Unemployment Insurance Claims Data Shed Light on the Local Economic Impacts of the COVID-19 Pandemic

Unemployment Insurance Claims Data Shed Light on the Local Economic Impacts of the COVID-19 Pandemic

By Lecia Parks Langston, Senior Economist; Michael Jeanfreau, Regional Economist

“You have power over your mind — not outside events. Realize this, and you will find strength.” Marcus Aurelius

In the wake of the COVID-19 pandemic, businesses lost revenues and workers lost jobs. But because of the time it takes to collect and collate data, economists have been left without much information to quantify the economic impacts at the local level.

But there is one ray of data illumination. Claims for unemployment benefits are promptly available and provide information about a large cross section of the economy. This post will outline what light unemployment claims data sheds on the state of Utah’s Wasatch Front North economy.

While not all workers are protected by unemployment insurance laws, roughly 95% of jobs are covered. This makes claims data an exceptional source of information about the economy. Not included under unemployment insurance laws are most self-employed workers, about half of agricultural employment, unpaid family workers, railroad personnel (covered separately) and many nonprofit organizations (such as churches). Also, some out-of-work employees may not have worked a sufficient work history to qualify for unemployment insurance benefits, but may file anyway. Fortunately, in this time of economic distress, the social safety nets of the unemployment insurance program, special national COVID-19 funding and social programs are working together to keep workers’ income and well-being stable.

Unemployment claimants and the unemployed; they aren’t the same

Also, keep in mind that, in addition to individuals drawing unemployment benefits, the unemployment rate includes those entering and re-entering the workforce and noncovered groups without current employment. This means the number of “unemployed” will be greater than the number of claimants. In “normal” times, only about 40% of the “unemployed” are claiming benefits. The generally reported unemployment rate also has a work-search requirement. If you haven’t made any minimal attempts to find work, you aren’t counted as “unemployed.”

Watch this Space

While this analysis won’t be updated on a regular basis, new data will be added to the data visualization on a weekly basis allowing readers to check back for the latest information.

An Unprecedented Event

Not surprisingly, first-time claims for unemployment benefits have soared in Utah and across the nation as the pandemic swept across the country. This increase is unprecedented since the creation of unemployment insurance coverage during the Great Depression. Week 12 (beginning March 16) marks the start of this unparalleled surge in claims. On a positive note, while new claims for unemployment benefits have skyrocketed in Utah, the state currently shows one of the lowest claims rates in the nation.

For most Wasatch Front North counties, initial claims peaked in week 14 (starting March 30) and have since tapered downward. During the peak, initial claims filed totaled 5,744 in the region. By week 19, claims measured considerably lower but continued to run substantially greater than in previous years — even during the “Great Recession.”

Here’s another example of the tremendous flood of new claims. Prior to the COVID-19 pandemic, counties in Wasatch Front North Utah averaged a total of 240 first-time claims per week. This time period included seasonally high claims weeks in January. In the weeks after, an average of 3,342 claims were filed for a staggering increase of 1,392%.

Who took the hardest hit?

Each county in the Wasatch Front North region has had a different industry leading the total number of claims in the area. Overall, manufacturing lead total initial claims at 13%, followed by both health care/social assistance and retail trade at 12%, with food service/accommodation following at 11%. Additionally, claims from unknown industries are also prevalent, representing 12% of total initial claims. These claims will mostly fall into the food service industry.

The Domino Effect of COVID-19

In the early stages of the pandemic, this was a story of service-dependent industries. However, the domino effect of the COVID-19 pandemic have also begun to have large impacts in other industries. Claims have been distributed fairly evenly among different industries, with manufacturing, health care/social assistance, retail trade, accommodation/foodservice and claims from “unknown” industries as the top five industries impacted within each county in the Wasatch Front North region. Many of these unclassified claims would rightfully be counted among accommodations/food services if the appropriate information were available.

The initial impact of the pandemic led to the closure of face-to-face jobs, but the change in employment and social behavior both locally and abroad has led to subsequent closures in other industries. Industries that didn’t face instructions to alter behavior during this event still had to adapt to the difference in consumer behavior, supply chains and additional safety precautions.

The Industry Flow

Initial claims in the region have come in waves, with food service/accommodation and unknown claims peaking in week 12, followed by an uptick in claims from nonessential health care services and retail trade through weeks 13 and 14, and lastly a marked increase in manufacturing by week 15.

The High and the Low

Although the largest numbers of claims in Wasatch Front North have come from manufacturing, health care/social assistance, retail trade and food services, in percentage terms, other industries have actually suffered more. For example, in the smaller industries of mining, real estate/rental and leasing, information and personal care services have all seen similar losses of between 16-19% of total covered employment.

Because of its job-to-job nature, the construction industry typically accounts for 15-25% of first-time claims. However, although construction’s new claims have also increased, they have increased at a much slower-than-average rate. After the COVID-19 pandemic hit, construction contributed less than 4% of all first-time claims. Ease of social-distancing and good weather have helped construction maintain employment levels. New claims measured just 5% of covered construction employment.

Only a portion of agricultural employment is covered by unemployment insurance laws. However, as companies work to keep America fed, agribusiness has laid off few employees. Only 2% of Wasatch Front North’s covered agricultural workers have filed a claim during the COVID-19 pandemic.

Public administration, educational services (including public and higher education), finance/insurance and utilities have also managed to keep a higher percentage of their workforces employed.

