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Trendlines: Winter 2013, Perspectives on Utah's Economy


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Trendlines: Winter 2013, Perspectives on Utah's Economy

  1. 1. Perspectives on Utah’s Economy Winter 2012/2013 Looking Forward to 2013 Economic Improvement Will Likely ContinueNATIONAL utahs economyHousing Market HOW DID IT FARE IN 2012?Staging aComebackConstruction JobsReboundingManufacturingEmploymentImproving Department of Workforce Services
  2. 2. Hiring Our Heroes! Trendlines Successful hiring Utah Department of Workforce Services Executive Director event showcases Utah Jon Pierpont veterans Workforce Research and Analysis Jon Pierpont, Executive Director, Rick Little, Director Department of Workforce Services Carrie Mayne, Supervising Economist Contributors D ear Readers: At DWS, it is a top priority to connect service men and women to providing "Priority of Service" to all Utah veterans. We also provide: Mark Knold Lecia Parks Langston Natalie Torosyan Utah jobs, including active members Jim Robson of the National Guard and Reserve • Information on transferring and their eligible spouses. Recently, military skills to civilian education Nate Talley a military hiring event for our and licensing credits John Krantz veteran heroes was held at the South • Utahs largest online employment Eric Martinson Towne Expo Center in Sandy. Im system for finding a job MeLauni Jensen happy to report that we connected • Referrals to employment 144 employers with 837 job workshops and temporary Editor seekers from the local military assistance programs Kathy Hopkinson population. • Work readiness activities Ongoing surveys will be conducted for Designer • Networking opportunities those who attended so that we might Pat Swenson continually improve our services to Looking ahead to 2013, we will veterans and to track the total number of jobs offered. continue to improve our services and highlight our commitment to veterans. For more information, visit If you are a veteran or know a veteran, our web site at please help spread the word about our services. We are committed to Sincerely, Trendlines is published every other month by the Workforce Research and Analysis Division. To download this publication go to wi. Click on Publications and select the one you want from the list. To obtain additional printed copies or to subscribe to Trendlines contact: Department of Workforce Services Attn: WRA 140 East 300 South • SLC, UT 84111 (801) 526-9785 • Fax: (801) 526-9238 Email: The Workforce Research and Analysis Division generates accurate, timely and understandable data and analyses to provide knowledge of ever-changing workforce environments that support sound planning and decision-making.2 Winter 2012/2013
  3. 3. Perspectives on Utah’s Economy LOOKING FORWARD TO 2013 Winter 2012/2013 Economic contents Improvement Will Employment Profile by County Likely Continue 4 Wasatch Front and Statewide NATIONAL UTAHS ECONOMY Housing Market HOW DID IT FARE IN 2012? Staging a Comeback Looking Ahead for Utahs Economy 6 Construction Jobs Rebounding Manufacturing Employment Improving Department of Workforce Services Economic News Modest Financial Activities Job Growth A Look Forward 8 Insider News and Back This New House: National Housing 10 Market Staging a Comeback National News Construction Jobs Rebounding 12 The Outlook pg. 14 Dig This 14 Whats Happening Manufacturing Employment 16 in Utah Improving Economic Insight Industry Clusters and the North 18 American Industry Classification System FYI Off the Front: Forecasting Leisure/ 20 Hospitality Services Employment The Outskirts pg. 16 Roustabout 22 Occupations Celebrating 14 Years of Work/Life Awards 24 DWS News Mining 26 Industry Highlight Equal Opportunity Employer/ProgramAuxiliary aids and services are available upon request to individuals with disabilities by calling Just the Facts...801-526-9240. Individuals with speech and/or hearing impairments may call the Relay Utah by 27 Rate Update dialing 711. Spanish Relay Utah: Trendlines 3
  4. 4. wasatch front and statewide | by mark knold, chief economist Employment Profile by County U tah’s employment base is expanding, growing gas production. Utah’s hardest hit county during the in the 3.5-percent range. All industrial sectors recession, Washington, is finally seeing a bounce back are adding jobs again in Utah except for the and looking like its old self again with growth over 4.0 federal government. percent. Most metro counties are doing well. Emery When you look at Utah from a county level, it is more County’s big job loss is the reflection of temporary of a mixed bag. Most have growth, but some do not. power plant maintenance projects last year having been The best growth is in the two major counties of the completed. These varying county economies paint a Uintah Basin (Duchesne and Uintah), fueled by oil and generally optimistic picture for Utah. 4 Winter 2012/2013
  5. 5. Employment Growth Rate by County October 2011–2012 10% 8% 6% Metropolitan Counties 4% 2% Daggett Garfield Carbon Beaver Wayne Emery 0% Uintah Wasatch Morgan San Juan Tooele Washington Sevier Juab Summit Utah Salt Lake Iron Piute Davis Cache Box Elder Kane Millard Duchesne Rich Sanpete Weber Grand -2% -4% -6% -8% -10% Source: Utah Department of Workforce Services Trendlines 5
