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SALT LAKE CITY — The Utah defense industry has doubled since 2015 with a sharp increase in contracts and grants, according to a new report from the University of Utah's Kem C. Gardner Policy Institute.
Between the fiscal years of 2015 and 2019, the industry has increased in the state by 102,000 jobs and $9.1 billion in inflation-adjusted gross domestic product. It also generated $244.3 million in tax revenue for state and local governments.
In 2019, the defense industry contributed $19.3 billion to the state's GDP — 10.6% of the state's total — and supported 211,000 jobs, roughly the same number of jobs in Utah's education and health care sectors combined. It also directly and indirectly supported 10.3% of the state's income and made up 9.5% of personal income.
"When it comes to the defense sector, especially in Utah, there's just been tremendous growth," said Joshua Spolsdoff, senior economist at the institute and primary author of the report.
He said the growth can be attributed to three major components: contracts and grants, Hill Air Force Base, and veterans services.
The study was commissioned by the Utah Defense Alliance as an update from a previous study in 2015. The alliance chose to analyze data from 2019 because, at the time of this research, the most recent, reliable information from all the different sources being analyzed was from that year.
"We wanted to understand exactly what the impact of the defense sector was in the state, but we also wanted to make sure other people understood the magnitude of the impact," said Kevin Sullivan, executive director of Utah Defense Alliance.
To compile the report, institute researchers used industry-leading software to examine data from Hill Air Force Base, veterans, Dugway Proving Ground, defense civilian retirees, Tooele Army Depot and the Utah National Guard, as well as pensions and services for veterans, pensions for defense civilian retirees, and Department of Defense and Department of Veterans Affairs contracts and grants.
The report states that defense is "an integral component of the state's diverse economy. It brings in federal dollars that expand the state's economy and invest in its highly paid, middle-class workforce."
"It tells the story of both the recruiting effort, but also retention," Maj. Gen. Michael Turley of the Utah National Guard said. "It speaks to the vibrancy of this as a career."
Some of the steepest growth has come through contracts and grants. Between 2015 and 2019, employment via contract and grants more than quadrupled and spending more than doubled. Direct employment spending in the defense industry increased by 62.8%, but nonpayroll spending increased by 90.1%
Of the $4.4 billion in defense contracts, 76% went to 10 contractors, with 60% — or $2.6 billion — going to the two largest contractors: Northrop Grumman and L-3 Communications.
Gary Harter, executive director of the Utah Department of Veterans and Military Affairs, was heartened by the number of small businesses that managed to get contracts and by the number of contractors expanding operations and moving into Utah.
"It just shows that Utah is a great place to perform military missions and for our defense contractors. That growth is explosive," he said.
Much of the growth in the sector also comes from Hill Air Force Base, the largest military installation and sixth largest employer in Utah in 2019. Between 2015 and 2019, direct jobs at the base increased by 19% to 19,832 employees.
The report also showed that the average salary for defense jobs in Davis County and Salt Lake County is far above the average for nondefense jobs. This is also applicable statewide. The average salary for defense contracts in Utah is $23,000 higher, or 35.7% more, than nondefense jobs.
The data in the report has shown that defense jobs are "high-quality, high-paying jobs" and have beaten the average salary of nondefense jobs since 1990, even during recessions, which shows that the "industry has remained resilient," especially with how competitive Utah's economy is, Spolsdoff said.
"These are family-sustaining jobs," Sullivan said. "These are the kinds of jobs we want people in Utah to have." He added that the majority of the people in these positions are Utahns that "live in Utah, pray in Utah and play in Utah."
"I think that the report is a great reflection of what's happening here in Utah," Harter said.