County by County

Davis County

• Davis County matched the state average for new claims as a share of covered employment (10%). While the whole region suffered similar initial losses, Davis County was largely spared the increase in manufacturing claims that Weber County experienced in the weeks following the arrival of the COVID-19 pandemic.
• While the percent of covered employment is lower in Davis County, it had the largest total initial claims in the region (13,951), narrowly beating out Weber County (12,451).
• Prior to the COVID-19 pandemic, Davis County averaged 104 first-time claims per week compared with 1,744 claims after the pandemic. This increase of 1,581% ranked as the largest in the region.
• Retail trade, health care/social services and accommodation/food services generated the highest number of initial claims during the pandemic.
• Davis County’s initial claims peaked on week 14, totaling 3,081. This was the only week that claims rose over 3,000.
• The regional share of new claims that Davis County had rose from before 43% of claims to 52% during the pandemic.

Morgan County

• Prior to the COVID-19 slowdown, Morgan County averaged three unemployment insurance claims per week compared to 42 new claims afterward, an increase of 1,071%.
• Because of its relatively large share of service industry employment, Morgan County has shown a higher-than-average increase in claims due to the COVID-19 pandemic.
• New claims as a percent of covered employment measured at 13% — above the state average of 10%.
• Morgan was slightly unusual compared to other areas, with health care/social assistance receiving more initial claims than food service/accommodation industry.
• In counties with small workforces, the lack of data accuracy can make an impact to volatility. In Morgan County, the initial claims data show claims from an overwhelming percentage of covered employment in both entertainment and management of companies.
• Morgan County remained a meager 1% of total first-time claims for the region during the COVID-19 pandemic.

Weber County

• While Weber County and Davis County are the two large contributors to employment numbers in the region, Weber County has had 12,451 total first-time claims filed during the COVID-19 pandemic. While this is only slightly less than Davis County (13,951), Weber County’s share of first-time claims within the entire region dropped before and during the COVID-19 slowdown from 55% of all claims before to 47% of all claims during. This means that, while Weber County’s claims increased proportionately less than other counties in the region.
• Before the slowdown, an average of 133 initial claims were being filed in Weber County compared to an average of 994 claims in the following weeks. The pre-to-post-pandemic increase registered at 1,339%
•  Initial claims for unemployment insurance filed during the pandemic as a percent of covered employment measured at 11%, near the middle of a ranking of all Utah counties.
• Weber County had more first-time claims filed during the pandemic from the manufacturing (2,376) and health care/social assistance (1,470) industries than the more common accommodation/food services.
• While the total claims are higher in other industries, several industries suffered larger portions of claims as a percent of covered employment. Real estate/rental and leasing saw claims from 19% of covered employment, while industries designated as “other services” received the same. In this case, these claims will largely be coming from personal beauty services, a subset of “other services.” Information (18%), mining (16%) and accommodation/food service (16%) all similarly saw claims from a high percent of covered employment.
• Claims originating from manufacturing and transportation surged towards the latter weeks of the pandemic time period.

Utah's Seasonally Adjusted Unemployment Rates

Seasonally adjusted unemployment rates for all Utah counties have been posted online here.

Each month, these rates are posted the Monday following the Unemployment Rate Update for Utah.

For more information about seasonally adjusted rates, read a DWS analysis here.

Next update scheduled for March 26th.

Utah's Employment Situation for January 2018

Utah's Employment Situation for January 2018 has been released on the web.

Find the Current Economic Situation in its entirety here.

For charts and tables, including County Employment, go to the Employment and Unemployment page.

Next update scheduled for March 23rd, 2018.

Ten Year Later: Differing patterns of recession and recovery in the Wasatch Front North

December 2017 marked 10 years since the Great Recession first cast its long shadow across the American economy. The recession officially lasted 18 months, but its consequences can still be seen across the country without having to look very hard. We have not had another recession since.

Utah was hit hard at the time, losing a larger share of jobs than the national average; but, we were fortunate to be one of the most resilient states in terms of economic rebound. There are plenty of states where the Great Recession continues to weigh upon them. Employment levels in 14 states are still not back to their pre-recession peak, and another 29 states have only grown 5.0 percent or less. As the working-age population has grown by more than 5.0 percent, the job gains nationally have not been enough to fully employ working-age labor.

Utah lost 7.0 percent employment during the recession. Since that low, employment has recovered by 18 percent. That is the second best rebound in the nation. From Utah’s pre-recession employment peak to now, Utah’s employment has increased by 9.5 percent, third best in the nation. Yet, Utah’s job growth has not been enough to absorb all of the labor force growth during that time. Utah’s unemployment rate is low, but the percent of the working-age population in the labor force is several percentage points below the pre-recession norm — telling us that potential labor is still not as fully engaged with the job market as before the recession.

As a whole, Utah has had a notable recession rebound, but those gains have not been shared equally across all regions. Just like the national profile, some areas have bounced back strong while others are still lagging behind. The state’s metropolitan areas have grown well, but many of Utah’s rural areas cannot say the same. Nine counties have employment levels below their pre-recession peaks.

In this issue of Local Insights, we profile Utah’s regional and county economies in light of the 10-year span since the Great Recession.

Wasatch Front North

The Wasatch Front North (Davis, Morgan and Weber counties) is often viewed as a single region. The reality is they each have distinct economies and experienced differing recessionary impacts and recoveries. For instance, Davis County is tied closely to Hill Air Force Base (AFB) and U.S. defense spending. This helps to stabilize the region. Morgan County is a growing bedroom community, but most new construction halted during the recession. Weber County has a vibrant and diversifying economy, but lacks a significant recession-resilient core to soften the severity of economic downturns.

Davis County

Davis County experienced a mild contraction during the recession in comparison to Utah’s other counties, losing only 4,000 jobs and falling by 3.6 percent. The downturn was short-lived, too. Davis County started expanding again at the beginning of 2010, and regained its pre-recession employment by late 2011; a time when most other counties were just turning the corner and starting to rebound.

There is no single sector that dominates Davis County’s economy, but Hill Air Force Base functions as the primary engine for economic growth and stability — accounting for about 10 percent of total county employment (around 12,000 civilian employees). During recessions demand falls for many nonessential goods and services, but government defense spending is historically stable. During the recession, Hill AFB employment dipped slightly for a few quarters and then picked up helping to prop up the local economy.

