To repeat an overused cliché, Utah’s economic eggs aren’t all in one basket – and that’s a very good thing.
Utah’s widely diverse economy is a major reason the state is enjoying strong job growth and economic prosperity, say Utah’s top economic development officials.
When one economic sector struggles, as is the case with energy today, other sectors keep the economy humming.
“It’s hard to overestimate the importance of having a diverse economy,” said Val Hale, director of the Governor’s Office of Economic Development (GOED), in an interview with Utah Policy. “Maintaining that diversity has to be a top priority if we want to provide good jobs for our children and grandchildren.” Utah currently enjoys the third most diverse economy in the country.
But a diverse economy doesn’t just happen automatically, Hale said. It can be easy – and a trap — to narrowly focus on a few sectors that currently appear to have great potential. Economies change and evolve. Sometimes whole industries are disrupted. A widely diverse economy protects against downturns in particular sectors.
For a number of years, Utah economic development officials have targeted several different economic clusters where Utah has natural advantages, to ensure a strong economy. Those clusters include energy/natural resources, life sciences, information technology/software development, outdoor products/recreation/tourism, aerospace/defense, and financial services.
Teams of economic developers, including representatives of GOED, the Economic Development Corporation of Utah, chambers of commerce, World Trade Center Utah, and city/county economic development officials focus on each of the economic clusters, encouraging entrepreneurship and startups, business expansion, and attracting outside businesses to locate in Utah. The collaborative approach is very effective.
Hale said the energy sector compromises about 12 percent of Utah’s economy, and low energy prices are taking a toll, especially in the Uintah Basin. But most other Utah economic clusters are flourishing. Tourism is booming, outdoor products and recreation have been “fantastic,” and financial services, life sciences, and aerospace are doing very well.
Theresa Foxley, deputy director of GOED, noted that innovation and advanced technology are causing some of the economic clusters to overlap, or even merge. Fintech, a mashup of software development and financial services, is creating new businesses and opportunities for entrepreneurs. More than half of all lending is occurring outside of regulated financial institutions, she said.
Likewise, advanced material composites from the aerospace industry are being used in outdoor recreation products. “We’re seeing a lot of synergies and merging of technologies among our clusters,” Foxley said.
One challenge is that robust economic success can sow its own seeds to slow growth, Foxley said. In Utah’s case, the current limiting factor is workforce. Utah isn’t producing enough skilled workers to fill all the available positions. The state must do better in preparing young people for the good jobs that exist, and also attract workers from outside the state.
Utah’s information technology sector currently employs about 60,000 workers. But an additional 15,000 workers are needed today, Foxley said, and businesses are having a hard time finding qualified employees.
Foxley said CEO Magazine recently rated Utah’s workforce as the best in the country. Many corporations are elevating workforce as the top consideration in determining where to expand or move. “We have a great quality workforce. Now we need more quantity.” A real shortage exists in mid- to upper-level executives. Some businesses look at Utah’s low unemployment rate and wonder if they can find enough good workers.
Utah still faces perception and cultural challenges, said Hale and Foxley, including issues like alcohol availability, cultural diversity, conservative politics, and insularity. In reality, Utahns are world travelers, cosmopolitan, enjoy high foreign language capabilities, and are warm and welcoming. Surveys of companies show that once they get established in Utah, their workers and executives really like the state.
Public and higher education remain a top economic development priority, said Hale, for two reasons. First, the education system must prepare workers for the high-tech jobs of the future. Second, companies and workers won’t come to Utah if executives and workers worry their children won’t receive a top-quality education.
The economic development world is highly competitive, said Hale. States continually watch each other and adopt best practices. Any letdown in focus and intensity means an opportunity lost.
Utah’s economic development leaders are keeping their collective foot on the gas pedal, to end with another overused cliché.
