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