The impacts of the COVID-19 pandemic have spread far and wide, reaching even into Utah County — at least according to Phil Dean, chief economist and chief public finance officer for the Kem C. Gardner Policy Institute.
Dean made a presentation on the economic impacts during Wednesday’s Utah County Commission meeting business session.
He said Utah County was one of the fastest growing counties in the nation and it was important for county leaders to economically prepare their systems to adapt to changing conditions.
“We don’t engage in advocacy on policy issues, but we try to be a storehouse of public policy data to talk about economics. I want to highlight a few takeaways for you as decision makers to think about a bit,” Dean said. “The economy is constrained on both materials and labor. The demand is very strong in the economy. I’ll talk about many areas, including housing, but that’s certainly not the only place where cost inflation is driving interest rate hikes – and those labor shortages are a big deal. .
According to Dean’s presentation, Utah currently has a record unemployment rate of 1.9%. As of April 2022, approximately 33,000 Utahns were unemployed. About 85,000 jobs are currently listed on Indeed alone.
Part of the shortage is because much of the baby boomer generation is retiring and wages are too low to entice them back into the workforce.
“Wages are too low right now to attract these people,” Dean said. “That’s one of the challenges we’ve had for a while right now. We used to have cheap and readily available labor, but that is not the case now.
Commissioner Amelia Powers Gardner said Utah County had an unemployment rate of 1.7%, lower than the state figure. She asked Dean if part of the employee shortage had something to do with workforce participation rates, which she said were close to 62%. Dean replied that the percentage of labor force participation was closer to 69%.
“Another interesting thing is that it’s harder to get current data, but young people have a lower labor force participation rate,” he said. “The age bracket may be 25 and under, but that portion of the population, and that’s pre-pandemic, also has a lower labor force participation rate that continued into the aftermath of the pandemic. pandemic.”
He added that younger workers are more fluid and change jobs more frequently than an older population that has an incentive to stay on company benefits.
High housing costs are the biggest risk to Utah’s economy over the long term, according to Dean. He believes Utah needs 250,000 more homes by 2030. If housing issues aren’t resolved, Dean believes the next generation of children and grandchildren won’t be able to live in the state. .
Current owners are taking advantage of high housing prices. However, these high prices hurt both those looking to become homeowners and renters.
“House prices have gone up dramatically, and now one of the challenges we have as a state is for some of us that the increase is really good if you already own a house,” said Dean. “This is not the case for tenants and people trying to enter a home for the first time. We can have this division in society between those who have really benefited from rising property prices and those who are feeling the pain of high prices.
Dean added that of the 30% increase in house prices year over year, only 10% is due to inflation.
During the pandemic, Utah’s economy has stayed afloat thanks to three waves of stimulus aid sent by the federal government.
Public savings have increased, according to Dean. He said many households had saved up the stimulus checks they had received. On the other hand, retail sales also increased and the most purchased items were household items.
“I think it’s important to realize that some people are being left behind,” Dean said. “A lot of different things, inflation in particular, which hits low-income households the hardest.”
Dean said people shouldn’t expect trends to stay high, he called the pandemic-era rise artificial sugar high.
Powers Gardner said the county has seen a big increase in sales tax revenue, which has outpaced all other revenue sources in Utah County.
“Over the past 18 months, as we look at revenue models and we have a significant increase in sales tax revenue, it absolutely affects our budgets and how we budget,” she said. . “When I looked at those charts that you made, it looked like those spikes coincided with stimulus checks going into bank accounts, and they supplemented, over time, that sales tax increase.”
Powers Gardner added that it would be helpful for commissioners to know how temporary the increase in county revenue is.
Dean said adding the inflation and population growth percentages during the pandemic would be a safe place to start. He gave a base number of 10% inflation.
No action was taken by the commissioners. The presentation was designed to inform them of current economic conditions and how to prepare for the future. The three commissioners – Powers Gardner, Bill Lee and Tom Sakievich – agreed that Dean could return as the county’s budget season approaches.