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Front Page » December 14, 2006 » Local News » Carbon experiences economic, labor market expansion in se...
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Carbon experiences economic, labor market expansion in second quarter

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Carbon County experienced broad-based economic growth during second quarter 2006.

The latest local statistics compiled by the Utah Department of Workforce Services indicate that Carbon's economy created 583 employment opportunities for a job expansion rate of 6.5 percent.

The county's traditional heavy industries - mining, construction and manufacturing - all showed tremendous strength in the second quarter, pointed out regional workforce services economist Michael Hanni.

Year-over mining employment was up nearly 21 percent for 150 jobs. Likewise, construction and manufacturing posted double-digit growth, reaching 17 percent and 12 percent respectively.

Carbon County's service-producing industries also enjoyed strong employment gains, continued the DWS regional economist.

The local health care, accommodations-food services and retail trade sectors showed the largest year-over increases in jobs.

Neighboring Emery County also posted solid 4.9 percent year-over job growth in the second quarter.

With several coal mining operations continuing to ramp up and major utility construction projects ongoing, Emery's goods-producing industries remained the driver for job creation, adding 158 net positions during the year.

On the other hand, Emery's service producing industries have been lagging behind in the creation of employment opportunities, noted Hanni.

Combined, Emery's service sector grew by 1.4 percent compared to last year.

In addition to Carbon and Emery, the southeastern region encompasses Grand and San Juan counties.

After coming back to earth in the first quarter, the job growth in Grand County rose to 3.0 percent in second quarter 2006.

Grand's tourism cluster industries - retail trade, recreation and accommodation -food services showed strength in the quarter, adding 138 jobs compared to last year.

Additionally, Grand County's construction industry created 44 jobs in the 12-month period.

In San Juan, the number of employment opportunities in the county grew 3.9 percent for 159 jobs in second quarter compared to last year. The copper ore processing industry created jobs, while the construction and mining sectors posted slight declines. While health care and leisure-hospitality added roughly 100 jobs, a loss of 73 government positions put a crimp on growth in San Juan County.

Development in rural areas of the state has frequently advocated entrepreneurship as a means of promoting growth, explained Hanni. Policymakers argue that, only when local people take a hold of their own economic destiny will there be job growth and prosperity in their communities. Rhetoric aside, there are some economic justifications for pursuing this strategy.

For example, local entrepreneurs have the benefit of first-hand knowledge of the local market and the challenges that face a business in rural Utah. Supporting local entrepreneurs may also help broaden the industry mix of small rural economies.

"While the potential justifications are interesting, what is going on in southeastern Utah? Does the area have a vibrant entrepreneurial community? Unfortunately, there are no readily available and accepted economic statistics that measure this form of economic development directly. How do you measure the entrepreneurship of a person, after all? To answer these questions, perhaps we need to flip them on their heads," noted Hanni.

"What is the outcome of successful entrepreneurship? It seems logical that by measuring the creation of new businesses we could gauge how much entrepreneurial activity was occurring in an area," continued the regional economist.

Luckily for us, data is collected each year on the number of establishments that are born and die for each county in Utah. The published data relates to establishments or individual work sites as opposed to firms. Firms may have multiple establishments.

"It is important to note this distinction because, in what follows, we aren't dealing with individual businesses per se, but rather individual work sites. To make this data manageable and to see how it relates to entrepreneurial activity, we will look at something called 'the establishment replacement rate,'" explained Hanni.

The rate is basically the establishment births in an area divided by the number of deaths. Basically, when the rate registers higher than 100 percent, the number of establishments is growing in the area. When the rate registers less than 100 percent, the number of establishments is declining in the area.

"Looking at establishment replacement rates for the four counties from 1995 to 2004, it is clear that there is significant variability in this statistic. Nevertheless, buried in this data are some interesting trends.

The first thing that stands out is that all four southeastern counties averaged positive replacement rates over the 10-year period. Something else that shows up in this data is the dependence of the different counties on their main industries," continued the DWS regional economist.

Emery County shows a fall-off in its replacement rate that coincides with the slowdown of the coal industry at the beginning of the decade. In 2001, Grand County began to struggle to reach a neutralreplacement rate.

"To put this into perspective, while the four counties combined averaged a 111 percent replacement rate from 1995 to 2004, the state as a whole averaged 118 percent. Looking outside of our corner of the state, the Uintah Basin averaged a 118 percent rate and the 11-county western region averaged a 123 percent rate.

Are these higher rates indicative of more entrepreneurial activity in other areas? Perhaps. However, these numbers also argue strongly that entrepreneurs in the region have made solid progress in the face of adversity, i.e. a weak coal market spell and terrorism related travel woes," concluded Hanni.

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