  6. 6. economic news | by mark knold, chief economist Looking ahead for utahs economy T he Utah economy comparatively well in 2012. did Yes, we are still being impacted by the broad shadow of the Great Recession, but the economy began making aggressive progress beyond that shadow in 2012. The recession’s cloud spread from 2008 through 2011. Employment losses had accumulated through 2010, followed by a middling Utah employment expansion beginning in 2011. In 2012 it rose above mediocre, as employment gains moved above 3.0 percent. The change is that jobs increased in 2012 (projected at 40,200) faster than the 2012 labor force growth (new labor force growth in Utah usually runs around 20,000 to 25,000 per year). This was the first year since 2007 that the economy outpaced new labor force growth. We created more jobs than the number of new workers. 2012 was the first year the economy began to reach back into the recession shortfall and re-employ people. By the end of 2012, Utah had as many jobs as it did before the recession. The deficit that remains is about 100,000 fewer jobs than what otherwise would have developed had the economy kept up with labor force growth. Therefore, we still have relatively high unemployment and remain in the recession’s shadow. When 2012 final job counts are in, the Utah economy will probably have grown around 3.3 percent, or 40,200 jobs. Projections show6 Winter 2012/2013
  7. 7. that 2013 will largely be a repeatperformance with growth around3.2 percent, or another 40,000 jobs.If those numbers aren’t accurate,it will probably be on account of a BY THE END of 2012, Utahbetter economic performance than had as many jobs as it didanticipated, not worse.The Utah economy will still lag before the recession.behind accumulated labor forcegrowth for quite some time.Depending on the pace of jobgrowth, it could take five to eightmore years for Utah to employ utah EMPLOYMENT*its internal labor force growththat otherwise would have beenemployed had we not gone throughthe Great Recession. Employment 2000–2013fThere is a potential revolutionary (thousands)economic transformation underway 1,320in America that could help Utahmove more rapidly toward closingthis employment gap. It is the shale 1,270 Previous Peak Employmentgas boom that has emerged acrossthe country over the past five years.This is not likely to fade anytime 1,220soon. Shale rock formations aregiving America cheaper, abundantand comparatively clean energy. 1,170Because of this, America’s industrialbase could surge, particularly inindustries that were fading — 1,120namely manufacturing.This energy boom is expected to be 1,070a major spur to the United States’economy. Citigroup has estimatedthat the payoff for America over the 1,020next decade may be 3.6 million newjobs. Utah has generally enjoyed 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013a position where it performsparallel with yet better than thenational economy. Therefore, if Source: U.S. Bureau of Labor Statistics; November 2012. f = forecast; Utah Department of Workforce Services.this revolution is going to spur the * = Seasonally Adjustednational economy to new heights,then it stands to reason it will alsospur the Utah economy onto astronger and more rapidly repairingpath as this decade Trendlines 7
  8. 8. insider news | by jim robson, economist Total 2013 financial activities employment will likely average about 71,000, with the largest increases occurring within securities/trusts/other finance and in real estate. Modest Financial Activities Job Growth I n addition to the construction industry, another major industry sector at the center of the housing boom and bust, with the subsequent financial meltdown and the Great Recession, was financial increased its share of financial activities employment by 2.1 percentage points, from 14.8 percent to 16.9 percent. Real estate jobs had increased from an average of 9,350 in 2002 to average 12,600 in 2007, activities. Banks, credit unions and other an increase of 34.9 percent. financing businesses, along with real estate agents, brokers and related activities are The housing bust and Great Recession took within the financial activities industry a significant toll on financial activities with group. annual average employment reaching a low of 68,000 in 2010, a drop of 9.0 percent Over the past ten years, there was a from 2007. Real estate employment has significant increase in financial activities declined by a somewhat smaller amount jobs. Included within the decade was by 8.3 percent. By 2012, some recovery the housing boom that ended in 2007, a of financial activities jobs has occurred rather dramatic drop of employment as with average employment estimated to be a result of the 2008/2009 recession and about 69,400. Figure 1 shows the structural renewed job growth since 2010. In 2002 changes that have occurred within financial total employment in the industry stood activities by 2012 compared to 2007. Real at 63,300, comprising about 5.4 percent of estate has actually gained an additional all payroll jobs