percent. This implies that Beaver County’s economy may be slipping a bit. A one-year view would imply a problem. A longer-term view places this short-term setback against a broader perspective of overall prosperity.

The quadrant of concern is the Contracting quadrant. These economies have contracted over both the most recent year and the past five years. No matter how one wants to define rural as outlined above, all of these contracting counties identify as rural.

In-county jobs alone are not the complete picture. For example, a large percentage of Morgan County’s residents commute to Weber or Davis counties for work. If jobs are not being germinated in Morgan County, the county and its population can still prosper from its ties with the urban area.

An additional way to look at the economy is through the lens of the labor force. The labor force consists of those 16-years and older who are either working or looking for work. It is based upon where people live, not where they work. A worker living in Morgan County will be represented in Morgan County on the following chart (County Labor Force Change); yet, if they work in Weber County, their job is represented in Weber County on the prior chart. Adding this perspective helps to round out a county’s profile.

The structure of the County Labor Force Change graphic is the same as the prior chart. The area of vibrancy is the upper-right quadrant where the labor force is increasing. The quadrant of labor force contraction is the lower left. A decline in the labor force occurs when people become discouraged and leave the labor force — yet stay in the county, or when people leave the county altogether. Either way, a decline in the labor force signals a fundamental negative in the economic trend.

Depending upon the variables measured, a gain in one and a decline in another can both be positive. Job growth and an unemployment decline are both positive. To associate the positive with low unemployment, the quadrant message on the Unemployment Rate chart has been transposed.

Every month an unemployment rate is calculated for Utah and each of its counties. A county’s unemployment rate can be measured against the Utah statewide average unemployment rate. In the following graphic, county rates are mathematically compared against the statewide rate (seasonally adjusted), recorded and then summed across time.

For example, if a county’s unemployment rate is 5.5 percent and the statewide rate is 4.0 percent, then that county’s difference for that month is 1.5. If a county’s rate were to be 3.5 percent against the statewide rate of 4.0 percent, then the difference is -0.5. These monthly differences are tallied and summed. A high score speaks to a consistent and persistent unemployment rate above the statewide average. In other words, these are counties with a continuous environment of high unemployment.

The horizontal axis is a measure since 2000 and the vertical axis a measure since the beginning of the Great Recession (2008). The axis intersection is not at zero to isolate the “concern area” within the upper right quadrant. The statewide average is consistently close to the Salt Lake County average, so a sizeable number of counties will have sums slightly above the statewide average; yet, this doesn’t imply an unemployment problem. But the non-zero intersection is utilized to emphasize the counties that do have an outstanding unemployment disparity.

Across these various charts, a common group of rural counties emerge in the weak quadrant. These include Carbon, Emery, Garfield, Piute and San Juan counties; with Duchesne and Uintah hanging on the edge. There is a common theme that surrounds this grouping and it centers upon low economic diversity.

An economy’s ability to be consistently positive has a strong foundation in a diverse mix of industrial employment. Think of it in terms of “not putting all your eggs in one basket.” Economic diversity is spreading jobs across many baskets. Diversity is desirable because the overall economy is not dominantly influenced by one or a handful of industries whose poor performance weighs upon the whole.

A Hachman Index is an evaluation tool measuring to what degree an economy may or may not have all its eggs in one basket. In the Hachman Index, a measure of 1.0 means your eggs are well distributed across many industries. Conversely, numbers approaching zero point to a high concentration in one or a handful of industries.


Many of the counties that score low on the previous charts are the same ones on the lowest tier of the following Hachman Index chart. This chart represents the placement of economic diversity upon employment change of the past five years. A county will be placed high or low (vertical axis) on the chart depending upon its Hachman Index score. It will align right or left (horizontal axis) depending upon its five-year employment change. Metropolitan counties have higher economic diversity than rural counties — placing them higher on the chart. They are also further to the right on the chart, showing stronger employment growth. There can be individual exceptions, but the general theme is that lack of economic diversity is a foundational impediment to economic viability. Industrial diversity, though difficult to artificially induce, is a desired remedy to counter sluggish economic performance.

Lack of diversity does not mandate a poor economy. A reproduction of this chart five years ago would have placed Uintah and Duchesne counties still low on the chart, but their five-year growth rates would have been off the chart, needing arrows to point out beyond the chosen 40 percent horizontal axis limit.

