Amazon has started hiring 1,500 new staff members for its new Salt Lake distribution center, but many of those jobs will be accompanied by little more than a living wage. While attracting jobs to the state is good, lawmakers and business leaders should do more to ensure wages grow at pace with open positions.
Not all job growth is equally beneficial to the state economy. Attempts to attract jobs to Utah by giving generous tax breaks to prospective employers have generated intense policy debates in recent years. Reports about Amazon’s low-wage jobs will further fuel that debate.
As has already been addressed on these opinion pages, wage growth is pivotal to the relative benefits of job growth. Job growth without increasing wages can give a sugar high to an economy while leaving something of a long-term hangover that may actually depress growth in the long run. And while some say that policymakers are limited in what they can do to stimulate wage growth, Utah’s numbers suggest otherwise.
The latest Department of Labor hourly wage numbers paint a clear picture of policy-influenced wage growth in Utah. The two employment sectors with some of the fastest rising wages over the past year are education and health care. It is not coincidental that two of the most significant policy initiatives in recent years were to increase funding for education and expanding health care coverage within the state. While these policy changes don't account for all of the wage growth in these sectors, the correlation is irrefutable.
The Amazon story is more cautionary. While the growth in high-tech jobs has fueled a lot of Utah’s economic success, and statewide pride in the achievements of Silicon Slopes is well justified, it is good to remember that not all high-tech jobs pay high wages.
The employment sector that includes most of Utah’s tech jobs has had little wage growth in the past year. This is no doubt influenced by the fact that much of the job growth has been hiring young talent, an abundant resource in the state and where wages often start at the lower end of the pay scale. But the state’s bet on aggressively attracting tech jobs will be very disappointing in the long run unless those wages rise over time.
Much of the public debate about using tax incentives to attract companies to Utah has been focused on how many jobs they will bring. This is shortsighted when considering the long-term impact on the state. The potential for wage growth must be one of the primary considerations as well. Watch for ongoing wage growth in the construction sector as the gas tax increase fuels infrastructure spending growth.
Utah has demonstrated its ability to grow jobs in targeted industries and occupations. Policymakers must look beyond job growth alone and include wage growth when deciding what kind of jobs they want to attract to the Beehive State.