in Utah. With the housing 0.5 percent share of employment within boom and hot economy, financial activities the industry, with the largest increase in employment reached a peak annual job share accruing to securities/trusts/ average of 74,700 in 2007, accounting for other finance, increasing to 11.0 percent 6.0 percent of payroll jobs in the state. Over compared to 9.3 percent in 2007. this five-year period, jobs were growing at 3.6 percent per year compared to overall The 2013 outlook for financial activities Utah payroll job growth of 3.3 percent. suggests overall job increases of about 2.2 percent above 2012. This rate is less than In Figure 1, financial activities have been what is expected for total job growth in divided into six sub-industry categories, Utah, which should increase from 3.3 to with the percentage of industry employment 4.0 percent in the coming year. Total 2013 displayed for each category. Not surprisingly, financial activities employment will likely the activities that grew the most from 2002 average about 71,000, with the largest to 2007 during the housing boom were increases occurring within securities/trusts/ real estate and related businesses, which other finance and in real estate.8 Winter 2012/2013
  9. 9. Figure 1 Share of Total Utah Financial Activities by Industry Group: 2002, 2007 and 2012 Estimate Figure 1–Share of Total Utah Financial Activities by Industry Group: 2002, 2007 and 2012 Estimate Total Financial Activities Employment for the Selected Years 63,347 74,739 69,435 100% 6.7% 8.4% 7.9% 80% 14.8% 16.9% 17.4% 9.2% 9.3% 11.0% 60% 21.0% 21.8% 21.7% 40% 20% 46.7% 44.1% 43.2% 0% 2002 2007 2012 estimate Banks/Credit Unions/Other Credit Real Estate Insurance Rental/Leasing Securities/Trusts/Other Finance Figure 2 Figure 2–Utah Financial Activities Employment by Month: 2001 to 2013 Utah Financial Activities Employment by Month: 2001 to 2013 (Seasonally Adjusted) (Seasonally Adjusted) 60,000 55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Recession Finance and Insurance Forecast Real Estate, Rental and Leasing Forecast Source: Utah Department of Workforce Trendlines 9
  10. 10. national news | by john krantz, economist This New House: National Housing Market Staging a Comeback T he national housing market, Signs abound that the country’s economy which was not only a cause of the Great Recession, but also is finally on the mend. a victim, has finally started to show some improvement. The U.S. Census Bureau reports that new residential sales were up 27 percent in September 2012 as compared to one year ago, and new residential construction housing starts were up 42 percent in October. These positive signs are providing evidence that the country’s economy is finally on the mend. A healthy national housing market is of critical importance to the overall health of the national economy. When high demand for housing stimulates residential investment, jobs are created throughout a large number of industries. Residential investment directly creates jobs within the financial, manufacturing, retail trade and construction sectors, to name just the more important ones. When businesses in these industries expand, they create additional demand for the products of their suppliers, thereby indirectly creating more jobs in an even larger number of industries. As new workers spend their paychecks, the economy receives yet another boost. The relationships between residential investment, residential construction and recessions are illustrated in Fig- ure 1. When residential investment10 Winter 2012/2013
  11. 11. Figure 1: Residential Investment, Residential Building Figure 1. Residential Investment, Residential Building Employment and Recessions in thein the U.S. Employment and Recessions U.S. 1,600 120 Residential Investment (Quantity Index, 2005=100) Residential Building Employment (in thousands) 1,400 100 1,200 80begins to decline, a recession typically 1,000 60follows soon afterward. Furthermore,the growth of residential investment 800 40after a recession is an important mech-anism by which the vitality of theeconomy is restored. While residential 600 20investment creates jobs across a widearray of industries, it is the creation 400 0of construction jobs that is of partic- 1985 1990 1995 2000 2005 2010 2012ular importance. Included in Figure1 is residential building construction Recessions Residential Building Construction Employment Residential Investmentemployment (NAICS 2361), whichaccounts for roughly one third of all Sources: Bureau of Economic Analysis; Bureau of Labor Statistics;residential construction employment. National Bureau of Economic Research.As the figure makes clear, residentialinvestment essentially determines thelevel of residential construction jobs.FannieMae is projecting that newsingle-family homes will sell at an Figure 2: Annual Rate of New Single-Familyannual rate of 492,000 by the endof 2013, which represents a 65 per- Home Sales in the U.S. Annual Rate of New Single-Family Home Sales (in thousands)cent increase in sales as compared 1,400to the fourth quarter of 2011 (seeFigure 2). Even though this signi- 1,200fies a substantial improvement, therate is still far below the peak of 1,000nearly 1.3 million new home salesreached in 2005. Nevertheless, the 800projected growth in new homesales is good news for residential 600 492,000construction employment. As thehousing market continues to gain 400traction, the consequent expan-sion of construction employment 200should go a long way toward lift-ing the national economy out of its 0doldrums. 2000 2002 2004 2006 2008 2010 2012 2013 Seasonally Adjusted Annual Rate Forecast from 2012-Q4 to 2013-Q4 Sources: U.S. Census Bureau; FannieMae Economic and Housing Outlook. Trendlines 11