Those economies are dominated by energy production. When energy prices are high, their economies can soar. When energy falters, they often do likewise. They are striking examples of economic outcome being determined by a dominant industry.

In summary, there is a dichotomy within the Utah economy between urban and rural. The urban economies are diverse and, therefore, more economically balanced; while many rural economies are not. With some rural counties the economic distinction is not a wide divide; but in the rural counties where the divide is pronounced, the underlying theme is often a low level of economic performance.

Monday, October 23, 2017

Utah's Seasonally Adjusted Unemployment Rates

Seasonally adjusted unemployment rates for all Utah counties have been posted online here.

Each month, these rates are posted the Monday following the Unemployment Rate Update for Utah.

For more information about seasonally adjusted rates, read a DWS analysis here.

Next update scheduled for November 20th.

Friday, October 20, 2017

Utah's Employment Situation for September 2017

Utah's Employment Situation for September 2017 has been released on the web.

Find the Current Economic Situation in its entirety here.

For charts and tables, including County Employment, go to the Employment and Unemployment page.

Next update scheduled for November 17th, 2017.


Tuesday, August 1, 2017

A Look at the Retail Trade Industry in Eastern Region


Consumer spending makes up around 68 percent of the nation’s gross domestic product. Consumer spending is individuals and families purchasing groceries, clothing, recreation, stocks, insurance, education and much more. The transactions cover a broad swath of economic activity.

Much of the nation’s consumer spending is captured via retail trade. A useful retail trade definition is “the re-sale (sale without transformation) of new and used goods to the general public, for personal or household consumption or utilization.”[1] Not all consumer spending is captured through retail trade transactions, but a large share is.

Broad-category examples of retail trade sectors are motor vehicle sales, furniture stores, electronic stores, building material stores, grocery stores, pharmacies, gas stations, clothing stores and department stores, among others.

Then there is the relatively new and emerging part of the retail trade sphere — non-store retailers. These are establishments that sell products on the internet. Examples include Amazon, Zappos, Overstock.com, or eBay. These types of retailers have grown rapidly in the past 15 years and their presence is reshaping the retail trade landscape.

Whereas in the past nearly all retail transactions were done through traditional brick-and-mortar stores, now a significant and growing segment is diverted to internet sales. The consumer shops online and FedEx (or like) delivers the product. One can see that the number of brick-and-mortar stores and the level of local sales across the country are being endangered by this economic evolution.

The brick-and-mortar reduction is beginning to show its economic presence in the United States employment numbers. While the U.S. economy is finally expanding at a healthy pace this side of the Great Recession, one of the few industries not rising with this tide is retail trade. While overall retail sales are increasing, employment is not.

Traditionally, as a population increases, retail trade employment grows simultaneously, since population growth and consumer spending volume is an integrated dynamic. If studied deeply, a certain ratio of retail trade employment growth spawned from population growth would emerge. Before the internet, the vast majority of all consumer sales occurred in the immediate community or region. But now, the internet is diverting these sales away from the local community — and with internet sales growing, its market share will increase.

We do not yet know how much brick-and-mortar erosion will eventually occur. And will such a phenomenon hit some areas more than others (e.g., urban vs. rural, or local vs. tourist spending)? These are touch points that economists will be watching as this internet sales phenomenon continues to grow within the national and Utah economies.

In light of this change, in this quarter’s Local Insights we are profiling retail trade employment throughout Utah’s local regions. This can offer a profile of where retail trade is now in a local economy, and possibly how much of the sector could become vulnerable to the internet-sales phenomenon.

All regions can be viewed through the Local Insights web portal. The following is a retail trade profile for the Eastern Region:

Non-store Taxable Sales Are Gaining, But Not as Fast as Employment. Why?

Taxable sales in non-store retail have not gained as a share of total taxable sales as quickly at the employment share has increased. This is primarily due to the fact that sales taxes are collected by the state of the purchaser, and then, only if the seller has a physical presence in that state. This means that when BackCountry.com sells a rug to someone outside of Utah, there is money coming into Utah (in terms of the jobs that the sale supports), but there is no sales tax coming in to Utah. The only non-store sales taxes captured in Utah are Utah consumers purchasing goods from retailers with a presence in Utah. Since large shares of sales by local online retailers are to customers in other states, it means that sales tax revenue lags compared to employment growth in the industry.