Defense contracts bring steady jobs and the people filling those jobs bring their families to live in the area. This adds to health care services and education demand. Both provide recession-resilient jobs. The health and education sectors combined continued to grow during the recession, and have provided the single most consistent employment growth since the recession’s end — adding more than 8,000 new jobs to Davis County since 2007.

Retail trade is the next largest industry in Davis County. In most local economies retail growth follows the lead of other “core” industries, primarily serving the local population demand. Due to its location along a major commuting artery and its targeted growth strategies, Davis County has developed a retail industry that serves a significant number of consumers from outside the county that brings money into the local economy. Retail trade employment is typically sensitive to economic downturns, but in Davis County it only dipped slightly and then came back strong — averaging more than 3.0 percent growth since 2011, and even adding additional retail space in areas such as Station Park in Farmington.

Thanks to its diversity and recession-resilient core, the Davis County recovery has been steady and shared across many sectors. Current employment now sits at about 124,000 — nearly 25 percent higher than its pre-recession count. Growth at Hill AFB and the related IT, engineering and manufacturing jobs it spawns boosts the local economy’s vibrancy. Professional, technical and scientific services have been expanding employment at a rate of about 4.7 percent annually on average since 2010, adding relatively high paying jobs that will only help to further stabilize the region in the next cyclical downturn.

Weber County

At the beginning of 2008, Weber County’s employment was nearly 97,000. By 2011 that number had dropped to around 90,000 — a more than 7.0 percent decrease. Drawdowns of both goods and service industries contributed to the decline. Auto parts and aerospace manufacturing jobs dropped sharply with large layoffs at Autoliv and Williams International, among others. Business and employment services jobs sagged as well, especially among telemarketing establishments and temporary work agencies. The construction sector shed some 3,000 jobs over the time period — in both residential and non-residential construction. Nearly every sector was affected negatively, except for education and health care services, which tend to be relatively resilient to economic downturns.

Weber County’s recession resilient industries are not quite large enough to act as a buoy when the rest of the economy is struggling. The IRS is the county’s single largest employer, and those federal jobs tend to be stable even through recessions. But it still only accounts for about 6.0 percent of total employment. Weber State University is a major stabilizing employer in the region, as well — as are the local hospitals (McKay Dee and Ogden Regional). Education and medical care tend to be recession hardy, but even those employers combined still only make up about 7.0 percent of county total employment. Their share of the economy was not large enough to absorb other large job losses and counteract the fall in overall consumer demand. Granted, without these stabilizing industries the recession might have been much worse for Weber County.

The recession hit Weber County hard, but it did not stay down long. By early 2011, the economy was on the upswing and has grown at an average annual rate of about 3.0 percent since. The pre-recession employment peak of 97,000 was regained by 2014, and now the county sits at about 105,000. The rebound has been driven by some of the previously prominent industries as well as some new players. For example, auto parts manufacturing has added back all the jobs lost during the recession plus 500 more (largely at Autoliv). Pharmaceutical manufacturing (primarily Fresenius in Ogden) has doubled its share of county total employment since 2008, adding more than 600 jobs over that time. In addition, business support and temp work agencies have returned to pre-recession levels. But the really interesting county newcomer is non-store retailing. Prior to the recession online retailers were virtually nonexistent in Weber County — but the arrival of Wayfair in 2011 changed that. There are now nearly 1,000 jobs in the industry.

The rise of these new industries suggests that Weber County’s economy is further diversifying — a valuable element to help protect against future industry-specific downturns. But diversity is not the only factor that mitigates recessionary impacts. Large recession-resilient employers (like the IRS) act as stabilizers, but the IRS has been downsizing (more than 1,000 jobs since 2011) which will reduce Weber County’s recession-resilient core.

Morgan County

Morgan County lost about 300 jobs — or roughly 15 percent of its 2008 employment during the last recession. Pre-recession peak employment was nearly 2,000, and by 2012 that had dropped to almost 1,700. Construction was hardest hit, shedding upwards of 180 jobs and accounting for the majority of job losses. Morgan County has a large and growing share of residents that commute outside the county for work. New residents moving in were driving strong residential construction demand prior to the recession — 105 new residential units were permitted in 2007. Once the housing crisis hit, demand plummeted. In 2009, only 20 units were permitted.

Most other industries were relatively insulated from the recession. Browning, a sporting equipment manufacturer and wholesaler, and the largest employer in the region, was able to hold employment steady. Holcim, a concrete manufacture and the second largest employer, did the same. These core industries’ stability helped to mitigate constructions job-loss effects as local demand remained consistent and health care, education and retail all weathered the storm relatively well.

Morgan County turned the corner at the end of 2012, and has been growing at an average annual rate of 5.0 percent since. New growth in health care and retail are driving the recovery. New single-family home construction is on the rise but has yet to return to pre-recession levels. By 2015 the county had recovered to its pre-recession peak and is now sitting at more than 2,200 jobs.

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Economic Hurdles in Rural Utah

by Mark Knold

Utah is a geographically large state. Based on total area, it is the 13^th largest state, implying there is room to spread out. Despite all this space, Utah’s population distribution is quite concentrated. According to the U.S. Census Bureau, Utah is the nation’s 9^th most urbanized state. This dichotomy has shaped a state with two economic profiles — one urban, one rural. It can be challenging for a state dominated and prospering within the urban to extend its economic bounty to the betterment of the rural.

What is rural? It depends upon one’s objective behind the question. Most define rural by a visual scan of the landscape. A lot of open land and not many people — rural. Yet economically, the view can be different. An area may look rural, but if the economic vitality of its populace is strongly integrated with a nearby urban area, then this creates a different perspective. The latter is a preference of the federal government — an entity that often makes allocation or distribution decisions based upon economic factors.

