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Kristin Murphy, Deseret News
Lawrie Allred, HTS engineer, hands a cell plate to a coworker while seeding cells at Recursion Pharmaceuticals, at The Gateway in Salt Lake City on Tuesday, Oct. 30, 2018.

SALT LAKE CITY — The Utah tech community's reign of accolades continue with the release this week of a new Milken Institute report ranking the state No. 5 in the country for the power of its science and technology pipeline.

Local industry experts welcomed the latest news but highlighted challenges that, unmet, could lead to derailment of Utah's booming tech success.

Milken's biennial 2018 State Technology and Science Index lauded Utah for its improvements. It was the only new state in the top 5, moving up from the eighth spot and trailed only Massachusetts, Colorado, Maryland and California.

Kristin Murphy, Deseret News
Paul Wheeler, unmanned aerial systems coordinator for UDOT, helps Gov. Gary R. Herbert fly a drone over the site of the Utah Department of Transportation’s I-15 tech corridor construction project at the Rain office in Lehi on Wednesday, April 25, 2018.

Among highlights noted in the report are Utah's nation-leading 4.3 percent tech job growth rate, the state's 46-rank jump in business starts, the University of Utah's ranking as the top school in the country for technology commercialization and the Utah Pathways program that leverages public-private partnerships to address tech industry workforce needs.

Kevin Klowden, executive director of the Milken Institute Center for Regional Economics, said states that earned top rankings in the report show a propensity for policy actions that help nurture and grow their respective tech sectors.

“The success stories of states profiled in this year's index reflect sustained efforts to not only build but to maintain their ecosystem,” Klowden said in a statement. “Making the changes that are necessary to perform well on the State Technology and Science Index can contribute to stronger long-term economic performance.”

Juliette Tennert, director of economic and public policy research at the University of Utah's Kem C. Gardner Policy Institute, said her team is currently working on a comprehensive economic impact study of the state's tech and innovation industry, which will be the first analysis of its kind. Tennert noted many factors have helped drive Utah's tech successes, as reflected in the Milken report, but some are less obvious than others.

"We're the youngest state in the nation ... that means that relative to our entire population, we've got more digital natives in our labor force to support the industry," Tennert said. "We've always been a place of entrepreneurship and innovation — Adobe, Novell, Evans and Sutherland, Pixar — all have some tie to Utah.

"And, we have incredible lifestyle amenities that attract tech companies and talent."

Tennert cautioned, however, that in spite of Milken's findings indicating that Utah has the highest number of science/engineering grads per 1,000 workers, the average tech wages in the state lag behind other innovation centers. And that could become a bigger factor as Utah's cost of living, already on the rise, continues to increase.

"Wages are a major factor in labor recruitment and retention," Tennert said. "To the extent that our cost of living is favorable to other places, we might expect wages here to be a little softer.

"But increases in that cost of living, especially on the housing affordability front, will increase the pressure for higher wages in order for Utah to remain competitive in attracting and keeping skilled labor."

Workforce issues figure largely into Salt Lake Chamber and Downtown Alliance CEO Derek Miller's concerns about keeping the state's innovation mojo rising, though he was also pleased to see Utah's high marks on the Milken report.

Kristin Murphy, Deseret News
Tina Larson, chief operating officer, talks about the different uses of space at Recursion Pharmaceuticals, in the former Dick's Sporting Goods space, at The Gateway in Salt Lake City on Tuesday, Oct. 30, 2018.

"Our tech industry is growing faster than any other state in the nation," Miller said. "That’s the good news. But if we want to continue to have a sustainable knowledge-based, innovation economy we’re going to need to continue to focus on workforce development.”

“Yes, our tech sector is growing, but there are currently 5,000 unfilled tech jobs in Utah."

Miller said the chamber is working to keep the tech tide rising, praising recent work by the Utah Legislature and vowing to help keep the collective foot on the gas of one of the state's leading economic drivers.

"To help close this workforce gap, the Salt Lake Chamber is continuing our efforts to ensure Utah is attracting, developing and retaining the best and brightest for our economy," Miller said. "Last legislative session, the business community worked hard to see the passage of a bill that offers debt relief to local college graduates who stay in Utah and work in identified high-demand, high-wage jobs. This upcoming legislative session, the Salt Lake Chamber is going to be supporting efforts to ensure all students have access to computer science classes.

"By working with our business community and elected officials to create a sustainable workforce development strategy, Utah will continue to see high-skills job creation and broad economic growth.”

Keith Marmer, executive director of the University of Utah's Center for Technology and Venture Commercialization, has helped oversee one of the most successful programs of its kind in the country, a point noted in the Milken assessment. While appreciating the latest Utah tech sector laudatory, he would like to see more support of the state's deep tech efforts, like life sciences and biotech.

Jeffrey D. Allred, Deseret News
Qualtrics CEO Ryan Smith, left, plays basketball with employees at the business in Orem on Friday, Feb. 2, 2018. Qualtrics is a global leader in the realm of customer experience analytics and the company is worth over $2.5 billion.

"The rankings are fabulous," Marmer said. "Utah's tech sector is booming and our Silicon Slopes' companies are thriving ... with the big Qualtrics deal just the latest evidence of that.

"There are key clusters we're still working hard to build capital interest in. High rankings are great, but I worry they could instill a false sense of security that we have all the capital we need ... and we don't."

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Marmer also noted that it's critical to take a wide-angle view of the state's tech pipeline, particularly as some top homegrown talent continues to be lured away by higher wages and bigger markets at the more mature coastal innovation cities.

"From the U., we're spinning out a lot of early-stage companies and there's a ton of great entrepreneurs here," Marmer said. "But when you drill down, you want to know where the next great entrepreneurs are coming from. We want to know that our bench strength is growing.

"If people are getting pulled out of Utah, where is that next wave of talent coming from? We have a strong base but we can’t get complacent about it."