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2011-05-04 16:16:32

The service sector now dominates employment in the Utah economy. The sector has a total of 460,700 employees, which reflects a tremendous shift in employment over the last 30 years. In 1980 only 23.5 percent of all non-farm workers were in the service sector, but by 2009 that share had grown to nearly 40 percent. Two high wage sectors that have significantly declined are mining and manufacturing. Manufacturing’s share of jobs has dropped from 16.1 percent in 1980 to 10.3 percent in 2009.

The growth of healthcare services has pushed Intermountain Health Care (IHC) to the top of the list of Utah’s major private employers. In 2009, IHC employed more than 20,000 workers. Wal-Mart, which entered the state in the 1990s, has climbed to second place with over 15,000 employees. The 10 largest employers in 2009 included two banks, but only one manufacturer. By comparison, in 1980 there were no banks in the top 10, but three manufacturers; Thiokol, Hercules and Unisys. ATK is now Utah’s largest manufacturer with 4,500 employees in 2009. Two utility companies; U.S. West (Qwest) and Pacific Corp. (Rocky Mountain Power) had dropped out of the top 10 by 2009.

With the long-term shift to service employment, Utah’s average wage rate has suffered. In 1980 the average annual wage in Utah was 95 percent of the U.S. average. High-wage manufacturing, mining and federal government jobs pushed up Utah’s average wage rate to near the national average. However, over the past 30 years as lower wage service jobs increased, the average wage rate in Utah has not been able to keep pace with the national rate. The average annual growth rate in wages since 1980 has been 3.6 percent in Utah compared to 4.3 percent nationally. Consequently, Utah’s average wage is now only 78 percent of the national rate. In inflation adjusted dollars over the 30 year period Utah’s average wage rate has increased from $35,271 to $38,663 while at the national level the average wage rate has increased from $37,104 to $49,336. Utah households have offset this slow downward drift in wage rates by working more hours.

Working more hours, however, is not a satisfactory long-term solution for low wages. Every Utah governor over the past 30 years has struggled with the state’s slow wage growth. This problem was at the heart of Governor Huntsman’s USTAR (Utah Science Technology and Research) initiative. This initiative is a long-term effort to develop world class R&D at the University of Utah and Utah State University. After five years, the USTAR effort is resulting in new high-tech companies for the Utah economy.

Utah’s high-tech sector now has nearly 69,000 employees; about 6 percent of the non-farm workforce. The growth of this sector is central to improving wages and prosperity in Utah. Wage rates throughout the high-tech industry are substantially higher than the typical wage rate in Utah. The average salary for software development is $74,508, Table 3. Overall the high-tech sector has an average wage rate of $66,360; nearly $27,700 higher than the average wage rate in Utah. Computer systems design employs the largest number of high-tech workers followed by aerospace products and engineering services.

To read the entire report download the PDF.

Information taken from the March issue of 'UTAH’S ECONOMY' - a monthly report Produced for COMMERCE REAL ESTATE SOLUTIONS by Jim Wood, Bureau of Economic and Business Research University of Utah.

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