No matter how one technically defines rural, the Governor’s Office recognizes a recent dichotomy in Utah’s economic prosperity. Since the Great Recession, Utah has had compelling economic success. Yet, most of this is concentrated in Utah’s urban centers. Portions of Utah’s rural communities are not seeing matching levels of success. Utah’s Lt. Governor recently observed, “Not all of Utah’s communities are full participants in this economic success. Many counties off the Wasatch Front are experiencing challenges.”

In response to this economic disparity, the Governor’s Office has launched the 25k Jobs initiative — an effort for businesses to create 25,000 new jobs in 25 Utah counties by 2020. With this spotlight on rural Utah’s economics, let’s take a look at some of these rural challenges.

To most, jobs deliver their income and means for living sustenance. Therefore, employment, and peripheral variables associated with employment, becomes the strongest proxy for measuring the Utah economy’s health. We will look at Utah’s counties through the lens of employment, unemployment, the labor force and how the industry structure speaks to the underlying performance of these variables.

A profile of job growth becomes a starting point. Economic performance needs to be viewed with a somewhat long lens. The Governor’s 25k Jobs initiative was not born from a short-term disorder, but instead is recognition of weak longer-term fundamentals. To illustrate this perspective, one needs to backdrop the short-term mechanics against the longer-term dynamics.

The County Job Profile chart is an intersection of the short-term trend with the moderate-term. Each county is a bubble, and the bubble size reflects job counts. The chart is divided into four quadrants. The quadrants tell the story of the intersection of the short and moderate-term trends (growth or contraction) and the general health of the county’s economy.

There are two axes of measure. First, the vertical axis represents the short-term. It is the percentage of county job change between 2015 and 2016. Above the horizontal axis is growth — below is contraction.

Second, the horizontal axis measures the moderate-term. It is the percentage of job change over the past five years (2011-2016). To the right of the vertical axis is growth — to the left is contraction. Where a bubble lies is the intersection of the short and the moderate term.

To illustrate, find Beaver County on the chart. Beaver aligns with around -4.0 percent on the vertical axis, and 8.0 percent on the horizontal axis. This says that over the past five years, Beaver County’s job count has grown by 8.0 percent, but over the past year it has contracted by around 4.0 percent. This implies that Beaver County’s economy may be slipping a bit. A one-year view would imply a problem. A longer-term view places this short-term setback against a broader perspective of overall prosperity.

The quadrant of concern is the Contracting quadrant. These economies have contracted over both the most recent year and the past five years. No matter how one wants to define rural as outlined above, all of these contracting counties identify as rural.

In-county jobs alone are not the complete picture. For example, a large percentage of Morgan County’s residents commute to Weber or Davis counties for work. If jobs are not being germinated in Morgan County, the county and its population can still prosper from its ties with the urban area.

An additional way to look at the economy is through the lens of the labor force. The labor force consists of those 16-years and older who are either working or looking for work. It is based upon where people live, not where they work. A worker living in Morgan County will be represented in Morgan County on the following chart (County Labor Force Change); yet, if they work in Weber County, their job is represented in Weber County on the prior chart. Adding this perspective helps to round out a county’s profile.

The structure of the County Labor Force Change graphic is the same as the prior chart. The area of vibrancy is the upper-right quadrant where the labor force is increasing. The quadrant of labor force contraction is the lower left. A decline in the labor force occurs when people become discouraged and leave the labor force — yet stay in the county, or when people leave the county altogether. Either way, a decline in the labor force signals a fundamental negative in the economic trend.

Depending upon the variables measured, a gain in one and a decline in another can both be positive. Job growth and an unemployment decline are both positive. To associate the positive with low unemployment, the quadrant message on the Unemployment Rate chart has been transposed.

Every month an unemployment rate is calculated for Utah and each of its counties. A county’s unemployment rate can be measured against the Utah statewide average unemployment rate. In the following graphic, county rates are mathematically compared against the statewide rate (seasonally adjusted), recorded and then summed across time.

For example, if a county’s unemployment rate is 5.5 percent and the statewide rate is 4.0 percent, then that county’s difference for that month is 1.5. If a county’s rate were to be 3.5 percent against the statewide rate of 4.0 percent, then the difference is -0.5. These monthly differences are tallied and summed. A high score speaks to a consistent and persistent unemployment rate above the statewide average. In other words, these are counties with a continuous environment of high unemployment.

The horizontal axis is a measure since 2000 and the vertical axis a measure since the beginning of the Great Recession (2008). The axis intersection is not at zero to isolate the “concern area” within the upper right quadrant. The statewide average is consistently close to the Salt Lake County average, so a sizeable number of counties will have sums slightly above the statewide average; yet, this doesn’t imply an unemployment problem. But the non-zero intersection is utilized to emphasize the counties that do have an outstanding unemployment disparity.

Across these various charts, a common group of rural counties emerge in the weak quadrant. These include Carbon, Emery, Garfield, Piute and San Juan counties; with Duchesne and Uintah hanging on the edge. There is a common theme that surrounds this grouping and it centers upon low economic diversity.

An economy’s ability to be consistently positive has a strong foundation in a diverse mix of industrial employment. Think of it in terms of “not putting all your eggs in one basket.” Economic diversity is spreading jobs across many baskets. Diversity is desirable because the overall economy is not dominantly influenced by one or a handful of industries whose poor performance weighs upon the whole.

A Hachman Index is an evaluation tool measuring to what degree an economy may or may not have all its eggs in one basket. In the Hachman Index, a measure of 1.0 means your eggs are well distributed across many industries. Conversely, numbers approaching zero point to a high concentration in one or a handful of industries.

