The Utah Science, Technology and Research (USTAR) Economic Development Initiative is an innovative, aggressive and far-reaching effort to bolster Utah’s economy and keep it vibrant in the Knowledge Age. USTAR is designed to attract world-class research teams in carefully-targeted disciplines where Utah already has distinct competitive advantages. These teams will develop products and services that can be commercialized in new businesses and industries that will create high-paying jobs and increase Utah’s tax revenue.
Who Supports USTAR?
Utah’s business community is leading the USTAR initiative. Many individuals, businesses and associations have been involved in its development, particularly the Salt Lake Chamber, the Economic Development Corporation of Utah, the Utah Information Technology Association, and the Utah Life Science Association. Others who have been involved include key state legislators, the Governor’s Office, state economic development officials, leaders from the University of Utah, Utah State University, and the Utah System of Higher Education.
Why is USTAR Needed?
Utah currently enjoys a solid economy with strong job and tax revenue growth, and we should all be grateful for that. However, a significant long-term structural weakness exists in our economy that must be addressed. The weakness is the quality of jobs in our state and the level of pay in those jobs.
In 1981, the average Utah salary was 96% of the national average. But since then a steady decline has occurred, and today Utah salaries average only 82% of the national average. This is a serious problem, because low salaries make it difficult to support Utah’s large families and educate our children.
The social consequences of having salaries nearly 20 points below the national average loom very large for Utah families:
- Low salaries force more mothers into the workforce, even when they would prefer to be home with their children. Utah has among the highest percentage of two-worker households in the nation.
- Low salaries are one reason Utah leads the nation in bankruptcy rates.
- Low salaries contribute to Utah’s lowest-in-the-nation education expenditures per pupil, even though we contribute a higher proportion of our tax dollars to education than almost any other state.
If Utah salaries were to rise to merely average in the nation, it would mean a 20% salary boost. And we ought not to be satisfied with just average salaries. We ought to aspire to be a high-wage state, not an average state, and certainly not a low-wage state.
Supply and demand in the free market establish wage levels, and properly so. The way to boost salary levels is to attract and create businesses and jobs that pay high wages, salaries that can comfortably support a family.
Are Utah Job Numbers Growing?
Utah’s economy is guaranteed to grow because our population is growing. Our job numbers will grow commensurately in services, construction and small manufacturing. But most of these jobs will not be high-paying. Growth in high-paying jobs is not automatic. It takes smart strategy and concerted focus and effort to build and attract businesses that offer higher salaries, most of which will be in high-tech industries.
The average salary in the information technology industry in Utah is 75% higher than the statewide average annual nonagricultural wage. IT accounts for only 3.7% of Utah jobs, but 6.5% of total nonagricultural wages.
Tellingly, economic analyses show that the decline in average salaries in Utah has occurred in tandem with a decline in technology jobs in the state. Utah’s technology employment dropped from a high of 67,000 jobs in 2000 to only 56,000 in 2004, slipping not only as a percentage of total employment, but even in actual numbers. This has meant fewer opportunities for Utah’s many young people, including graduates of top professional programs, to pursue careers for which they prepared in college.
Can These Trends be Reversed?
Utah’s business leaders believe strongly that the solution to low wages in Utah, and a key ingredient in keeping Utah’s economy strong, is to attract and create high-tech jobs in Utah. That is why business leaders support USTAR.
We believe this initiative will reverse the decline in technology employment in Utah and, over the long-term, create high-paying jobs for our children and grandchildren. We believe USTAR is Utah’s most important economic development initiative in many years and that it complements the Legislature’s and Gov. Jon Huntsman’s other approaches to economic development.
Current data from leading policy think tanks and government sources suggest that despite Utah’s early and substantial successes with advanced technology businesses, the state is in danger of falling behind other states and countries that are specifically targeting the high-tech sector for economic growth. Utah is at a crucial crossroad today and must take action if it is to maintain and improve its position in the high-tech economy.
Technology is advancing at a whirlwind pace across the country and the world. The race is on. Whole new businesses and industries are emerging as a result of basic research and development, mostly centered around research universities. Utah has been a significant player in the commercialization of university research, but much more can and must be done.
What are Other States Doing?
We can’t relax and wait for good things to happen. Success will require smart strategy and aggressive effort. Thirty-two states are now investing large amounts in university research for economic development. A nationwide survey running from 2000 to 2005 showed total state appropriations for high-tech academic research at $29.5 billion, including funds for buildings, university research and high-tech economic development.
Without decisive action we risk failing to keep pace with surrounding states and the rapidly-expanding Asian economies, and we may lose opportunities to generate economic activity in leading-edge industries.
The USTAR initiative is the aggressive and visionary plan we need. It has been developed over several months by leaders from the business community, the universities, the state, and economic development experts. It will put Utah in the forefront of world-class research in carefully-targeted disciplines with multi-billion dollar markets.
In future editions of EDCUTAH Economic Review, we will publish more information about USTAR, including Utah’s specific opportunities in targeted disciplines, how USTAR would be structured and governed, expected return on investment, and the start-up investment needed.
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