Wednesday, July 26, 2017

“New and Improved?” A look at the Retail Trade Industry in Central Utah

By Mark Knold, Supervising Economist and Lecia Parks Langston, Senior Economist

“Almost no one wants to admit the genius of Jeff Bezos and Amazon. Apparently, many have failed to see that Amazon has become the world's biggest retail company.” Hubert Burda

Consumer spending makes up around 68 percent of the nation’s gross domestic product. Consumer spending is individuals and families purchasing groceries, clothing, recreation, stocks, insurance, education and much more. The transactions cover a broad swath of economic activity.

Much of the nation’s consumer spending is captured via retail trade. A useful retail trade definition is “the re-sale (sale without transformation) of new and used goods to the general public, for personal or household consumption or utilization.” Not all consumer spending is captured through retail trade transactions, but a large share is.

Broad-category examples of retail trade sectors are motor vehicle sales, furniture stores, electronic stores, building material stores, grocery stores, pharmacies, gas stations, clothing stores and department stores, among others. Then there is the relatively new and emerging part of the retail trade sphere—non-store retailers. These are establishments that sell products on the internet. Examples include Amazon, Zappos, Overstock.com, or eBay. These types of retailers have grown rapidly in the past 15 years and their presence is reshaping the retail trade landscape.

Whereas in the past nearly all retail transactions were done through traditional brick-and-mortar stores, now a significant and growing segment is diverted to internet sales. The consumer shops online and goods are delivered to the customer’s doorstep. One can see that the number of brick-and-mortar stores and the level of local sales across the country are being endangered by this economic evolution.

The brick-and-mortar reduction is beginning to show its economic presence in the United States employment numbers. While the U.S. economy is finally expanding at a healthy pace this side of the Great Recession, one of the few industries not rising with this tide is retail trade. While overall retail sales are increasing, employment is not. Traditionally, as a population increases, retail trade employment grows simultaneously, since population growth and consumer spending volume is an integrated dynamic. If studied deeply, a certain ratio of retail trade employment growth spawned from population growth would emerge. Before the internet, the vast majority of all consumer sales occurred in the immediate community or region. But now, the internet is diverting these sales away from the local community — and with internet sales growing, its market share will increase.

We do not yet know how much brick-and-mortar erosion will eventually occur. And will such a phenomenon hit some areas more than others (such as urban vs. rural; or local vs. tourist spending)? These are touch points that economist will be watching as this internet sales phenomenon continues to grow within the national and Utah economies.

In light of this change, in this quarter’s Local Insights we are profiling retail trade employment throughout Utah’s local regions. This can offer a profile of where retail trade is now in a local economy, and possibly how much of the sector could become vulnerable to the internet-sales phenomenon.

All regions can be viewed through the Local Insights web portal. The following is a retail trade profile for the Central Region:

Slow Going


Just how important is retail trade employment in Central Utah? In 2016, roughly 3,000 Central Utah workers were employed in retail trade representing 14 percent of total nonfarm employment in the region. That’s somewhat higher than the statewide retail average of 12 percent. However, although retail trade employment has ebbed and flowed during boom, recession and recovery, the overall trend remains essentially flat. In fact, Central Utah has not yet regained the retail employment levels of the pre-recession boom. While lackluster population growth is probably the main factor in the sluggish retail sector, perhaps online buying plays a part as well.

Most Central Utah counties experienced strong retail trade employment growth in the booming mid-2000s. However, recession stole most of these gains and Central Utah has struggled to add retail employment even during the recovery. Wayne and Millard counties experienced some of the region’s best retail job expansion in recent years, but have yet to show consistent improvement. They are the only two counties to have regained their pre-recession employment levels. Sanpete County has seen steady improvement in the last three years, but growth rates remained moderate.

Tis the Season


Retail trade employment can be very seasonal in nature. In the Wayne County economy, a strong tourism and recreation component produces a significant seasonal pattern. Employment peaks in the summer months and bottoms out in January or February. Retail trade jobs almost double between trough and peak in Wayne County.

Seasonality is not as pronounced in the remaining Central Utah counties. The two most populated counties (Sanpete and Sevier) do show a moderate increase in retail jobs during the holiday season.

Dependency


Some counties in Central Utah are more dependent on retail trade employment than others. Statewide, retail trade employment accounts for about 12 percent of total nonfarm jobs. Sevier (16 percent), Millard (15 percent) and Wayne (13 percent) counties all show higher percentages of retail trade employment than the state. Sevier County attracts shoppers from outside the county boundaries. Millard County is relatively far away from more populous shopping areas, and Wayne County’s tourism appears to pump up its retail employment.

Location quotients (LQ) provide another way of looking at the importance of an industry. These ratios compare an area’s industry employment share to that of the nation. A retail trade LQ of 1 indicates the area’s industry employment makes up the same share of employment as that industry does nationwide. A location quotient greater than 1 means the area’s industry has a greater employment share than the United States. Utah’s retail trade location quotient measures just higher than 1. However, Sevier County has a retail trade LQ of nearly 1.5, signifying the distinct importance of retail employment in this county. Millard and Wayne counties also show notable retail trade LQs — both in the range of 1.2. On the other hand, Sanpete County (which is relatively close to Utah County shopping) shows an LQ of roughly 1.

