December 1, 2012

Cover Story

Rocky Recovery

Naughty boys and girls in Utah may not find lumps of coal in their stockin...Read More

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Rocky Recovery

The Dichotomy of Utah’s Economic Outlook

Gaylen Webb

December 1, 2012

Naughty boys and girls in Utah may not find lumps of coal in their stockings this Christmas, despite the fact that the fossil fuel is plenteous in the Beehive State. Rather, local Christmas stockings may lack for want of coal because Utah’s coal industry is in a tailspin. And if the steady decline of mining operations in the state’s coal country weren’t problematic enough, the pre-Thanksgiving layoff of some 102 workers at West Ridge Mine in Carbon County certainly exacerbates the industry’s dire economic outlook.

It’s not that Utah’s coal industry hasn’t seen seasonal layoffs before, but this round of job losses and the indirect jobs that support them are not likely to come back. On the other hand, further north in the Uintah Basin, the economic outlook is as hot as the oil and gas industry that fuels it. Unfortunately, the boom in natural gas—along with its low prices and vast supplies—is helping to kill Utah’s coal industry. And so, as the state’s oil and natural gas industry sizzles, its coal industry languishes.

So goes the dichotomy of Utah’s economic landscape: some counties are experiencing strong recoveries from the Great Recession, while other counties are still losing jobs or “just hanging in there,” to borrow a phrase from Lecia Parks Langston, regional economist for the state Department of Workforce Services (DWS).

The Employment Picture
Interestingly, wages have been fairly sticky across the state. They didn’t decline much, or at all, during the recession, according to Langston, and only have increased slightly as job growth has occurred. The Uintah Basin is the exception. Robust job growth there has forced companies to compete for skilled workers, driving up wages.

Overall, Utah’s economic outlook is strong and among the best in the nation in many respects. The state’s unemployment rate is down around 5.2 percent—much lower than the national unemployment rate of 7.9 percent—while Utah’s economy is growing between two and three times the national rate. Statewide, job growth is up about 3.6 percent year over year and, barring a dive off the fiscal cliff or a global recession, the pace of job growth is expected to climb in 2013.

Mark Knold, chief economist with DWS, reports that Utah lost 93,000 jobs during the Great Recession, but the Beehive State has regained 59,000 of those jobs. Nonetheless, shortfalls linger and the pace of recovery remains slower than other recessions, according to Knold.   

Across the Wasatch Front, year over year employment growth varies from a low of 2.1 percent in Weber County to a high of 4.8 percent in Utah County. In Davis County, which experienced 3.1 percent job growth, Hill Air Force Base remains the center of economic activity. Depending on future defense spending—or cuts triggered on Jan. 2, 2013 by budget sequestration—Hill Air Force Base could continue to be a major economic driver or the source of great angst as defense contractors cut their workforces.

Currently, unofficial sources say the base needs to hire approximately 600 more software engineers over the next two years. Further, Hill has a persistent hunger for engineers from the aeronautical and electrical fields.

In Weber County, the Hostess plant’s shutdown in Ogden cost 600 employees their jobs just before the holidays. Weber County has a seasonally adjusted unemployment rate of 6 percent.

Boom and Bust
Although the Wasatch Front accounts for more than 80 percent of the state’s labor market activity and holds the vast majority of the state’s job openings, the greatest job increases are taking place in counties off the Wasatch Front. Consider the Uintah Basin, where help wanted signs abound. The boom in the oil and gas industry is driving job growth in nearly every other sector there. In fact, Duchesne and Uintah counties lead the state in job growth, with year over year employment growth rates of 14.1 percent and 7.4 percent respectively.

Approximately 10,000 wells are in production in the Uintah Basin and 30,000 more are planned, but all of that activity does have a down side. Locals say the bumper-to-bumper traffic on U.S. 40 between Vernal and Duchesne can be exasperating. Regardless, Duchesne, Uintah and other superstars in the state like Sanpete, Washington and Grand counties are enjoying phenomenal job growth. Sanpete and Washington counties are both experiencing job gains of 5.5 percent year over year, while Grand County job growth is 4.4 percent year over year.

DWS Regional Economist Eric Martinson says tourism is driving job growth in Grand County, which has made for a robust leisure and hospitality sector there. Meanwhile, manufacturing and call center employment are driving job growth in Sanpete County. Langston says the combination of Sanpete’s large, available workforce (due to Snow College in Ephraim) and the lowest average wages around have helped support broad-based growth in the county.

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