About NAICS

In order to explore the relationship between internet and brick-and-mortar retail we need to look at data grouped through the North American Industry Classification System (NAICS) , which “is the standard used by federal statistical agencies in classifying business establishments.”[2] Stated simply, NAICS groups businesses together based upon what they do.

Hierarchical in nature, NAICS begins with a broad categorization and narrows its focus through subsector levels. As an example, the educational services sector includes all institutions focused on providing instruction and training. At the subsector level, the focus narrows to elementary schools, colleges and trade institutions, etc.

The broad sector known as retail trade includes several underlying categories, such as motor vehicle sales, furniture stores, electronic stores, building material stores, grocery stores, pharmacies, gas stations, clothing stores and department stores, among others.

Then there is the relatively new and emerging part of the retail trade sphere — non-store retailers. These are establishments that sell products primarily on the internet or through direct selling. Examples include Amazon, Overstock.com, Young Living and dōTERRA. These types of retailers have grown rapidly in the past 15 years and their presence is reshaping the retail trade landscape. We will look at an illustration of this in a later section.

Internet sales have increased dramatically. Data from the Federal Reserve shows that internet sales are 8.5 percent of total retail sales as of January 2017. Nationally, retail’s 2016 share of employment is 11.2 percent. It is important to note that NAICS classifies businesses by what they do at a location, rather than by their business model. For example, the BackCountry.com location in West Valley City is classified under warehousing since that location is a warehouse.

Back to the East

In the Eastern Region (Carbon, Duchesne, Daggett, Emery, Grand, San Juan, and Uintah counties) retail trade is correlated with commodity prices because of the areas reliance on mining. When prices are high there is more discretionary income in the community, therefore more retail sales; and, correspondingly, retail establishments expand to meet demand. The reverse happens when commodity prices decline, slowing the economy and reducing discretionary income, therefore lowering retail sales and potentially retail employment.

The commodity-dependent industries can expand and shrink their employment in large quantities. When these industries’ employment increases, so then does retail trade employment. But commodity-dependent industries can grow so rapidly that their share of total employment also grows rapidly. Even though retail trade employment goes up, it does not grow as rapidly; and, therefore, retail’s share of total employment actually declines.

Retail sales in the Eastern Region also differ from the national archetype because of broadband internet usage. The Pew Research center estimates that there is a 10 percent “gap” in broadband access between urban and rural internet users. This impacts the ability of Eastern Region residents to purchase goods on-line and forces them to rely on “brick and mortar” stores.

The composition of the retail trade labor force in the Eastern Region is now different than for the state as a whole. Utah’s retail trade labor force has greyed significantly over the past 15 years. In 2001, 11 percent of the labor force was under 18 while 8 percent was older than 55. As of 2016, only 3 percent of the sector’s labor force was under 18 while 16 percent was over 55. Unlike the state as a whole, the age composition of the Eastern Region has remained unchanged from 2001; the share for workers under 18 was, and still is, 13 percent. The analogous figure for workers older than 55 is 26 percent.

Conclusions

Traditionally, “retail follows roof tops.” Retailers try hard not to oversaturate given an area’s population. It follows that the ratio of retail-employment-to-population should fall over time. Given internet competition, it takes more people to generate the same amount of retail sales. The state data seems to weakly support this hypothesis. The statewide share has fallen by 0.4 percentage points since 2001, hardly an indication of a “retail apocalypse.” Surprisingly, the share in the Eastern Region has fallen by 0.6 percentage points. Analysts speculate that the larger decline is influenced by incomes in the Eastern Region’s energy-based economy. Internet purchases are positively related to income, and energy economies have greater income than agricultural-based economies. Further, because of the internet, consumers in Vernal or Roosevelt has infinitely more choices than they did a decade ago.

Perhaps the state’s recent agreement with Amazon will be helpful in unraveling this puzzle. Amazon recently established a nexus with the state of Utah and therefore became obligated to collect Utah sales taxes. Amazon reportedly captured 33 percent of all U.S. online purchases in 2015, according to the magazine Internet Retailer, up from 25 percent in 2012. In response to this development, revenue estimators for Salt Lake County have added a half percentage point to their estimate for 2017 sales tax collections. It will be interesting to see how Amazon’s actions will impact the Eastern Region.


