Utah Gov. Spencer Cox has made himself a student of Utah’s fiscal history and notes the state’s economy regularly found itself a national underperformer until an opportunity to take the global stage some two decades ago changed everything.
“I’ve spent a lot of time studying what was happening in the ’80s, ’90s and into the 2000s, and Utah regularly found itself in the bottom half or bottom third of state economies in the country,” Cox said.
“But that all started to change around the time of the Olympics when Utah was discovered by the world.”
Since that time, Utah has earned its way to the top of the list of most vibrant state economies in the U.S., just weathered the financial fallout from the COVID-19 pandemic better than anyplace in the country, and now, according to experts and state leaders, is poised to take that prosperity to an even higher level as the first glimpses of a post-vaccine world appear on the horizon.
Cox says a new era is upon us and Utah’s long-running economic strategy is ready for a revamp, one that will aim to continue the state’s enviable growth arc while keeping a steady eye on the emerging pitfalls that come with high-level success.
That strategic pivot will include a bigger and data-based focus on looking inward, rather than outside state borders, when it comes to nurturing further expansion.
Utah is fast approaching its nation-leading pre-pandemic unemployment numbers and the state’s February rate of 3.0% came in at less than half the 6.2% national average. Cox sees it as further evidence for a shift.
“For a long time, our focus has been primarily on jobs and should always be, but the truth is Utah is a different place than it was in 2002,” Cox said. “We have the most diverse economy in the country, unemployment that’s been in the top five for many years ... and we routinely dominate economic rankings.
“It’s time to focus on broader opportunities.”
Cox says he wants to push the vibrance that’s been mostly concentrated on the I-15 corridor into areas that have continued to struggle amid the state’s growth and double down on building the homegrown talent pool.
“We need to look at Utah and Utahns more holistically,” Cox said. “We can focus on communities that are struggling, with a deeper focus on rural Utah and our multicultural communities.
“We can also focus on workforce development and investing in our people instead of just investing in new jobs. And making sure our people are able to get those jobs.”
Cox said luring big companies to relocate or open satellite operations in Utah makes for great headlines — and the state has long-running programs designed to incentivize those actions. But it is time to assess the full data set that goes with those decisions, including an evaluation of the downstream impacts. Cox wants to look at the entire footprint of job importing, including impacts on the state’s rising affordable housing, air quality and traffic congestion challenges.
“When we incentivize a major expansion here, there are costs associated with that,” Cox said. “I think it’s important to look back and see what works, what doesn’t work.
“We bring in a company that’s going to hire 500 employees, and they bring 475 from other states. Maybe that is OK, but we should have all of the information in front of us ... about both the benefits and the costs. We still might make the same decision, but we should only do so when we also know all the consequences.”
A ‘huge’ one-word change
Luring big companies, and the associated investments and jobs that come with them, to Utah has long been among the top priorities for the Utah Governor’s Office of Economic Development.
Now the agency has a new, Cox-appointed leader and has undergone both a name change and fundamental restructuring that is more aligned with the governor’s fresh take on how to do economic development in Utah.
Known henceforth as the Governor’s Office of Economic Opportunity, new Executive Director Dan Hemmert brings his past experience as a state lawmaker and perhaps more importantly, as an entrepreneur, to the gig.
Hemmert says the single-word change to his new agency’s title really does reflect an intentional and strategic shift.
“It’s one word but it’s huge,” Hemmert said. “When you hear ‘economic development,’ you typically think of building and impersonal business. When you hear ‘opportunity,’ you can’t help but think of a person, the individual.
“The one word change naturally makes you think about people not projects, opportunity for all Utahns and building the mechanism that leads to that.”
Hemmert’s office has played a forward role in the emergence of Utah’s super-economy having launched back in 2005. Now, however, the state’s success requires a shift in how it goes about the business of maintaining forward momentum, Hemmert said.
“We’re back at super low unemployment,” Hemmert said. “We always need high-paying jobs, but the challenge right now is about our workforce ... finding workers for the jobs that are out there.”
Hemmert said his agency is paring down following legislation passed in the 2021 session, has a new commission tasked with getting the state’s various divisions to communicate between and among each other to help identify and eliminate redundant efforts that go to economic development, and is realigning efforts under a single, focused state economic policy.
‘Continued growth, but not just growth at any cost’
Natalie Gochnour, the state’s top economist, associate dean for the University of Utah’s David Eccles School of Business and director of the Kem C. Gardner Policy Institute, said Utah is positioned to see a significant, upward economic bounce in 2021 and it’s one likely to be driven by multiple factors.
“Utah’s post-vaccine economy is definitely something to pay attention to,” Gochnour said. “We’re seeing pent-up demand, excess savings, rising consumer confidence and a boatload of federal stimulus money coming into the state.
“That, mixed with a new philosophy on economic development under a talented new governor, will converge and launch Utah to the top of the pack amid a nationwide recovery.”
Gochnour notes Cox is the first Gen Xer to assume the state’s top executive role and brings strategic priorities and sensibilities to nurturing a state economy that’s more mature than it has been for his predecessors. But Gochnour said he also gets the challenges that come with that streak of high-flying success.
“Norm Bangerter had to deal with a state that was watching residents migrate elsewhere. Mike Leavitt inherited overburdened infrastructure, including a freeway system badly in need of rebuilding, and that extended into the Huntsman and Herbert administrations,” Gochnour said of previous Utah governors. “The next challenge becomes taking advantage of the opportunities in front of us ... and doing it in a way that’s very aware of our housing issues, air quality, traffic and overall quality of life.”
Cox’s early policy reboots, along with the revamp of the former Office of Economic Development, are part of a deliberate broadcast that the new administration intends to pay attention to people, Gochnour said, and place new emphasis on talent investment, economic mobility and quality of life.
“So far, we know they want to be more statewide, with a focus on building vitality in rural communities and giving local entrepreneurs more tools to build success,” Gochnour said. “Prioritizing livability, life quality with growth strategies in a way that sustains this beautiful place. The positioning reflects a commitment to continued growth but not just growth at any cost.”
Gochnour also warned that while Utah’s prospects appear to be stellar, there are plenty of current and near-future issues that, if not well managed, could stymie the expected upward trajectory.
“In the short term we must manage the public health journey correctly,” Gochnour said. “Right now we’re doing really well, all eyes are on what happens in the next 60 days. That has to be a first priority. ... You can’t miss what saves us from the current crisis.
“Looking medium and longer term, underinvesting to address the current, biggest issues would be a mistake. With all this growth and people moving into the state, if you don’t invest in infrastructure and don’t invest in talent, homelessness and housing affordability, we’re in trouble. It’s already happening to a certain degree, but it’s time for doubling down in managing these challenges.”
Gochnour noted some big moves already underway in these areas, including sizable appropriations supported in the recently completed legislation session that target housing affordability, homelessness and the largest infrastructure bond in the state’s history.