In Sevier and Millard counties, the share of retail trade employment has remained fairly steady over time. However, in Sanpete County, the importance of retail trade jobs has steadily declined since the beginning of the recession. Wayne County’s retail trade industry has taken over a more important role in the labor market, partly due to a change in the industry mix when the county lost its largest employer several years back.

Relationships


Population per retail worker also provides insights into the retail trade industry’s local importance. Statewide, there are roughly 16 residents per retail trade job. With just under 15 inhabitants per retail sales worker, Sevier County is the only Central Utah county to register a lower number than the state. This lower-than-average figure arises because Sevier County acts as a regional shopping destination for many rural neighbors. With its sparse population, Piute County showed a whopping 78 residents per retail trade worker. Most of the population is apparently doing their primary shopping in nearby Sevier County. In Wayne County, the number of residents per retail job has dropped in recent years as retail employment showed strong gains.

Down to Subsectors


In Central Utah, food and beverage stores dominate subsector employment, accounting for almost 25 percent of retail trade jobs. Gasoline stations and general merchandise store (e.g., Wal-Mart) show the next largest employment portion with 18 percent each. Motor vehicle/parts dealers and building materials/garden dealers also account for 10 percent of more of the retail sales workforce.

The share of Central Utah employment at food and beverage stores (25 percent) measures almost double the statewide share (15 percent). Building/garden supplies dealers and gasoline stations also provide a significantly large retail employment portion in Central Utah than in the state as a whole. On the flip side, specialty stores (e.g., clothing, electronics, furniture, sporting goods) contribute much smaller shares of retail employment in Central Utah than statewide. Non-store retailer employment is also in short supply in Central Utah, suggesting the area’s labor force is not benefitting from online sales.

A Fair Share?


Since 2000, food/beverage stores, gasoline stations and motor vehicle/parts dealers have lost labor market share. In contrast, both general merchandise stores and building material and garden dealers have picked up the employment slack as big-box stores moved into the area.

Wages


Retail trade is not known for its excessive wages. In 2016, only leisure/hospitality services showed a lower average monthly wage in Central Utah. Not only are retail trade’s hourly wages lower than average, many jobs are part-time contributing to its lower-than-average standing.

Statewide, the average monthly wage for a retail trade worker measures less than $2,600. Not surprisingly, the average retail trade wage measured even lower in all Central Utah counties. Nevertheless, a wide disparity in wages exists even within the region. In shopping-hub Sevier County, the 2016 average monthly retail trade wage registered nearly $2,100, while in Piute County, the average was a mere $1,200.

The Same, but Different


Retail trade wages also show a notable variety in relationship to the average county wage. Statewide the retail trade industry wage measures 70 percent of average. In the two most populous Central Utah counties, Sanpete (74 percent) and Sevier (73 percent), retail trade wages compare more favorably to the overall county average than in smaller counties. In Wayne and Piute counties, the retail wage measures between 50 and 55 percent of average. Millard County’s figure measures, by far, the lowest at 46 percent. The presence of high-paying utilities jobs in Millard County pushes up the comparative average.

Although the gap between retail trade and total average wages widened statewide between 2001 and 2016, most Central Utah counties showed little change in the relationship between the two wages. This suggests that earnings in other industries are growing at about the same rate as those in retail trade. Piute was the lone exception. Here retail trade wages have improved relative to the average wage since the end of the recession.

Within the retail trade industry in Central Utah, the few jobs at non-store retailers showed the highest average wage followed by motor vehicles/dealers and electronics stores. On the low end of the scale, clothing stores paid the lowest wages.

Tuesday, July 25, 2017

Utah's Seasonally Adjusted Unemployment Rates

Seasonally adjusted unemployment rates for all Utah counties have been posted online here.

Each month, these rates are posted the Monday following the Unemployment Rate Update for Utah.

For more information about seasonally adjusted rates, read a DWS analysis here.

Next update scheduled for August 21st.

Friday, July 21, 2017

Utah's Employment Situation for June 2017

Utah's Employment Situation for June 2017 has been released on the web.

Find the Current Economic Situation in its entirety here.

For charts and tables, including County Employment, go to the Employment and Unemployment page.

Next update scheduled for August 18th, 2017.


Tuesday, June 27, 2017

Delta Fire Station Construction Completed

The newly completed Delta Fire Station hosted their official hose cutting ceremony and open house to the public. Funding for the new fire station was made possible by joint efforts with a Community Impact Board Grant of $1,810,000 and a loan for $775,000 to the Millard County Fire District and Delta City, to be paid back by the Millard Fire District. Millard County Chronicle Progress

Intermountain Power Project will shutter coal-fired power plant near Delta

Utah's largest coal-fired power plant — the Intermountain Power Project outside Delta — will cease operations by 2025 due to losing its Southern California customer base and a weak market for coal-fueled electricity. The decision was anticipated, with its Southern California municipality customer base being prohibited from purchasing coal-fueled electricity when the contracts are up.