  12. 12. the outlook | by jim robson, economist Construction Jobs Rebounding The momentum in the housing market is forecasted to continue this next year. O f all industries in Utah, construction took the falling 2,365 below numbers recorded in 2003. During hardest hit from the Great Recession of 2008/2009. 2011, construction employment stayed at virtually the Undoubtedly this was due to the unprecedented same levels as in 2010, averaging just above 65,000 jobs. housing bubble that developed from 2004 to 2006 as a consequence of large excess housing construction, speculative Another way to look at construction jobs over this housing purchases, overvaluation and huge accumulations of debt boom and bust cycle is to divide employment among obligations. three major types of construction firms: (1) residential building and specialty trade contractors, (2) nonresidential A run-up of construction employment in Utah began building and specialty trade contractors and (3) heavy and after 2003, which was the low point for construction civil engineering construction. Employment levels for jobs after the “dot-com” recession of 2001. Employment firms classified among these three categories are detailed increased rapidly over the next four years, reaching its in Figure 2. The housing boom and bust cycle that began zenith in 2007 when average annual employment stood after 2003 and ended in 2011 is particularly evident at 103,450, an increase of almost 36,000 jobs, or 53.1 among construction firms and contractors involved in percent (see Figure 1). In 2008 the major housing bubble residential construction activities. In 2000, total jobs in that had developed during the previous four years burst. residential activities were 30,828 and grew to a peak level By September the financial system fell into disarray, credit of 57,155 in 2007. Residential job losses in the housing was unavailable and businesses in virtually all industries bust reduced jobs by more than one half to 28,032, or were shedding jobs. about 2,800 fewer than in 2000. In Utah, construction jobs were declining rapidly in 2008 Finally, in 2012 construction employment was on the and 2009. The Great Recession officially ended in July rebound. The recovery took hold in housing during 2012, 2009, but many industries like construction continued with single family housing permits increasing off the shedding jobs, finally hitting bottom in 2010. Utah bottom levels recorded since 2008. Along the Wasatch construction employment averaged 65,233 in 2010, Front this past year, home prices and sales have shown year-12 Winter 2012/2013
  13. 13. Figure 1: Figure 1 Utah Annual Average Construction Payroll Jobs: 2000 to 2013 Utah Annual Average Construction Payroll Jobs • 2000–2013 120,000over increases as housing demandhas picked up and inventories havedropped. Residential construction 100,000jobs reflect the improving housingmarket. Residential housing related 80,000 forecastemployment in 2012 averaged estimate31,800, or about 3,800 more jobs and13.5 percent above 2011. 60,000Given the exceptionally low mortgage 40,000interest rates and improving overalllabor market in Utah, the momentumin residential activity is forecast to 20,000continue next year with 2013 jobsincreasing by 3,600 on average, 0or a gain of 11.3 percent. Modest 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013nonresidential construction job gainsare also expected in 2013 and heavy/civil engineering construction should Source: Utah Department of Workforce Services.maintain current employment levels. Figure 2 Figure 2: Utah Annual Average Construction Payroll Jobs by Type:After four difficult years, construc-tion jobs, particularly those related Utah Annual Average Construction Payroll Jobs 2000 to 2013to residential construction, showed by Type • 2000–2013substantial improvement in 2012. 120,000Expanding housing activities are add-ing to the overall economic vitalityin Utah. 100,000 11,244 9,456 10,256 80,000 35,051 8,204 33,165 9,055 8,694 7,703 9,570 8,836 9,517 34,984 8,333 7,395 29,414 Single family housing 60,000 9,393 9,494 26,916 29,446 31,687 32,422 26,908 29,824 28,694 28,090 27,583 27,640 permits increased off the 40,000 57,155 52,542 44,067 45,229 35,394 38,010 33,285 31,810 bottom levels recorded 20,000 31,240 31,832 30,828 31,411 28,246 28,032 since 2008. 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 estimate forecast Heavy and Civil Engineering Construction Nonresidential Building & Specialty Trade Contractors Residential Building & Specialty Trade Contractors Source: Utah Department of Workforce Trendlines 13