Wednesday, May 3, 2017

Census Bureau Tool Provides Labor-Force Insight for Utah


Across the United States, jobs are quantified through each state’s unemployment insurance program. Those programs provide the potential for laid-off workers to receive unemployment benefits — the goal being to bridge the gap between workers’ lost jobs and their next jobs. An eligible recipient’s weekly benefit amount is based upon their earnings from recent work. This begs the question, how does Utah’s unemployment insurance program know how much an individual recently earned while working?

That answer is supplied by all businesses that hire workers, as they must report their employees and pay as mandated by the unemployment insurance laws. Companies identify their individual workers and those workers’ monetary earnings for a calendar quarter. As businesses are identified by their industrial activity and geographic location, it is through the unemployment insurance program that aggregate employment counts by industry and location are calculated.

Yet each state’s profiling of individuals is quite minimal in the unemployment insurance program. The U.S. Census Bureau can bring more light to the overall labor force by supplementing said information with gender, age, race/ethnicity and educational attainment (imputted from American Community Survey responses) for Utah’s labor force.

The Census Bureau packages this information through their Local Employment Dynamics program and makes available said data on its website. Here at the Department of Workforce Services, we recently downloaded and packaged Utah-specific data from said website and summarized it in the attached visualization.

Various data “tabs” are available, presenting Utah’s economy from different angles, ranging from industry shares within the economy to the age-group distributions of the labor force, to gender and race distributions. These labor variables can be viewed for the state as a whole, or by each individual county.

Some statewide highlights:

Industry — industrial distribution is quite diverse, which provides strength within the economy. Distributions do fluctuate with time, with manufacturing seeing its share lessen while health care and professional and business services shares have increased.

Age — the bulk of Utah’s labor force is composed of 25- to 44-year-olds. Older worker shares have increased over the past 15 years, yet still remain a non-dominant portion of Utah’s labor force. The youngest segments of the labor force declined noticeably during the Great Recession due to less participation, and that trend remains.

Educational Attainment — turnover rates are understandably highest with workers under the age of 25 as they strive to build their educational foundation and also find their niche in the labor market. A trend does stand out where the more education that a worker attains, the lower the turnover rate businesses experience from said educational classes.

Race/Ethnicity — Whites account for around 80 percent of Utah’s labor force. The Asian community is small but slowly increasing in share, and is also characterized with the lowest turnover rate and the highest new-hire wages.

Gender — males comprise about 55 percent of Utah’s labor force. The female share of 45 percent is higher than the national average. Roughly 35 percent of working females work part-time compared to 15 percent for males. Therefore, female new-hire wages are considerably lower than male new-hire wages. (Note: employer reporting into the unemployment insurance system is not hourly wage rate reporting but instead total calendar quarter wages paid. Therefore, calculations can only be made upon total quarterly wages, and part-time employment weakens this measure).

As for the various counties in the region, here are some labor highlights:

Carbon The share of workers employed in the mining sector slightly increased. In 2000, 9 percent of all Carbon County jobs were in mining. The analogous number for 2015 was 10 percent. The age of the workforce has increased markedly. In 2000, 31 percent of the workforce was 25 or younger. The current share is 19 percent. Paradoxically, the share of workers with a high school diploma or less has actually increased. In 2000, this group comprised 30 percent of employment. The 2016 number is 38 percent.

Emery In 2000, mining made up 19 percent of the job base. As of 2015, mining’s share has shrunk to 9 percent. In 2015, the three biggest sectors were construction (13 percent), Trade (15 percent), and Education (13 percent). As with Carbon County, the age of the Emery County workforce has increased. In 2000, 24 percent of the workforce was 25 or younger. The current share is 16 percent. The 55-64 year old cohort has increased its share from 9 percent in 2000 to 22 percent. The shares of jobs by educational attainment has remained fairly stable over time in the county.

Friday, April 7, 2017

Recent News for the Utah Coal Fired Electricity Market

PacifiCorp has just released its 2017 Integrated Resource Plan (IRP). The IRP “presents the company’s plans to provide reliable and reasonably priced service to its customers. The analysis supporting this plan helps PacifiCorp, its customers, and its regulators understand the effect of both near-term and long term resource decisions on customer bills, the reliability of electric service PacifiCorp customers receive, and changes to emissions from the generation sources used to serve customers.”