While electricity will no longer flow from heating coal, IPP participants are moving ahead with plans to develop new natural gas-fueled electricity generation at the site. Already, 32 municipal power systems and rural electric cooperatives have agreed to participate in the gas project, and engineering work has started, according to company officials.

The project will bring on 1,200 megawatts of new natural-gas fueled electricity, compared with the 1,800 megawatts of installed capacity from coal-fired generation. More than 440 people are employed at the site, generating an annual payroll that exceeds $46 million, according to a news release. The next eight years will be a time of "transition" for the plant's employees, but exactly how many of those workers will be able to retain their jobs was not specified in the company announcement. Deseret News

Utah Heritage Credit Union to get new building in Ephraim

Utah Heritage Credit Union has started on a project that will culminate in a new building on Main Street in Ephraim. The general contractor is Landmark Construction of Logan, but Todd Alder of Ephraim, owner of Todd Alder Construction, will be the construction superintendent, and most of the subcontractors will be from Sanpete County. The new building will have 3,840 square feet on the ground level, with 2,990 square feet in the basement. The basement won’t be occupied at first but will be available for expansion. Sanpete Messenger

Thursday, June 1, 2017

Is Your Town Growing?

U.S. Census Bureau releases 2016 City Population Estimates


By Lecia Parks Langston, Senior Economist

“A city is more than a place in space, it is a drama in time” –Patrick Geddes

Most of Utah’s cities and towns grew in 2017, according to population estimates recently released by the U.S. Census Bureau. Lehi even ranked 11th among the nation’s fastest-growing large cities. However, not all Utah’s cities and towns experienced growth.

Use the visualization and bullet points below to explore population trends for individual townships.


• The old Geneva Steel Mill site continues to be fertile ground for population expansion. Vineyard was once again the fastest growing city in Utah. However its rate of growth has slowed dramatically since 2015. In addition, Vineyard remains relatively small in size.

• Herriman added the highest number of new residents of any city in Utah (4,550) followed by Orem, Lehi and South Jordan. All showed higher population gains than Salt Lake City — Utah’s most populous city. Herriman also showed the second-fastest rate of expansion in 2016.

• St. George was the only city outside the Wasatch Front to increase its population by more than 2,000 residents.

• The top four population-gaining cities in Utah are all located in southern Salt Lake County or northern Utah County, as the metropolitan population continued to spread outward from the large city centers. Fastest-growing larger communities also tended to be located near the Salt Lake County/Utah County border.

• Due to the nature of percent-change mathematics, several small towns (such as Monticello, Mantua, Francis, Interlaken and Hideout) showed high growth rates although their new-resident counts measured relatively low.

• The Census Bureau estimates that most of the cities and towns showing population declines were located in the Uintah Basin, Carbon County and Emery County. Declines in resource-based employment have spearheaded these population declines.

• In addition, Millard, Piute, Garfield and Wayne counties displayed a significant number of contracting townships.

• Salt Lake County remains home to five of the 10 largest cities in the state. Utah County accounts for another two in the top 10. St. George is the only city in the top-10 ranking located outside the Wasatch Front.

Tuesday, May 30, 2017

Understanding Utah’s Future Skill and Knowledge Needs

The Utah Department of Workforce Services releases Skill and Knowledge-based Projections

By Lecia Parks Langston, Senior Economist

“It is possible to fly without motors, but not without knowledge and skill.” Wilbur Wright

The following skill and knowledge projections suggest that the foundation for future workforce preparation relies on those old favorites “readin' and 'ritin' and 'rithmetic.” Technical skills and knowledge areas are also important, but rely on an excellent foundation in basic skill and knowledge areas.

• Utah occupational projections and the Occupational Information Network (O*Net) provide the foundation for these skills and knowledge estimates.

• “Basic Skills” dominate the top 10 in-demand skills, suggesting a need to ensure training on “the basics” for all prospective workers.

• Basic skills needs cross occupational and educational boundaries. • Basic skills make changing occupations possible as the labor market changes.

• Communication skills and reading rank highest on the top skills list, followed by critical thinking. • The top five skill and knowledge areas are the same for every region of the state.

• The top 10 in-demand skills change very little regardless of the occupational training level.

• Customer Service ranks, by far, as the knowledge area with the highest projected demand.

• For occupations requiring formal training past the high school level, competence in English, computers/electronics, and mathematics becomes increasingly important — although these skills are in demand for employment at all training levels.

• Short-term shortages for certain technical skills may seem to displace the overarching need for all workers to have a strong foundation in basic skills in training discussions.


Friday, May 12, 2017

Centerfield mapping out $1.5M road project, $200,000 will allow chip-sealing

Centerfield City is getting ready for an almost $1.5-million roads project to get underway soon. The city has qualified for $1.47 million in a loan-grant combination for needed work. At a meeting of the city council Savage Surveying presented the company’s projections for where and what kind of maintenance should be done. Through its planning, the company had saved about $200,000, which could be used to double chip-seal all the east-west roads in the town, in addition to the north-south roads. The council approved Savage’s plans. Sanpete Messenger