  14. 14. whats happening | by eric martinson, economist THIS At 5.2 percent, Utah currently enjoys the sixth-lowest unemployment rate in the country. Oil and gas in the Uintah Basin has been driving much of this recent growth. A t 5.2 percent, Utah currently enjoys the sixth-low- which employment declined markedly for several quarters. est unemployment rate in the country. This is a January 2010 marks a turnaround for both national- and 3.1 percentage-point drop from the recession high state-level mining employment, having exceeded their unemployment rate of 8.3 percent. Relative to all other pre-recession employment highs. Few other industries at states in the country, this turnaround is pretty impressive. either local or national levels can make the same claim. So, just what is happening in Utah’s economy? From an industry standpoint, Utah has been experiencing robust Figure 2 digs deeper into Utah’s mining industry job growth in several private sector industries, including according to region and provides both historical and professional business services, wholesale trade, and trans- projected employment trends. Once again, the data are portation and warehousing. Although it accounted for seasonally adjusted. The bulk of employment in Utah’s roughly 1 percent of total nonfarm employment in the mining industry falls within three different regions and state of Utah (second smallest industry sector in terms of specific activities: Salt Lake County is comprised mostly of employment), the mining industry in 2011 had almost mineral and quarry mining; the Uintah Basin (Duchesne triple the growth rate of the second-fastest growing indus- and Uintah counties) is mostly comprised of oil and gas try (professional business services), with an exceptional mining; Castle Country (Carbon and Emery counties) is 11.7 percent year-over-year employment growth. Oil and almost entirely comprised of coal mining. There are a gas in the Uintah Basin has been driving much of this re- couple of things that immediately jump out in Figure 2. cent growth. The two figures provided offer deeper insight Oil and gas in Uintah Basin has experienced a tremendous into Utah’s mining trends over the last two decades. boom in employment. Despite the drop resulting from the Great Recession, the employment trend here has As Figure 1 illustrates, Utah’s mining trends tend to move exceeded its pre-recession level. The same can also be said with the national mining trends; both are seasonally for mining in Salt Lake County. On the other hand, coal adjusted to provide a clearer perspective. Mining mining has fallen since the Great Recession and continues experienced a surge in employment leading up to the to fall. The historical series for each of these regional Great Recession at both the state and national levels, after industries results in the projections shown for each14 Winter 2012/2013
  15. 15. Seasonally Adjusted Figure 1: State of Utah & National Mining Employment Figure 1: State of Utahto JuneNational Mining Employment January 1990 and 2012 - January 1990 to June 2012 • Seasonally Adjusted 14,000 900 National Mining Employment (Thousands) Mining Employment in Utah 12,000 800 700 10,000 National 600 8,000 500 Utah 6,000 400 300 4,000 200 2,000 100 Recessions 0 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Figure 2: Regional Mining Employment: Historic and Projectedregion: increasing employment in Figure 2: Regional Mining Employment: Historic and Projected Series Seriesthe Uintah Basin and in Salt LakeCounty and a decreasing trend January 1990 to to 2013 -•Seasonally Adjusted January 1990 2013 Seasonally Adjustedin Castle Country. Interestingly,it can be argued that the natural 6,000gas industry is putting pressure on Recessionscoal as a competing energy input,as low natural gas prices help to 5,000suppress the demand for coal. 4,000Although mining is responsible Uintah Basinfor a minor share of total private (Oil andsector employment in Utah, one Gas) Projected 3,000 Salt Lake Countycannot help but notice the tre- (Mineral and Quarrying)mendous growth occurring in thisindustry, which in turn provides 2,000boosts in employment within oth-er sectors such as heavy construc- Castle Countrytion and trucking. Furthermore, if 1,000 (Coal)domestic energy costs such as nat-ural gas can continue to remain 0low, this may eventually help to 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013solidify the return of thousandsof manufacturing jobs in the stateand nationwide. Source: Department of Workforce Services; U.S. Trendlines 15