Many of the counties that score low on the previous charts are the same ones on the lowest tier of the following Hachman Index chart. This chart represents the placement of economic diversity upon employment change of the past five years. A county will be placed high or low (vertical axis) on the chart depending upon its Hachman Index score. It will align right or left (horizontal axis) depending upon its five-year employment change. Metropolitan counties have higher economic diversity than rural counties — placing them higher on the chart. They are also further to the right on the chart, showing stronger employment growth. There can be individual exceptions, but the general theme is that lack of economic diversity is a foundational impediment to economic viability. Industrial diversity, though difficult to artificially induce, is a desired remedy to counter sluggish economic performance.

Lack of diversity does not mandate a poor economy. A reproduction of this chart five years ago would have placed Uintah and Duchesne counties still low on the chart, but their five-year growth rates would have been off the chart, needing arrows to point out beyond the chosen 40 percent horizontal axis limit.

Those economies are dominated by energy production. When energy prices are high, their economies can soar. When energy falters, they often do likewise. They are striking examples of economic outcome being determined by a dominant industry.

In summary, there is a dichotomy within the Utah economy between urban and rural. The urban economies are diverse and, therefore, more economically balanced; while many rural economies are not. With some rural counties the economic distinction is not a wide divide; but in the rural counties where the divide is pronounced, the underlying theme is often a low level of economic performance.

The New Retail Workforce:How Online Sales are Changing Retail Jobs in Northern Utah.

Consumer spending makes up around 68 percent of the nation’s gross domestic product. Consumer spending is individuals and families purchasing groceries, clothing, recreation, stocks, insurance, education and much more. The transactions cover a broad swath of economic activity.

Much of the nation’s consumer spending is captured via retail trade. A useful retail trade definition is “the re-sale (sale without transformation) of new and used goods to the general public, for personal or household consumption or utilization.” Not all consumer spending is captured through retail trade transactions, but a large share is.

Broad-category examples of retail trade sectors are motor vehicle sales, furniture stores, electronic stores, building material stores, grocery stores, pharmacies, gas stations, clothing stores and department stores, among others.

Then there is the relatively new and emerging part of the retail trade sphere — nonstore retailers. These are establishments that sell products on the internet. Examples include Amazon, Zappos, Overstock.com, or eBay. These types of retailers have grown rapidly in the past 15 years and their presence is reshaping the retail trade landscape.

Whereas in the past nearly all retail transactions were done through traditional brick-and-mortar stores, now a significant and growing segment is diverted to internet sales. The consumer shops online and FedEx (or like) delivers the product. One can see that the number of brick-and-mortar stores and the level of local sales across the country are being endangered by this economic evolution.

The brick-and-mortar reduction is beginning to show its economic presence in the United States employment numbers. While the U.S. economy is finally expanding at a healthy pace this side of the Great Recession, one of the few industries not rising with this tide is retail trade. While overall retail sales are increasing, employment is not.

Traditionally, as a population increases, retail trade employment grows simultaneously, since population growth and consumer spending volume is an integrated dynamic. If studied deeply, a certain ratio of retail trade employment growth spawned from population growth would emerge. Before the internet, the vast majority of all consumer sales occurred in the immediate community or region. But now, the internet is diverting these sales away from the local community — and with internet sales growing, its market share will increase.

We do not yet know how much brick-and-mortar erosion will eventually occur. And will such a phenomenon hit some areas more than others (e.g., urban vs. rural, or local vs. tourist spending)? These are touch points that economist will be watching as this internet sales phenomenon continues to grow within the national and Utah economies.

In light of this change, in this quarter’s Local Insights we are profiling retail trade employment throughout Utah’s local regions. This can offer a profile of where retail trade is now in a local economy, and possibly how much of the sector could become vulnerable to the internet-sales phenomenon.

All regions can be viewed through the Local Insights web portal. The following is a retail trade profile for the Wasatch Front North region:

Retail Matters in the Wasatch Front North

The retail trade industry is an important economic driver in the Wasatch Front North. It employs nearly 28,000 people in the region — more than 12 percent of total nonfarm employment. In Davis County, retail trade employs a larger share than any other industry, and in Weber County it is the third largest employer behind manufacturing and health care. Retail sales account for some 57 percent of total taxable sales in the region — a considerably larger share than the 52 percent statewide average.

The Rise of Online Retail

Due to consumers making more and more purchases online, the demand for brick-and-mortar retail workers in the region has been softening. Overall, employment in the Wasatch Front North has been growing at a rate of about 3 percent on average since the end of the recession; but in traditional retail, employment has been averaging just 1.7 percent. Prior to the recession — and before online retail really took off — traditional retail employment was clipping along at a much quicker average rate of 2.4 percent growth.

Non-store retail, on the other hand, has been booming in the region. With the arrival and expansion of major online retailers, like Wayfair in Ogden, employment in non-store retail has grown an average of 19 percent annually since 2010. The share of total employment represented by non-store retail has increased 137 percent over that time. The next highest employment share expansion in retail was in the miscellaneous category (e.g., pet stores, office supply stores, florists), which increased its share by a paltry 10 percent in comparison. Most other retail categories saw a decline in their share of total employment.

Non-store Taxable Sales Are Gaining, But Not as Fast as Employment. Why?

Taxable sales in non-store retail have not gained as a share of total taxable sales as quickly as the employment share has increased. This is primarily because sales taxes are collected by the state of the purchaser, and then, only if the seller has a physical presence in that state. This means that when Wayfair sells a rug to someone outside of Utah, there is money coming into Utah (in terms of the jobs that the sale supports) but there is no sales tax coming in to Utah. The only non-store sales taxes captured in Utah are Utah consumers purchasing goods from retailers with a presence in Utah. Since a large share of sales by local online retailers are to customers in other states, it means that sales tax revenue lags compared to employment growth in the industry.

