Building Utah's workforce key to becoming Silicon Valley East
Laura Seitz, Deseret News
SALT LAKE CITY — Instead of a place to keep felons behind bars, the ground on which the Utah State Prison now sits could someday be the hub of a sprawling business community where bright minds unlock the door to new technology.
Nearby, a new engineering or math graduate might be pulling down a high salary in an office tower in another high-tech development rising from what is now barren ground just west of I-15 in Draper.
Just around Point of the Mountain on the windswept rolling hills below Traverse Ridge in Lehi, a young family could be settling into a "workplace neighborhood" where people live, work, play and go to school.
The burgeoning IT corridor in southern Salt Lake County and northern Utah County is poised to be the focal point of Utah's economic future. It's where the state's two largest metropolitan areas converge, both of which have major universities and expanding transportation systems. Companies including Adobe and eBay already call it home.
"It has become such a nexus. It's such an amazing confluence of the economy of the state," said Jeff Edwards, executive director of the Utah Economic Development Corporation. "I see that being a really amazing engine; it already is, and I think it's just going to continue grow."
The governor and state lawmakers convening this week have key roles in preparing the state to take advantage of an anticipated boom, particularly in information technology and life sciences.
And a key component of that is education.
Building the workforce
Companies like Goldman Sachs and Procter & Gamble came to Utah primarily because of its business-friendly environment and stellar workforce, which Eccles said is the youngest in the country.
Those two firms account for nearly 2,600 jobs and will pay $437 million in corporate income tax over the next 20 years, all of which goes directly to public education, according to the Governor's Office of Economic Development.
But even though Utah has the second fastest growing economy in the nation, there are signs that the quality of the workforce might not be able to keep up in the technology arena.
Some top economic development officials fear a well-known company might decide against coming to Utah because the state wouldn't be able to supply enough tech-related graduates to fill its needs.
"That would probably be one of those seminal moments in developing policy on education that would probably be a lever that changes minds on increasing funding for education in a way that would help economic development," said Steve Kroes, president of the Utah Foundation, a public policy research group.
Such a scenario, he said, would get lawmakers' attention. "They would see that someone in the business community is serious about this issue and movement would need to happen."
Kroes said any increases in education funding would have to be pinpointed investments, such as in science, technology, engineering and math, referred to by state and business leaders as STEM.
"I don't think there's much of a stomach at the legislative level for just broad education increases. But if they can target some specific things that do increase productivity, I think there is sympathy for that and I think it's probably great strategy by the business community to be pursuing those," he said.
Edwards is among economic development officials who are concerned about the long-term viability of Utah's workforce.
"We've got to get our arms around education because if we don't, were going to lose that workforce advantage that we have and really enjoyed for the last 25 years. Another generation of kids is coming and we're going to need every one of them if the economy keeps growing," Edwards said.
Education and the state's economy are linked like the chain and sprockets on a bicycle.
"That is the lifeblood of this state," said Spencer Eccles, executive director of the Governor's Office of Economic Development, noting education is not typically an objective in a state's economic development plan.
On average, public schools see about 14,000 new students a year, costing an additional $75 million annually.
Bringing a business like Goldman Sachs to Utah each year helps cover those growing education costs, Eccles said.
Gov. Gary Herbert built his proposed state budget around bolstering public, higher and technical education with a nearly $300 million infusion of additional money. Whether he gets that depends on decisions made in Congress and how state lawmakers decide to use the tax revenue Utah ultimately has to spend.
Herbert said reaching his goal of 66 percent of all Utahns earning a college degree or certificate by 2020 will be a key issue for the state to come together on this legislative session.
"This will bring us together in a common goal of all of us pulling the same direction, and it's a game changer. That's why you see the business community, which is the end user of education, really embracing this in ways that are surprising to me," the governor said. "It's a necessity. If we don't do it, our economy will, in fact, underperform."
The Salt Lake Chamber lists lawmakers approving a joint resolution endorsing the achievement of the 66 percent goal, known as Prosperity 2020, through increased innovation and investment as a top priority for the 2013 Legislature.
Natalie Gochnour, Chamber executive vice president and chief economist, said that's an issue because business leaders have seen both warning signs and great potential for economic growth.
"It gets even more serious when California is struggling. Right now we're at a time when Utah's business environment is extremely attractive and California's is not very attractive" she said.
Reading and math scores among Utah fourth- and eighth-graders rank last or near the bottom when compared to states with similar demographics and socioeconomics, Gochnour said. Also, the state has seen a dip in high school graduation rates, and fewer students are completing college.
In addition, Utah's population is diversifying ethnically and racially at a rapid rate, she said.
"Culturally and because of the language spoken at home, there's greater impediments to learning, so it's more expensive and complicated to educate a diverse population," Gochnour said.
The STEM fields along with the health professions are subjects state leaders say will be most in demand as Utah's economy expands.
"There's no question that there are engineering jobs that have been left unfilled in the state right now," Gochnour said. "We know that's an area where we need to ramp up."
Solving the problem
Chamber officials identified specific things lawmakers could do to prepare Utahns for the future job market:
• Provide public schools $43.6 million for computer-adaptive testing, ACT testing for every high school student, and science, technology, engineering and math education.
• Give higher education $20 million for high-growth, high-wage degrees in science, technology, engineering and math and health professions.
• Give the Utah College of Applied Technology $9.75 million to increase capacity at its campuses to produce 153,000 more certificates by 2020.
• Sustain the Science Technology and Research initiative (USTAR) with $3 million of on-going funding and increasing its ongoing research allocation by $9 million annually.
• Fund a life sciences tax credit for medical device, diagnostics, drug delivery and biotech companies.
Lawmakers also will consider the first step toward relocating the state prison, which economic development officials say would open up prime real estate for business expansion.
Sen. Scott Jenkins, R-Plain City, said he and Rep. Brad Wilson, R-Kaysville, are drafting a bill to create a committee to start "getting down to the guts of the issue," including looking at new prison sites and building costs. The committee, Jenkins said, will have to work quickly because of currently low interest rates.
"They're going to have to get right on this," he said.
Real estate and education aren't the only issue the business community will be watching closely during the legislative session.
Utah's image also plays a role in economic development.
One thing the Chamber doesn't want lawmakers to do is propose so-called "message" bills, which are often aimed at the federal government over issue such as gun control or public lands. Those kinds of bills are unproductive and tarnish the state's image, according to the Chamber.
"Just like immigration has been a very important statement of this state in the past, some of the gun legislation will have that same character this session, Gochnour said.
The Chamber doesn't have position on gun legislation, "but bills should be oriented toward problem solving not sending messages."
A statewide nondiscrimination ordinance also is on the Chamber priority list. Legislators have shot down proposals to pass laws prohibiting discrimination in employment and housing based on sexual orientation and gender identity the past five years, without a committee hearing.
Salt Lake City passed Utah’s first nondiscrimination ordinance in 2009 with the backing of The Church of Jesus Christ of Latter-day Saints. Since then, 14 other cities and counties have adopted similar policies, leaving a patchwork of laws around the state.
"We don't like a patchwork of city ordinances," Gochnour said. "This is primarily a simplified regulation issue for us, but also important to many industries and companies."
Former Democratic Sen. Ben McAdams, now the the Salt Lake County mayor, carried the bill last year, which for the first time had a Republican sponsor in Rep. Derek Brown, of Cottonwood Heights.
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