  16. 16. economic insight | by natalie torosyan, economist Manufacturing Employment in Utah Improving Although many jobs were lost during the recession, manufacturing is expected to grow in 2013. A fter suffering two recessions result- average. High location quotients imply ing in decreased employment since that food manufacturing and computer/ 2000, Utah’s manufacturing industry electronic product manufacturing are has improved since 2010 and is projected export-oriented industries with more of to continue its growth into 2013. Manu- their products being consumed outside of facturing employment peaked in 2007, but Utah. In fact, these subsectors produce the the recession led to three years of declining state’s second and fourth largest exports employment. The 2013 growth rate from to the U.S. in terms of value, electronic 2012 is forecasted to be 0.9 percent, placing integrated circuits and food preparations, employment at 90.6 percent of the 2007 respectively, according to the U.S. Depart- peak. As Figure 1 shows, turnaround from ment of Commerce. the most recent recession has been slower than the relatively quick recovery earlier Characteristics of primary metal manufac- in the decade. turing, another subsector, exhibit an inter- esting dichotomy between value of exports The largest share of Utah manufac- and employment concentration. Products turing employment is in miscella- from this subsector, particularly gold, are neous manufacturing which includes Utah’s top export in terms of value, total- production of medical equipment and ing 62 percent of all export value, as reported supplies, jewelry, sporting goods, toys, by the U.S. Department of Commerce. But office supplies and other products that its employment claims only a small pro- cannot readily be classified in specific sub- portion, 3.8 percent, of all manufacturing sectors in manufacturing (Figure 2). Other employment. Since the export is measured top subsectors in terms of manufacturing in dollar value, and not volume, this rela- employment share in Utah are food manu- tionship of relatively few jobs producing facturing and computer/electronic product large amounts of value emphasizes the manufacturing. Compared to the national high price of gold. average, these two subsectors have a high concentration of employment in the state, Manufacturing experienced large job revealed through an analysis of location losses during the most recent recession, quotients. These quotients measure the but it has been steadily expanding rate of concentration of an industry’s employment and is expected to continue employment in Utah compared to the U.S. to grow through 2013.16 Winter 2012/2013
  17. 17. Figure 1: Total Manufacturing Employment and Forecast in Utah Seasonally Adjusted 130,000 125,000 120,000 Employment 115,000 110,000 Forecast 105,000 100,000 95,000 e=estimate f= forecast 90,000 1990 1991 1992 1993 1995 1996 1997 1998 1999 2000 2001 2002 2003 2005 2006 2007 2008 2009 2010 2011 1994 2004 2012e 2013f Figure 2: Employment by Industry Sector Industry Sector Share of Manufacturing Employment Miscellaneous Manufacturing 13.8% Food Manufacturing 13.2% Computer and Electronic Product Manufacturing 12.6% Fabricated Metal Product Manufacturing 10.4% Transportation Equipment Manufacturing 9.6% Chemical Manufacturing 6.7% Machinery Manufacturing 4.8% Printing and Related Support Activities 4.3% Furniture and Related Product Manufacturing 4.0% Nonmetallic Mineral Product Manufacturing 3.9% Primary Metal Manufacturing 3.8% Plastics and Rubber Products Manufacturing 3.7% Paper Manufacturing 2.4% Wood Product Manufacturing 1.4% Electrical Equipment and Appliances 1.3% Apparel Manufacturing 1.1% Petroleum and Coal Products Manufacturing 1.1% Textile Product Mills 0.6% Beverage and Tobacco Product Manufacturing 0.6% Textile Mills 0.4% Leather and Allied Product Manufacturing 0.1% Source: Utah Department of Workforce Trendlines 17
  18. 18. fyi | by lecia parks langston, economist Industry Clusters the North American Industry Classification System Or a story of apples and oranges & T he North American Indus- and associated institutions in a particular try Classification System field or industry. The theory is that represents a collaborative collaboration among these organizations effort between the United States, Can- will provide a sustainable, competitive ada and Mexico to commonly classify advantage for an area. industries. Here in the U.S. it replaced the very outdated Standard Industri- For example, the Utah Governor’s Office al Classification system more than of Economic Development has identified a decade ago. NAICS categorizes several targeted economic clusters where each business or establishment into it seeks to serve “as a catalyst to align a detailed industry based on the necessary resources and policies that production processes it uses. If you contribute” to the success of these clusters. regularly read our publications, you’ll These targeted clusters include aerospace/ be familiar with some of the “supersec- aviation, defense/homeland security, tor” NAICS groupings, such as construc- life sciences, energy/natural resources, tion or leisure/hospitality services. Here financial services, software development/ at the Department of Workforce Services, IT and outdoor products/recreation. economists analyze employment data using NAICS simply because that is how The Apples and Oranges U.S. detailed statistical information is col- lected and classified by federal directive. Analogy Why the talk about apples and Industry NAICS is an orderly, detailed and well thought-out system. The NAICS oranges in the same breath as industry classification? Both the NAICS structure structure includes two- through six-digit and the economic/industry cluster clusters are classifications, offering five levels of system embody ways of organizing detail. The more digits included in the and classifying industries. Both