An Aging Retail Workforce

Interestingly, the jobs in retail are not primarily younger workers as one might expect. In fact, about 70 percent of the region’s retail jobs are people 25 and older, and approximately 50 percent are at least 35. There used to be more young workers in the industry. Prior to the recession in 2007, the share of 35 and older retail workers in the Wasatch Front North was just 40 percent.

During the Great Recession, the share of teenagers working in retail plummeted from over 10 percent to about 5 percent and has remained low ever since. The reduced youth base means there are fewer workers who stay on and age into the older categories.

A Less Educated Retail Workforce

At the same time, the share of retail workers with less than a high school education has increased significantly. This has been primarily at the expense of individuals for whom educational attainment data are not available (i.e., workers under the age of 24 — mostly students). Since 2007, the share of workers with less than a high school education in Utah retail has increased by more than 25 percent.

This does not appear to be an actual increase in less educated workers. Rather, the drop in workers under 24-years-old is causing a share increase for the existing less educated workers. As a result, the retail workforce in the Wasatch Front North (and in Utah in general) is trending toward an older and less educated demographic.

What is Driving This Trend?

Much of this trend is likely the result of young people choosing to take jobs in other industries with better pay, as wages in retail have suffered. Or they may be opting to finance their education rather than work while attending school. But some portion of this shift is also being driven by the structural changes taking place in retail due to increasing online sales.

The Occupational Shift

The transition to non-store retail translates to shifting demand for a different set of occupations required by non-store retail operations. Traditional brick-and-mortar retail stores primarily need people to work on the sales floor, such as retail sales workers and cashiers. Those two occupations alone represent about 45 percent of all employees in traditional retail. In non-store retail, on the other hand, the top two occupations are customer service reps and shipping/receiving clerks. Freight and inventory movers, order clerks/fillers, and truck drivers all play a much more prominent role in non-store retail as well.

Generally speaking, these kinds of jobs tend to require more time commitment than the most demanded traditional retail jobs. According to the Conference Board’s Help Wanted Online® product (analyzes online job postings), about 40 percent of job openings for cashiers and retail sales workers (the top jobs for traditional retail) posted in Utah in the second quarter of 2017 were part-time jobs. Only 20 percent of job postings for customer service reps and shipping/receiving clerks (the top jobs for non-store retail) were part-time. Positions that require more time commitment and more fixed schedules are likely to be less attractive to young people — especially students — who may be looking for opportunities that are less time consuming.

The Geographic Shift

In addition, there is a geographic component to this transition. Traditional retailers tend to have many more locations spread out geographically, making them more likely to have that cover a broader footprint within the labor force. Online retailers, however, are generally centralized in large warehouses, distribution centers, and office buildings that runs counter to the disperse spread of traditional brick-and-mortar. As a result, it may be harder for workers — especially younger workers — to get to and from these jobs.

What It All Means

These structural changes are having a profound effect on the retail workforce, and we can reasonably expect the resulting trends to continue for some time. As new technologies and retail processes emerge, there will doubtless be more shifts in this rapidly evolving sector. But for now, in the Wasatch Front North region, we can expect fewer traditional brick-and-mortar retail jobs, more non-store retail jobs, and an increasing share of retail employment opportunities that may be challenging for our young population to access.

Check Out the Viz

If you are interested in the details, the data visualization below breaks out the various retail categories and allows you to compare sales (as a share of total taxable sales) and employment (as a share of total nonfarm employment) in each category (by county) over time. The relative changes in taxable sales compared to employment are telling in relation to some of these structural changes, although direct links are difficult to establish as there are many other confounding factors. The tables at the bottom give the actual sales and employment levels, summed-up for whatever you have selected in the county and retail category filters.

Census Bureau Tool Provides Labor-Force Insight for Wasatch Front North

Across the United States, jobs are quantified through each state’s unemployment insurance program. Those programs provide the potential for laid-off workers to receive unemployment benefits — the goal being to bridge the gap between workers’ lost jobs and their next jobs. An eligible recipient’s weekly benefit amount is based upon their earnings from recent work. This begs the question, how does Utah’s unemployment insurance program know how much an individual recently earned while working?

That answer is supplied by all businesses that hire workers, as they must report their employees and pay as mandated by the unemployment insurance laws. Companies identify their individual workers and those workers’ monetary earnings for a calendar quarter. As businesses are identified by their industrial activity and geographic location, it is through the unemployment insurance program that aggregate employment counts by industry and location are calculated.

Yet each state’s profiling of individuals is quite minimal in the unemployment insurance program. The U.S. Census Bureau can bring more light to the overall labor force by supplementing said information with gender, age, race/ethnicity and educational attainment (imputed from American Community Survey responses) for Utah’s labor force.

The Census Bureau packages this information through their Local Employment Dynamics program and makes available said data on its website. Here at the Department of Workforce Services, we recently downloaded and packaged Utah-specific data from said website and summarized it in the attached visualization.

Various data “tabs” are available, presenting Utah’s economy from different angles, ranging from industry shares within the economy to the age-group distributions of the labor force, to gender and race distributions. These labor variables can be viewed for the state as a whole, or by each individual county.

Some statewide highlights:

Industry — industrial distribution is quite diverse, which provides strength within the economy. Distributions do fluctuate with time, with manufacturing seeing its share lessen while health care and professional and business services shares have increased.

Age — the bulk of Utah’s labor force is composed of 25- to 44-year-olds. Older worker shares have increased over the past 15 years, yet still remain a non-dominant portion of Utah’s labor force. The youngest segments of the labor force declined noticeably during the Great Recession due to less participation, and that trend remains.

Educational Attainment — turnover rates are understandably highest with workers under the age of 25 as they strive to build their educational foundation and also find their niche in the labor market. A trend does stand out where the more education that a worker attains, the lower the turnover rate businesses experience from said educational classes.