The IRP has a 20-year forecast horizon and encompasses their entire service area, including Utah.
From a Castle Country labor market perspective, the IRP is particularly useful for deriving the utilities’ outlook toward the local coal-fired power plants. Not only would closure of the generating stations result in a job loss at the plants, it would also cause losses in the mining sector. The vast majority of Utah coal is used for electricity generation.

Newspaper accounts have emphasized that the majority of power expansion is from renewable energy sources in Wyoming. However, the biggest news in the document is the downward revision in prior forecasts for demand. On average, forecasted system load is down 5.3 percent when compared to the last IRP. Utah demand is anticipated to increase at less than 1 percent annually due to decreased industrial demand and retail consumer efficiencies.

The plan does not anticipate the installation of catalytic reduction equipment in Utah. Avoiding installation of this equipment will save customers hundreds of millions of dollars. It also notes that the EPA requirement to have this equipment installed is currently under appeal in the U.S. Tenth Circuit Court of Appeals. The IRP presents the requirement being upheld as a downside risk to the forecast and economic viability of coal generated power in Utah.

Currently, coal accounts for around 50 percent of PacifiCorp’s generating capacity. While the plan does not contemplate the early retirement of Utah coal-fired capacity, it also does not envision an expansion. Coal is currently at a competitive disadvantage to natural gas. Further, there are renewable fuel mandates in the Pacific coast states. The end-of-life dates for Utah capacity are given in following table.

Plant
County
Assumed End-of-Life Year
Hunter 2
Emery
2042
Hunter 3
Emery
2042
Huntington 1
Emery
2036
Huntington 2
Emery
2036

 Note that PacifiCorp does not own the Intermountain Power Project (IPP) in Millard County. This plant is owned by the Intermountain Power Agency and exports roughly 75 percent of its electricity to Southern California, principally Los Angeles. That contract was set to expire in 2017. However, the Los Angeles Department of Water and Power (LADWP) modified this contract in 2013, to enable the city to stop relying on coal-fired power no later than 2025. The modifications to the contract require permitting and construction of a natural gas plant at the IPP site to begin no later than 2020. However, there has been no recent news on the permitting process. In a 2016 compliance filing with the California Energy Commission, the City of Los Angeles noted that “The ability to meet this date is contingent upon several factors, including permitting, material procurement and final concurrence of all participants. The commercial operation date may be delayed due to circumstances beyond LADWP’s control.”

 

Tuesday, February 14, 2017

Better, Faster, Smarter... Check out our new website design!


Go to: JOBS.UTAH.GOV/WI to check it out

Information is the treasure of the current age. The instant access to information since the advent of the Internet has transformed societies in ways that thousands of years prior had not. Information can lead to knowledge, and — with increased knowledge — better efficiencies and way of life. If information is vital, then the presentation of information has also risen to a prominent level. With this, the Utah Department of Workforce Services has made some organizational improvements to its economic webpages. Various economic data categories are not mutually exclusive, but we made an effort to compartmentalize economic data for a better organizational display and navigation. We also added a new feature area that taps into various national data elements and measurements from the Federal Reserve Economic Data (FRED), the database of the Federal Reserve Bank of St. Louis. FRED’s added value is national — and Utah — economic indicators. More on FRED’s contribution below.

Depending on the subject, economic data can be categorized as either broad or specific. For example, the demographic makeup of an area and how that impacts an economic structure is a broad-subject approach. Conversely, a current monthly snapshot of the Utah economy, its job growth and unemployment rate is a more specific observation. Our economic webpage has four “portals” through which to “categorize” and search for information. One portal is broad, while the other three are more specific in nature.

Topic Portals

The monthly employment profile just mentioned is a specific topic and gets its own “portal,” entitled Employment Update. Here, the most current Utah economic performance can be explored and summarized. The information found here is what often gets cited in the local news media in reference to the current Utah job performance and unemployment rate.

The second specific “portal” is labeled Local Insights. This is a quarterly profile of the Utah economy down to a county level. Each county is summarized with its own economic performance, including job growth, unemployment rate, housing starts, taxable sales and other profile variables. The common theme here is a county-specific approach.