are the fodder code, the finer the level of detail. The metaphorically fruit. federal government regularly adapts the of economic NAICS coding system to reflect changes in the nature of the economy. Yet, these two systems are very different. NAICS was designed as a statistical development While NAICS provides structure for data method of organizing production activity for statistical agencies. Think of this users, industry or economic clusters are structure as apples. However, because tactics. the fodder of economic development industry clusters represent a strategic tactics. Typically, industry clusters are rather than a statistical method of defined as a geographic concentration classifying industries, they often group of interconnected businesses, suppliers establishments from diverse NAICS codes 18 Winter 2012/2013
  19. 19. Energy Industry Cluster Example Six-Digit NAICS IndustriesNAICS Two- and Four- Digit Industries Bituminous Coal Mining Underground Coal Mining Bituminous Mining Coal and Nonmetallic Support Metal Ore Mining Lignite Surface Mineral Activities of Oil Nometallic Mineral Mining Mining Mining and and Quarrying and Gas Quarrying Operations Oil and Gas Extraction Drilling Oil Support Activities Anthracite Natural Gas and Gas for Mining Mining Distribution Uranium- Wells Support Utilities Radium- Petroleum Activities Vanadium Refineries Power Generation Ore Mining for Coal and Supply Mining Natural Gas Distribution Natural Gas Hydroelectric Nuclear Liquid Power Electric Crude Extraction Generation Manufacturing Petroleum Power Pipeline Fossil Fuel Generation Petroleum and and Natural Coal Products Transportation of Electric Power Manufacturing Gas Crude Oil Generation Extraction Pipeline Electric Transportation Transportation of Power Other Electric Pipeline Transportation Natural Gas Distribution of Crude Oil Refined Power Petroleum Electric Bulk Generation Product Power Pipeline Transmission Transport and Control Source: Utah Department of Workforce Services.into one cluster. Think of industry clusters as oranges. the world as they struggle to produce and track economicAgain, both systems classify industries, just differently. information for industry clusters. Also, understand thatThe graphic provides an example of how an industry information produced for these clusters may be difficultcluster (energy) may draw from many different NAICS to reproduce for other entities because of the confidentialindustries. For example, the energy cluster draws from nature of the data at the detailed NAICS level.mining (all blue cells), utilities (green), manufacturing(purple) and transportation (orange).Determining exactly which NAICS industries should For more information, seebe included in an industry cluster is no easy task sincethere’s no established methodology. In addition, often at andeven the most detailed level, only a portion of the datafor a particular NAICS industry should be included in a economic cluster. So, forgive the data keepers Trendlines 19
  20. 20. the outskirts | by lecia parks langston, economist I n many counties, the leisure/ hospitality services industries showed the first signs of economic awakening as the business-cycle recovery began. Close-to-home vacations and a Forecasting Leisure/Hospitality little eating-out proved some of the first additional expenditures consumers were Services Employment willing to make. On the other hand, in some of Utah’s off-the-Wasatch-Front counties, this industry continues to contract. What do economists expect for the leisure/hospitality industry in the less urban areas during 2013? Leisure/hospitality services industry employment is often used as a proxy for tourism-related jobs. This large sector includes a wide range of businesses providing entertainment, recreational activities, accommodations and food services. Obviously, along with tourists, the industry serves the demand of local customers as well. See Figure 1 for a definition of each particular area.20 Winter 2012/2013
  21. 21. 24.8%How Dependent Are They?The level of leisure/hospitality services 24.8%employment comparative to other areas 15.8%suggests the dependency of a particularregion on tourism-related jobs. Forexample, on average in Utah, roughly 9percent of jobs in 2011 were categorizedin the leisure/hospitality services 9.7%industry. However, the Southeast portion 9.4%of Utah (Grand and San Juan counties), 7.9% 7.7% 15.8% 6.9%with its abundance of recreation and Castle Countrystate/national parks, shows almost one Uintah Basin Southwest Bear River Southeastfourth of employment in this industry. Statewide CentralOff-the-front areas show a wide assort-ment of leisure/hospitality services 9.4% 9.7%dependence. Three areas (Bear River, 7.9% 7.7%Castle Country and the Uintah Basin) 6.9%show lower-than-average leisure/hospi- Note: Bear River area consists of Box Elder, Cache and Rich counties. Castletality services employment shares. On Country includes Carbon and Emery counties. Central is comprised of Millard, Piute, Sanpete, Sevier and Wayne counties. Southeast is made up of Grand 4.5%the other end of the scale, both South- and San Juan counties. Southwest includes Beaver, Garfield, Iron, Kane andeast and Southwest regions show a sig- Washington counties. The Unitah Basin is comprised of Daggett, Duchesne andnificantly higher percentage of jobs in Uintah counties. Wasatch Front counties (Weber, Davis, Morgan, Salt Lakethis sector. Tooele, Summit, Wasatch, Utah and Juab) are not shown.What’s Ahead? 