Race/Ethnicity — Whites account for around 80 percent of Utah’s labor force. The Asian community is small but slowly increasing in share, and is also characterized with the lowest turnover rate and the highest new-hire wages.

Gender — males comprise about 55 percent of Utah’s labor force. The female share of 45 percent is higher than the national average. Roughly 35 percent of working females work part-time compared to 15 percent for males. Therefore, female new-hire wages are considerably lower than male new-hire wages. (Note: employer reporting into the unemployment insurance system is not hourly wage rate reporting but instead total calendar quarter wages paid. Therefore, calculations can only be made upon total quarterly wages, and part-time employment weakens this measure).

As for the various counties in the Wasatch Front North region, here are some labor highlights:

Davis County –

Retail/wholesale trade industries dominate in Davis County with more than 16 percent of employment. This share has been in decline, however, since the end of the recession – not due to a decline in these industries, rather, due to increased growth in professional and business services, which includes management/scientific/technical consulting services. Alone, this sector has added more than 1,000 jobs over the last 10 years.

In just the last two years, construction and manufacturing have both begun to regain some of the share of employment lost after the recession. Non-residential building construction in particular has added about 500 new jobs since 2013.

Weber County –

Perhaps surprisingly, Weber County has an even larger share of employment in retail/wholesale trade than Davis County – nearly 17 percent compared to 16 percent, but that is primarily due to the wholesale portion of that sector which has a large grocery and related product merchant wholesaler employer in the Ogden area.

Manufacturing and professional/business services both compose large shares of Weber County employment, about 14 percent and 15 percent respectively. However, the health care/social services sector has been increasing its share over the last 15 years more than any other sector. In 2000, the sector’s share was about 9 percent and now it’s nearly 13 percent – a major shift. In particular, over that time, the general medical and surgical hospitals industry has added more than 2,000 new jobs, primarily driven by the new McKay-Dee Hospital facilities and service expansions in Ogden in the early 2000s.

Morgan County –

In Morgan County, the largest share of employment is in the retail/wholesale trade sector as well, at about 20 percent. Like Weber County, this is largely due to the wholesale industry since Browning, the largest employer in the county, is classified as a wholesaler.

Construction is the next largest sector, although it has been trending toward a smaller share since the end of the recession. The number of employed in construction has not changed much in the last 15 years, averaging between 300 and 350 workers, but the health care/social assistance sector has been growing quickly – from about 25 jobs in 2000 to more than 170 in 2016, thus edging out construction’s share of the pie. Residential care facilities and ambulatory health service have been driving that growth.

Better, Faster, Smarter... Check out our new website design!

Go to: JOBS.UTAH.GOV/WI to check it out

Information is the treasure of the current age. The instant access to information since the advent of the Internet has transformed societies in ways that thousands of years prior had not. Information can lead to knowledge, and — with increased knowledge — better efficiencies and way of life. If information is vital, then the presentation of information has also risen to a prominent level. With this, the Utah Department of Workforce Services has made some organizational improvements to its economic webpages. Various economic data categories are not mutually exclusive, but we made an effort to compartmentalize economic data for a better organizational display and navigation. We also added a new feature area that taps into various national data elements and measurements from the Federal Reserve Economic Data (FRED), the database of the Federal Reserve Bank of St. Louis. FRED’s added value is national — and Utah — economic indicators. More on FRED’s contribution below.

Depending on the subject, economic data can be categorized as either broad or specific. For example, the demographic makeup of an area and how that impacts an economic structure is a broad-subject approach. Conversely, a current monthly snapshot of the Utah economy, its job growth and unemployment rate is a more specific observation. Our economic webpage has four “portals” through which to “categorize” and search for information. One portal is broad, while the other three are more specific in nature.

Topic Portals

The monthly employment profile just mentioned is a specific topic and gets its own “portal,” entitled Employment Update. Here, the most current Utah economic performance can be explored and summarized. The information found here is what often gets cited in the local news media in reference to the current Utah job performance and unemployment rate.

The second specific “portal” is labeled Local Insights. This is a quarterly profile of the Utah economy down to a county level. Each county is summarized with its own economic performance, including job growth, unemployment rate, housing starts, taxable sales and other profile variables. The common theme here is a county-specific approach.

The third specific “portal” is Reports and Analysis. Workforce Services’ economic forte is the labor market. Things over and above the everyday reporting on the labor market are presented here. Sometimes we do special economic studies, other times we will report on specific economic groups within the labor force, like women or veterans. Anything we do that is not an often repeated or ongoing report are grouped here.

The final “portal,” and possibly the one that will be most used, is labeled Economic Data. The core of our data collection and analysis is concentrated here. Employment data, occupational data, wage information and demographic profiles are just some of the major economic themes found in this area.

FRED's on site

As mentioned earlier, we have added an economic indicator area tapping into FRED, which is a massive compilation of economic data from various sources — primarily government statistical agencies, but also some nongovernmental organizations. Workforce Services economists have gone through the list and selected a handful of the most useful data series for gauging the performance of Utah’s macro economy and gaining insights into expected trends. Utah functions within the national economy, so the national economic indicators profiled here are intended to also be guiding influences on the Utah economy. These indicators include composite indexes; a recession probability indicator; leading indicators, such as construction permits and the yield curve; coincident indicators, such as real GDP and employment; and price indicators, such as the consumer price index, regional housing prices, and oil and gas prices. Each chart has a detailed description of what the data represent and how they may be useful.

Keeping relevant with the fast-changing pace of the Internet and data presentation is our goal at Workforce Services. We hope these changes help to better present our broad package of economic data offerings.

