|by Howard Stephenson|
It looks like Utah’s glory days of wildly surpassing national economic trends are over — at least for the time being. If you look at a graph of Utah unemployment rates compared with the national figures over past years, you’ll see clearly how Utah has outperformed the nation as a whole. We’ve been pretty proud of that distinction for a decade and a half.
But the current picture is not so rosey. The Beehive State’s unemployment now surpasses the national rate.
Utah’s unemployment rate jumped from February’s 5.5 percent to 5.9 percent in March 2002. This matches the revised December 2001 figure of 5.9 percent. The last time Utah’s unemployment rate was this high was in 1987, according to the Utah Department of Workforce Services (DWS). The national unemployment rate for March 2002 was 5.7 percent. In both December 2001 and March 2002, Utah’s unemployment rate was higher than the respective U.S. rate. The last time this occurred was in 1987.
Utah’s other primary indicator of current labor market conditions, the year-over change in the number of non-farm wage and salaried jobs, showed a loss of 1.1 percent, or 12,100 jobs, for March 2002, according to DWS. The last time Utah suffered year-over job losses was in 1982.
From March 2001 to March 2002, Utah’s private sector has seen a net loss of 14,400 jobs, or 1.6 percent, which was partially offset by a gain of 2,400 government jobs. March 2002 had 5,600 fewer construction jobs than in March 2001, a loss of 8.5 percent, while manufacturing jobs were down 8,400 for a loss of 6.5 percent (compared to a national loss of 7 percent in manufacturing jobs), and trade jobs were down 3,300 jobs for a loss of 1.3 percent. The transportation, communications & utilities category was down 2,100 jobs for a loss of 3.5 percent while mining was off 300 jobs for a loss of 3.8 percent.
Despite job losses in the private sector, government employers in Utah have 2,400 more staff than a year ago, an increase of 1.3 percent.
In the wake of this economic downturn the Utah Legislature acted at the close of the 2002 general session to support the faltering construction industry by passing a $348 million bond package, the largest in many, many years. The package includes $209 million for highway projects and $139 for buildings including the capitol building addition and university buildings. The fiscally-conservative legislature was convinced by economists that a speed-up of projects that were originally planned to be constructed later would be a good idea; partly because interest rates are so low and partly because Utah’s construction jobs were dropping precipitously after the completion of several large projects just before the Olympics.
The legislature also passed two measures specifically designed to promote business and condemn excessive business taxes and regulations. HCR 2 (Curtis), expresses support for Utah
businesses that provide stable jobs and create a healthy Utah economy. The resolution also
recognizes the importance of avoiding the potential negative impact of laws and rules on the Utah business community.
HJR 26 (Bennion) urges Utah state agencies and the Utah business community to work together to develop strategies that balance the need for regulatory protections with the needs faced by the business community in its role in strengthening the economy of the state.
Specifically, sponsors were concerned about the loss of basic industries in Utah and the loss of high-paying jobs that are associated with these industries. They noted that these basic industries require support jobs through suppliers and transporters equal to three times the employment of the industries themselves.
The loss of Geneva Steel’s 1,650 jobs had a significant impact on the Utah economy. Additionally, the potential loss of MagCorp’s 550 jobs if the company cannot locate a source of cheap electrical power would also be devastating. Kennecott’s 2,000 jobs may not be around long either if the company cannot avoid punitive taxes on proposed underground expansion.
In an effort to come back from the dead another time, Geneva Steel is seeking to convince Governor Leavitt to call a special session of the legislature to enact statutory authority for loan guarantees of approximately $10 million dollars to assist PacifiCorp in building a new substation to handle the extra electrical load required by Geneva’s mini-mill.
The loan guarantee is said by Geneva’s Chairman Joe Cannon to be a critical part of an overall package that will include $250 million in private financing and federal steelmaking loans that will allow bankrupt Geneva to reopen and make money.
If Geneva reopens, it is expected to employ about 1,200 workers, not to mention the construction employees to build the electric arc mini-mill and the ongoing secondary jobs which will be in the neighborhood of three times the 1,200 direct Geneva jobs. Supporters claim that even if Geneva only opens for one year, the additional taxes generated through construction and operation would more than cover the $10 million loan guaranty.
At this point, it could be a month before the legislature deals with the Geneva request.