2.3%Current and projected growth in leisure/ 4.5%hospitality services jobs tends to mirrorthe overall performance of an area’s 0.8%economy. This suggests that local 0.5%consumption plays a strong role in anarea’s expansion in leisure/hospitalityjobs. Of course in most areas, a high 2.3%percentage of food services sales do -0.2% Uintah Basin Southwestcome from local residents. SoutheastThe strongest leisure/hospitality services 0.8%growth is expected in the Uintah Basin 0.5%in 2013. This 5-percent expansion willbe heavily dependent on a continuing Central Bear River -0.2% Castle Countryboom in the oil and gas fields. TheSouthwest should show the next highestlevel (2 percent) of leisure/hospitality -3.8%services gains. Rather slow expansionis anticipated for both Bear River (0.5percent) and Central regions (0.8 For more information about Utah’spercent). Finally, the contracting trends off-the-front counties, visitcurrently experienced in Castle Country(down 4 percent) and Southeast areas 0.2 percent) ought to moderate -3.8%somewhat but not sufficiently toactually show growth. Source: Utah Department of Workforce Trendlines 21
  22. 22. occupations | by nate talley, economist Roustabout Motorman Roughneck Worm M otorman. Roughneck. Worm. Those colloquial In Utah, the Uintah Basin holds 78 percent of the state’s terms are sometimes used to describe workers oil and gas extraction employment, and, by extension, who perform manual labor in oil fields. Sound the majority of the state’s roustabouts. As of May 2011, appealing? Thankfully, the Standard Occupational there were an estimated 1,570 roustabouts in Utah at a Classification (SOC) system provides a structure under which median wage of $17.09 an hour. An employment level common job duties are grouped and formal occupational of 1,570 may not seem to represent an overwhelming titles are assigned. Under SOC, someone who assembles demand for roustabouts, but consider that the location and repairs oil field equipment is called a Roustabout. quotient for this occupation is 3.35. Location quotients measure the concentration of occupational employment Roustabouts’ job duties are actually somewhat wide- within one area compared to another. In this case, a ranging beyond the assembly and repair of oil field location quotient of 3.35 for roustabouts in Utah means equipment. While they spend much of their time bolting that relative to our employment base, Utah employs together platforms, assembling pump parts and tightening roustabouts at a rate that is over three times greater than pipes, they may also be responsible for guiding mobile the national rate. equipment such as cranes and bulldozers, checking safety harnesses, digging ditches and cleaning up spilled On the other hand, our high rate of roustabout employment oil. Naturally, roustabouts can expect to perform these is partially attributable to the fact that that not all states tasks outdoors and in all weather conditions. The work house oil extraction activities. Further, economic factors schedule for this occupation tends to be aligned with the exogenous to Utah affect the demand for roustabouts by drilling schedule of the respective oil rig, which means it influencing the price of oil and alerting the quantities is fairly common for roustabouts to work nontraditional at which oil extraction output is most profitable. And schedules such as seven days on and seven days off, or since these factors tend to be variable, it follows that the shifts longer than eight hours. Consequently, part-time demand for roustabouts is also susceptible to variability. opportunities can be hard to come by. The Bureau of Nevertheless, Utah roustabout employment is expected to Labor Statistics estimates that entry into this occupation grow at a faster-than-average rate in both the short and is relatively accessible, as stringent education or work long term. experience requirements are rare. However, some employers do prefer roustabout candidates to have some If youre looking for glamour, working as a roustabout is form of applied technology training where they acquired probably not right for you. But far from being a "worm," basic skills in the areas of mechanics, welding and heavy this occupation offers adventure, physical challenges, low equipment operation, among others. barriers to entry and a promising employment outlook.22 Winter 2012/2013
  23. 23. If you’re looking for glamour, working as a roustabout is probably not right for you. But far from being a “worm,” this occupation offers adventure, physical challenges, low barriers to entry and a promising employment outlook. Labor Statistics for Roustabouts in Utah Median Hourly Projected Annual Growth Projected Annual Growth Location Employment Wage Rate through 2013 Rate through 2020 Quotient 1,570 $17.09 9.3% 2.8% 3.35Source: Utah Department of Workforce Services and Bureau of Labor Statistics, (2012) Trendlines 23