Show Me the Economy - Occupational Projections for Utah's Wasatch Front North

The biennial update to Utah's occupational projections have been released and can be found here: http://www.jobs.utah.gov/wi/pubs/outlooks/state/index.html.  But first. check out these highlights:

 

Ogden-Clearfield MSA

Matt Schroeder, Regional Economist

The following are some general highlights gleaned from the Ogden-Clearfield Metropolitan Statistical Area (MSA) occupational projections:

The projected occupational growth rate in the Ogden-Clearfield MSA (which includes Box Elder, Davis, Morgan and Weber counties) is similar to the rest of the state on average at 2.6 percent annually through 2024. Utah statewide projected growth is 2.7 percent. The 12,120 projected annual openings in Ogden-Clearfield MSA from 2014 to 2024 represent about 17 percent of all projected openings in the state.

The occupations with the highest growth expectations are, on average, those that require the most education. Jobs that typically require a doctoral or professional degree are projected to grow 3.4 percent annually through 2024. Growth in openings for postsecondary teachers of business, criminal justice and health specialties are the primary drivers of this trend.

Occupational expectations in construction and production (i.e., manufacturing) are noteworthy in the Ogden-Clearfield region as well. Both of these categories are already supplying large numbers of annual openings and are still expected to grow at more than 3 percent every year. Jobs in these areas typically don’t require as much education but offer relatively good wages. Electricians, for instance, have a strong demand outlook. They typically require an apprenticeship but no college education, and they earn a median wage in the region of nearly $48K per year. Machinists, similarly, are expected to have plenty of job opportunities through 2024, while requiring only some college or long-term on-the-job training. In the Ogden-Clearfield region, they earn a median wage of $52K per year.

Jobs in engineering and information technology (IT) are also expected to continue growing at more than 3 percent annually over the next eight years; and, together, are projected to produce nearly 600 openings per year in the region. Jobs in engineering and IT tend to offer high wages for the level of education required. Mechanical engineers, for instance, are in high demand (about 70 openings per year in Ogden-Clearfield). They typically require a bachelor’s degree and earn median wages of $81K per year. Another example is applications software developers who make median wages of $74K per year and have job opportunities projected to grow at 3.5 percent annually (about 40 annual openings in Ogden-Clearfield).

There are many other occupations in the region that are projected to offer excellent opportunities as well — industrial machinery mechanics, dental hygienists, industrial engineers, electronics engineers and computer systems analysts to name just a few. You can learn more about these occupations and others through the Utah Occupational Explorer where you can explore and compare occupations of interest in detail by region, wage level, typical education required, projected growth and demand. Before digging into the details though, take a look at the interactive data visualization above to see the big picture of the occupational outlook for the Ogden-Clearfield MSA.

About Utah's Occupational Projections

Mark Knold, Supervising Economist

“The government knows everything about everyone.”

Fortunately, that statement is not true. Yet society still looks to the government to provide answers to comprehensive and complex questions that have their foundation within individual decisions and activities. One subject frequently directed toward the government is individual-level information about the economy — particularly, what occupations are in demand, what occupations pay well and have lucrative outlooks, and ultimately, what occupation(s) should I build my career upon?

It takes the accumulation of a wide array of individual information to answer these questions. Employers provide the foundation information about the occupations they employ. Jobs are held by individuals, but employers provide the profile information about the job itself, not any particular individual.

Since society desires to profile such a broad spectrum of the economy — occupational profiles and the occupational distribution within the economy — only government is in the unique position to collect, analyze and provide answers for said desire. Yet, no government program or regulatory agency mandates any comprehensive occupational reporting from individuals or businesses. Therefore, government attempts to fill the void with an ongoing, robust and voluntary survey of employers — a survey where employers are asked to provide details about their various occupations, including descriptions, quantities, wages/salaries and location. Through this survey emerges an occupational portrait of an economy.

The U.S. Bureau of Labor Statistics (BLS) structures and funds the survey, yet the individual states conduct the survey. Under BLS administration, all states use the same methodology; therefore, occupational profiles are comparable across states.

Through this survey, analysts discover how industries are populated with various occupations. Accountant is an occupation, yet accountants can be found across many different industries. Other occupations may be more exclusive to certain industries; for example, doctors are largely found only in the healthcare industry. One of the survey’s products is that industries can be profiled with their general mix of occupations. This is called an industry’s occupational staffing pattern.

This brings us back to the original questions: what occupations are in demand, what occupations pay well and have lucrative outlooks, and ultimately, what occupation(s) should I build my career upon?

The foundation is to make informed forecasts about how industries will expand/contract over the next 10 years. By applying existing occupational staffing patterns to each industry’s projected change, a trained economic analyst can then make an extrapolation about how occupations will correspondingly increase/decrease. Knowledgeable analyst judgment further refines the occupational expectations, such as knowing an occupation will grow faster than in the past, with the result being a set of occupational projections that accumulate to profile a state or regional economy.

A new set of occupational projections are done every two years to keep the information fresh even though economies do not change dramatically in short order. Because of slow change, updated occupational projects generally continue the overall message of preceding occupational projections. But economies do modify with time, and therefore, subtle changes will arise with each new set of occupational projections.

Utah’s most recent occupational projections are found here: http://www.jobs.utah.gov/wi/pubs/outlooks/state/index.html. These projections look forward to the year 2024.

The occupational profile is structured from the general to the detailed, mimicking the structure of a family tree. First, broad occupational categories are defined, such as management or healthcare occupations; then, subcategories are defined; and finally, individual occupations are defined. Individual occupations are the heart of the occupational projections. But overall patterns and characteristics do emerge when observing the broader categories.

While a Utah statewide profile leads the way, Utah’s local economies are not homogenous; therefore, nine Utah subregions are also profiled. Due to confidentiality restraints and statistical reliability, the amount of occupations available will diminish the smaller a subregion; but, occupations comprising the backbone of a regional economy will be available.