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Economists: Large families are an 'ace in the hole' for Utah's economy

SALT LAKE CITY — As a paper boy in Southern California, Scott Johnson saw what seemed like more than his fair share of gang activity, theft and robbery in his neighborhood.

Sometimes it was unavoidable. On several occasions, people tried to rob Johnson while he was on his paper route. One day, his bike was stolen from his yard while he stepped inside his house momentarily.

Needless to say, he wanted a better place for his own children to grow up.

Johnson later met his future wife in Utah County, and the couple bought a starter home in Vineyard after getting married. Five kids and about 18 years later, the Johnsons needed more space, but they didn't want to leave the neighborhood. So they built a new home up the street and moved in last summer.

It's a "far cry" from the neighborhood Scott Johnson was used to as a kid, he said.

"It's totally different here in Utah," he said. "I can go out for a jog at night, take the dog for a walk, or my family can go for a walk. It's a rare thing that you encounter any sort of an issue or problem. And that means a lot to me."

In addition to good schools, outdoor recreation opportunities and a "family-friendly" atmosphere, Sunny Johnson said she also sees Utah as a promising place for her children when they eventually attend college, enter a career and start families of their own.

"We've built this home with the intent that we'll get to be here until our kids are gone and we have grandchildren," she said. "We plan on staying forever. That's the plan."

Utah families are the primary contributor to the state's population growth rate, which is more than double that of the nation, according to U.S. Census Bureau estimates released last week. Lower crime rates, lower-than-average college tuition and multiplying employment opportunities after college are just some of the reasons many families choose to stay here.

But Utah also benefits economically from having families larger than most other states, as well as a population that grows by as many as 50,000 residents each year.

Those trends stimulate growth in housing construction, labor productivity and other factors, and it's an advantage that not all states enjoy as they recover from the Great Recession, according to Elliot Eisenberg, a national economist featured at Bank of Utah's annual economic outlook symposium Tuesday.

"Your ace in the hole is that you have large families. This is important," Eisenberg said. "You recover faster, your gross domestic product goes up faster, home construction activity is better in large part because of this huge demographic edge that you have over other states."

Between 2009 and 2014, family households throughout the U.S. increased by an average of 2.5 percent. In Utah, family households grew by more than triple that rate at 7.58 percent, according to Census estimates.

More than three-quarters of Utah's population live in a family household, compared with two-thirds of the U.S. population. Utah also has a higher percentage of homes with five or more family members than most other states and a lower percentage of households with only two family members.

Moreover, Utah has one of the youngest populations in the country. While the median age has risen in most places as baby boomers move into retirement, Utah's millennials now make up a majority of the state populace. Utah's median age in 2014 was just below 30, compared with a national average of over 37.

Combined, those factors make for a workforce in Utah that is young, diverse and growing by thousands every year.

"From an economist's point of view, those characteristics make us very attractive," said Natalie Gochnour, associate dean of the University of Utah's David Eccles School of Business and director of the Kem C. Gardner Policy Institute. "That's the real benefit of these large families to our economy: We have a growing labor force."

That's put Utah's recovery from the recession well ahead of other states, according to Eisenberg.

During the recession, Utah's unemployment rate peaked at about 8 percent, which was less than all but 14 other states. And Utah's current unemployment rate of 3.4 percent is the eighth-lowest in the country, according to the U.S. Bureau of Labor and Statistics.

Home construction in Utah has largely recovered. Single-family housing construction reached a low of 319 building permits statewide during February 2009. Last month, the state issued 1,413 building permits.

Housing prices have also climbed to prerecession levels in the Salt Lake City, Ogden-Clearfield, Provo-Orem and Logan metropolitan areas.

"You've recovered much faster than the rest of the country has," Eisenberg said.

But alongside the economic benefits of a growing population come long-term challenges that require planning and investment, and key among them is education.

Utah's K-12 student population grew by almost 12,000 students last year for a total of 633,896 students. That population is expected to reach 1 million students by 2050. Utah's college student population also increased by 3,453 students for a total of 170,770 pupils. Colleges and universities in the state are expected to absorb another 50,000 students by the end of the decade.

"The challenge is we have to pay for it. Education is always a battle," Gochnour said. "If we don't invest in human capital, we will pay a price."

Planning for other infrastructure needs, such as transportation, undeveloped land and the move of the Utah State Prison, should also be considered carefully to maintain Utah's current economic prosperity and growth, according to Gochnour.

"I think it's our responsibility as today's leaders to plan it correctly," she said. "We have to do all those things well to capture this opportunity."

But Utah overall is in a good place, especially when compared with other places more heavily impacted by fluctuating oil and gas prices, aging demographics and slower population growth, Eisenberg said.

"Utah is a good story, and it will continue to be a good story," he said. "With a well-educated labor force (and) large population growth, it's an appealing place to live."


Twitter: MorganEJacobsen