The third specific “portal” is Reports and Analysis. Workforce Services’ economic forte is the labor market. Things over and above the everyday reporting on the labor market are presented here. Sometimes we do special economic studies, other times we will report on specific economic groups within the labor force, like women or veterans. Anything we do that is not an often repeated or ongoing report are grouped here.

The final “portal,” and possibly the one that will be most used, is labeled Economic Data. The core of our data collection and analysis is concentrated here. Employment data, occupational data, wage information and demographic profiles are just some of the major economic themes found in this area.

FRED's on site

As mentioned earlier, we have added an economic indicator area tapping into FRED, which is a massive compilation of economic data from various sources — primarily government statistical agencies, but also some nongovernmental organizations. Workforce Services economists have gone through the list and selected a handful of the most useful data series for gauging the performance of Utah’s macro economy and gaining insights into expected trends. Utah functions within the national economy, so the national economic indicators profiled here are intended to also be guiding influences on the Utah economy. These indicators include composite indexes; a recession probability indicator; leading indicators, such as construction permits and the yield curve; coincident indicators, such as real GDP and employment; and price indicators, such as the consumer price index, regional housing prices, and oil and gas prices. Each chart has a detailed description of what the data represent and how they may be useful.

Keeping relevant with the fast-changing pace of the Internet and data presentation is our goal at Workforce Services. We hope these changes help to better present our broad package of economic data offerings.

Tuesday, December 13, 2016

How Business is Organized in Utah and in Castle Country

Utah has a diversified economy meaning employment is spread out across many industries. Some industries, like banking, tend to have many employees spread among many locations. Others, like hospitals, tend to cluster around a single location. “Mom and Pop” restaurants and law offices usually have one location and a small number of employees.The Department of Workforce Services has constructed an interactive data tool to flesh out these relationships. It uses data collected through Utah’s Unemployment Insurance system. This system produces a comprehensive tabulation of employment and wage information for workers covered by Utah Unemployment Insurance laws and Federal workers covered by the Unemployment Compensation for Federal Employees program.

The program makes two key definitions important for this analysis:
  • A firm, or a company, is a business and may consist of one or more establishments, where each establishment may participate in different predominant economic activity. 
  • An establishment is an economic unit, such as a farm, mine, factory, or store that produces goods or provides services. It is typically at a single physical location address and engaged in one, or predominantly one type of economic activity for which a single industry classification may be applied. 
As an example, Wells Fargo is a firm. Its branch locations are establishments.

The visualization’s first tab makes an important generalization about where people work. A typical Utahn is employed at a large company and works at a location employing 20–250 people.

The second tab shows that larger locations generally pay more than smaller locations. The prominent exception, of course, is shown in the 1-4 employer category. Analyst speculate that the large average wage is due to tax reasons. Sometimes there is a financial advantage in a sole proprietor (which of course would report as one location only) claiming his/herself as an employee. Again, these sort of tax vehicles would benefit higher earning professionals.

Tab 3 shows the percentage of total wages and employment sorted by location size. As expected from the distribution of employment, the bulk of the state’s wages are paid by locations employing 20-250 people with a sizable contribution coming from locations employing more than 1000. However, locations employing more than 100 workers contribute five percent in wages more than their employment would suggest. Schools, universities, and hospitals would be included in this employment range and generally pay higher wages.

The fourth and last tab focuses on firms (companies) by time. Here the results are unambiguous; these firms employ the biggest share of workers. However, it is interesting to note that firms employing 10-49 employees rank third in terms of share. These firms are commonly thought of as small businesses.

Castle Country 

Because of confidentiality problems, it is problematic to separate firm data by county. Data is suppressed to protect the identity, or identifiable information, of cooperating employers. Most of the suppressed data are provided by or are substantially attributable to an individual employer. In many cases, suppressions may also be necessary for otherwise disclosable data that may be used to derive sensitive information from another industry or area. It is widely believed that employment in Castle Country is dominated by the coal industry. This is no longer the case. Coal mining, while still vital for the region, makes up only 7 percent of employment. However, in terms of wages, this industry is still the highest paying in the region.

