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Front Page » January 3, 2008 » Local News » Utah concludes '07 with expanding employment, 2.5 percent...
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Utah concludes '07 with expanding employment, 2.5 percent jobless rate

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Utah concluded 2007 with 4.5 percent job growth and the statewide unemployment rate remained in the low 2.5 percent range.

The 2007 data point to a strong economy with ample job creation and abundant opportunities statewide, indicated the Utah Department of Workforce Services latest Trendlines report.

The statewide picture should change little in 2008, pointed out department of workforce services economist Mark Knold.

The defining characteristics of Utah's current boom are the hyper-low unemployment rate and the large amount of construction activity. Long-term and short-term factors are at play.

The long-term factor can be separated into two sections: the nature of the United States economy and the changing age as well as limited availability of labor nationwide.

For most of the 200-plus years of the nation's development, the industrial revolution was the economic umbrella dictating population distribution, explained Knold.

The industrial environment demanded large quantities of labor massed in urban settings, working in factories on assembly lines to produce physical products like machines and industrial goods.

The economic environment demanded the cheap transportion of products and mountains were a hindrance.Therefore, the mountainous region of the western U.S. remained underdeveloped and underpopulated.

But the nation's industrial revolution has matured and overcome mountain barriers.

"The bottom line is that the economy has changed and that change has opened the doors for expanding population and commerce in the mountain west," noted Knold. "With Utah lying in the heart of this region, the moral of the story is that what Utah is experiencing, in terms of population growth and its resultant economic expansion, is not just a one-time or short-term phenomenon. Instead, it is a change that is only beginning, and will continue to be, a driving and dominant factor in the development and composition of Utah for many decades to come. Within the long-term framework will be periods of boom and slowdown, but the long-term trend is for continual economic growth."

The second section within the long-term framework is the labor composition of the U.S. economy.

The 40- to 55- year-old core of the baby boomers dominates the nation's labor force.

The boomers forced the U.S. economy to stretch, but the members of the group did not reproduce in equal or greater numbers and created a vacuum of replacement workers.

"The vacuum is just beginning to have a profound economic impact on not just the United States, but also upon Utah," pointed out the department of workforce services economist.

The first stage on which the replacement worker vacuum is manifesting is in the low-skill arena. By virtue of education and experience, boomers moved beyond these types of jobs long ago. Today's younger domestic workers aren't of sufficient number to fill these low-skill jobs. With the death of replacement workers, they have better options available to them than did the Boomers at that age. This low-skill labor vacuum is the primary reason why this country is seeing such a strong wave of in-migration flowing from south of the border. We, as a country, are struggling with the reality that this low-skill labor vacuum has a very powerful pull. Utah's population age tree runs counter to the U.S. tree and suggests that Utah itself doesn't have that kind of low-skill labor pull. But that would be a naive conclusion. Utah's economy is just a small component within the larger United States framework.

The immigrant labor pull is strong in the western U.S. and Utah lies in the center of the region. In-migration has become a significant component of the Utah labor force during the last 10 years. With the face of the aging and eventual shrinking United States labor profile, the attraction should increase.

The short-term phenomenon driving the state's economy is the large pool of 20- to 30-year-old Utah-born workers seeking entrance into the labor market at the beginning of the decade. Utah posted no net employment growth from 2001 to 2003 and the economy was not allowing the younger workers to enter the labor force.

"If there had to be an economic downturn, the timing may have turned out to be favorable as many of these emerging workers were young enough to have opted to defer to college and more education while the economy was making its readjustment," noted Knold. "But at some point, they had to come forward and kick the economic door down. And that is what they have been doing for the past three years and counting. Their presence seems to have reached its crescendo in 2007. However, they are of such large size and significance that their influence will still be driving the Utah economy forward for several years to come."

"The short-term internal labor boom is combining with long-term change to produce Utah's current period of strong and somewhat self-sustaining economic expansion. It appears it will be several more years before this short-term demographic push runs its course and Utah's economy returns to being influenced by its long-term economic factors," concluded Knold.

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