News about Utah’s economy has been mostly positive in recent years, reflecting a steady rise from the 2008 recession with the expansion of new businesses and declining unemployment. But lurking in the data is a trend that threatens to derail that impressive trajectory. Utah is increasingly facing a shortage of qualified workers in fields requiring both high and low skill levels, with more than two-thirds of all employers saying they are currently having a hard time finding people to fill open positions.
A new research report by the non-profit Utah Foundation says the so-called “skills gap” is a particular problem in the technology sector, which has been responsible for a large percentage of recent job growth in Utah. The construction trades are also suffering, making it tough for contractors to keep up with a critical need for new housing units. The situation requires that business and educational institutions step up efforts to collaborate in training people for the specific kinds of jobs businesses need to fill.
Utah has created several so-called “pathway” programs to encourage more focus on vocational education and opening the doors to more internship, apprenticeship and other on-the-job training initiatives. It is important that these programs be expanded in order to avoid a scenario in which businesses are forced to cut back or postpone growth plans.
In both high and low skill-level jobs, wage levels in Utah have remained relatively low, which means the state has not seen a surfeit of in-migration from people in other areas looking for jobs in their chosen fields. A newly-graduated software engineer in Northern California is more likely to wait for a job opening near home that would pay six figures instead of relocating to Utah where the pay is 30 to 40 percent less. Economic theory holds that a tight labor market will bring increases in wages as businesses compete for a limited number of qualified workers. But as a research analyst for the foundation points out, that’s “something we haven’t seen yet.”
Utah is not alone in this predicament. In many parts of the country, and in many job sectors, the labor market remains tight as unemployment rates trend downward. Many economists are predicting an imminent escalation of median wages, which could result in rising inflation. For example, housing prices increase when construction companies have to pay more to hire a sufficient workforce, and pass those costs onto homebuyers.
An acceleration in wage levels, whether it happens or not, won’t necessarily address the skills gap affecting employers in fast-growing sectors like technology and health care who are seeking workers with specialty skills. Programs that offer incentives and assistance to educational institutions to churn out a sufficient number of qualified workers have proven to be effective. Bolstering such existing programs and exploring additional measures should be a top priority of policy makers hoping to keep the state’s economic engine running in top gear.