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.
Bear River Region
Although the three northernmost counties in Utah (Cache, Box Elder and Rich) are often viewed as a single region, the reality is they each have distinct economies and experienced differing recessionary impacts and recoveries. For instance, Box Elder County is reliant on the manufacturing sector, which was hit hard during the recession. Rich County is highly subject to swings in tourism spending, which is among the first things consumers pull back on when money is tight. Cache County, on the other hand, has a more diverse economy and recession-resilient industries (like education) that help to mitigate the severity of economic downturns.
Box Elder County
Just prior to the recession in 2008, the manufacturing sector accounted for nearly 40 percent of Box Elder County’s total employment — or about 8,100 workers. By 2012, that number had been slashed to around 4,500. Layoffs at ATK Launch Systems and the La-Z-Boy closure slashed deep into the region’s economic tissue. Although the initial ATK cuts were the end of NASA’s shuttle program and not a direct result of recessionary pressures, the recession did put budgetary constraints on the federal government leading to less money for NASA and other types of contracts that might have kept ATK at higher employment levels. In addition, the recession meant virtually no other jobs were available and many people left the area. Net migration turned outward with about 500 leaving each year in 2011 and 2012.
Box Elder is only now getting back to its pre-recession employment level of about 21,000. The good news is that since it turned the corner in 2013, growth has been robust — averaging more than 5.0 percent annually. Manufacturing is still the primary driver of new growth; but within manufacturing, the products being produced are more diverse. Motor vehicle parts, food and fabricated metals now make up larger shares of manufacturing employment.
In addition to manufacturing’s resurgence and diversification, other industries have begun to rise in economic importance adding to the economy’s overall diversity and future recessionary resilience. For example, health care services did not even dip during the recession and has been on the rise since. Prior to the recession, heath care was about 6.0 percent of employment. Now it is up to 9.0 percent.
Rich County lost about 150 jobs during the last recession — nearly 27 percent of its average employment. Only Piute County lost a larger employment share. Tourism is the key to Rich County’s economy; and during recessions, travel and recreation are among the first luxuries cut to pinch pennies. Traveler accommodations alone shed more than half of its employment between 2007 and 2012 (from 90 to nearly 40).
Construction took a significant hit as well, shedding about 90 jobs over the same period. Most of the losses were in residential construction with fewer vacation and retirement homes being built. In 2007, there were 43 single-family homes permitted in Rich County. By 2012, that number had dropped to just four.
Rich County’s recovery since late 2012 does not appear to be driven by tourism spending. Some moderate growth in restaurants indicates improvement in visitor spending, but the accommodations industry has basically plateaued since the recession’s end. New single-family home construction is again on the rise but has yet to return to pre-recession levels. Most of the recovery growth is local business services, such as repair and maintenance, and building services. Retail sales employment in lawn and garden, and building materials is also a significant contributor to the recovery — indicating that local demand is currently keeping Rich County on its growth trajectory. This is encouraging as it suggests a shift away from tourism dependence and leaves room for even more growth once travel spending resumes.
Cache County did not contract nearly to the extent of Utah’s other counties during the recession. It lost less than 800 jobs and contracted only 1.6 percent. The downturn was short-lived too. The economy started expanding again in early 2010, and regained its pre-recession employment by mid-2012 when Box Elder and Rich counties were just bottoming out.
In Cache County there is no single sector that dominates the local economy the way manufacturing does in Box Elder County. Manufacturing is Cache County’s largest sector and comprises 19 percent of total employment. And, most of Cache County’s manufacturing employment is in food manufacturing (especially dairy and beef), which is highly recession-resilient. During recessions demand falls for many nonessential goods and services; but core food products, such as milk and meat, tend to hold steady. In fact, during the recession, employment in both dairy and beef manufacturing actually grew and helped prop up Cache’s economy.
Utah State University provided a similar stabilizing effect. The university is the region’s core economic engine, accounting for about 12 percent of employment. Like food manufacturing, education services are not prone to major recessionary setbacks. Historically, enrollment actually increases when unemployment is high as more people who find themselves idle choose to invest in education.
Cache County’s recovery has been steady and shared across most industrial sectors. Growth at the university and the human and intellectual capital it produces boost the vibrancy of other industries, as well. Professional, scientific and technical services have been expanding employment; as have medical services and even manufacturing industries, like chemical and computer and electronic products. Such industry diversification will further strengthen Cache County and its ability to weather the next recessionary downturn.