An examination of the Average Monthly Wages by Establishment Size tab (Tab 2) for Carbon County shows that larger establishments tend to pay more than smaller establishments. Furthermore, the largest establishments in the county (more than 100 employees) pay decidedly more than their statewide counterparts. Those employing less than but 100 workers pay decidedly less than their statewide peers. One can infer that this this reflects the organization of coal mines in the county. This statistics for Emery County is only slightly different from Carbon County’s. Establishments employing more than 50 workers pay more than their statewide counterparts. This is likely the result of the existence of some smaller mines in Emery County. It is worth emphasizing that Castle Country establishments employing less than five people pay their workers substantially less than the same establishments statewide. Analysts speculate that this is because of the relative lack of small professional businesses in rural areas such as accounting and law firms.

The Quarterly Employment and Wages by Establishment Size (Tab 3) shows employment and wage share by location size. As noted above, locations with employment greater than 100 make up 45 percent of total state employment but contribute 50 percent of all wages. In Carbon County, locations employing more than 100 workers total 47 percent of employment but contribute 53 percent of county wages. The spread between wage and employment share in Emery County is an enormous 19 percentage points. This is by far the largest discrepancy in Eastern Utah, being more than three times greater than the second largest spread which is 6 points. The implication here is that coal mining (which tend to be larger establishments), provide the majority of the higher paying jobs in the county. On the small side of the spectrum, places of business with less than 10 employees make up 13 percent of statewide employment and contribute 12 percent of wages. In Carbon County, these establishments make up 16 percent of the employment base but only contribute 13 percent of wages. In Emery County these firms comprise 17 percent of total employment but only contribute 12 percent of total wages. This again is due to the relative scarcity of small professional firms in the Castle Country such as accounting and law firms

Tuesday, November 8, 2016

Older Utahns in Carbon County

The Department of Workforce Services has just published an interactive graphic on older Utahns. Based on 2015 Census Bureau data, it allows researchers (and the simply curious) to “drill down” to the county level.

Roughly 15 percent of the state’s population is age 60 and older. Further, workers age 55 and older make up 17 percent of the labor force. As the population “greys”, the economic importance of older Utahns will naturally become of greater importance. The Deseret News recently reported that in 2015 there were 337 people in Utah over the age of 100. In 50 years, there will be nearly 7,000.

As an example of the information available and the potential for insights, this post will focus on Carbon County.

The visualization has six profile segmentations, each represented by a “tab” above the graphs that one can click on. The first tab is a statewide overview of Utahns age 60 and older. From this the reader can generalize that about half of older Utahns still receive taxable income (either passive or active) and/or retirement income. Around 5 percent qualify for some form of public assistance. The typical older Utahn owns his or her home, is married, and speaks English.

The second tab shows unemployment rates by county and age. Older working age Carbon County residents under age 65 have the same unemployment rate as their statewide counterparts. Unemployment is statistically zero in the ages 65-74 cohort and then balloons in the age 75 and older cohort. The last two rates are generated from a very small sample and should be ignored.

Tab three shows the complete employment status of the older population. With the exception of women in the ages 55-59 cohort, county participation rates are markedly lower than the state as a whole. This is a different pattern than that found in other eastern Utah counties; participation rates for men in the ages 55-59 cohort are usually higher than the statewide number. This may be due to problems associated with the coal mining industry.

The fourth tab shows the older population sorted by poverty level, which is $11,670 for an individual. Poverty is much more common in the county than it is statewide. This is especially true for residents in the ages 55-64 cohort. The rates of poverty are closer to the statewide statistics for older cohorts. This is likely because these individuals qualify for social security. As expected, the proportion of residents at the highest end of the scale (more than 400 percent of poverty or $46,680) are less in the county than statewide.

The fifth tab displays insurance coverage differentiated by educational attainment for older Utahns. Note that there is no display for persons without coverage; due to Medicare, that number is statistically zero for both Carbon County and the state as a whole for persons over age 65. The proportion of county residents with private health coverage is roughly the same as the statewide rate. However, the educational attainment of those residents is much lower than the statewide profile. Analysts speculate that these persons probably are beneficiaries of union health plans. This is unique for Utah. In general, private insurance coverage correlates with education.

The sixth and final tab shows disability rates for older Utahns. Disability rates for Carbon County residents of both sexes are markedly higher than are the rates for older Utahns statewide. Given the absence of substantial medical infrastructure, one may assume that disabled county residents would leave the area and therefore lower the disability rate. This is the experience of other eastern Utah counties. However, Carbon County residents are sufficiently close to the medical infrastructure in Utah County and presumably commute.