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SALT LAKE CITY — Despite the Federal Reserve raising interest rates throughout most of last year as a method to slow the economy, job growth remains vibrant in both Utah and the U.S. while the unemployment rate remains low.
The Beehive State's nonfarm payroll employment for February 2023 increased an estimated 2.8% across the past year, with the state's economy adding a cumulative 46,000 jobs since February 2022. Utah's current job count stands at 1,701,000, according to the Utah Department of Workforce Services' February Employment Summary.
The report also shows that February's seasonally adjusted unemployment rate is estimated at 2.4%, with approximately 42,300 Utahns unemployed. This puts Utah in a better position than the national unemployment rate, which has moved upward in recent months, to 3.6%.
Mark Knold, Utah Department of Workforce Services' chief economist, said that Utah's unemployment rate is a "variable of little concern."
"When I say of little concern, I mean in the context of the unemployment rate signaling no current negative economic messages from the labor force," Knold said. "Utah's labor force is fully employed — and then some."
What this means, Knold explained, is that there are areas of the economic spectrum that are actually understaffed, primarily in service and manual labor occupations.
Additionally, Knold estimated that Utah's labor force participation — the percentage of people 16 years and older working or looking for work, which is largely reflective of an area's demographic makeup — is demographically built to have a maximum labor force participation rate just shy of 69%.
Comparatively, the U.S.'s maximum labor force participation rate is around 63%.
Currently, Utah's participation rate sits at 68.7%.
"We consider the Utah economy to be operating at full employment. The Utah labor force is giving the economy all it is capable of offering," Knold said.
This, of course, is a good thing. It means people have more opportunities to be employed and make a living.
However, Knold noted there is always a flip side when it comes to economics.
"A fully employed labor force can also create a situation where the economy can lose its capacity to grow further," Knold said. "If everyone who wants to be employed is employed, then where does a new business look to find new labor?"
He said that a business will either look to take labor from an existing business — possibly through offering better wages — or a flow of new labor will feed into the economy, spurring growth.
This growth can come through two avenues. "Either from new, home-grown labor aging into the labor force, which largely happens in a big wave each year with spring graduations, or new labor moves into the state from other states or countries," Knold said.
The latter has been a big reason that Utah has achieved and sustained above-average job growth over the past two years.
For one to move from another state to a job in Utah would mean ... take a job and also take on a higher mortgage rate. That is a pretty significant decision one has to make when considering coming to Utah for a job.
–Mark Knold, DWS Economist
However, Knold sees this in-migration slowing down.
"Now, there are economic pressures that will probably restrict more in-migration going forward and, if so, would naturally slow Utah's job growth rate," Knold said.
One reason he sees it slowing is due to the high cost of housing in Utah for the portion of the labor force that are homeowners — primarily due to rising mortgage rates.
"Much of American homeowners have mortgage rates established at much lower levels than the current offered rates. For one to move from another state to a job in Utah would mean to surrender one's low home mortgage rate to come to Utah, take a job and also take on a higher mortgage rate," Knold said. "That is a pretty significant decision one has to make when considering coming to Utah for a job."
While this isn't a factor for migrating labor that rents, Knold doesn't expect all in-migration to be threatened.
"For now, in Utah, the economy will not rot from the inside. We have enough internal labor sustainability to achieve a slower, more serene level of job growth," Knold said. "If and when the next economic setback does come, it will come as they all seem to come: from an external, overall United States economic pressure and not from something homegrown or distorted within Utah."
The full employment summary can be found here.
