Want a Formula for Success? Study Utah

Gallup Poll proved prescient in 2012 when it rated Utah No. 1 among U.S. states in “future livability” based on 13 economic, health and lifestyle measures. Five years later, it’s become the fastest-growing state and enjoys the lowest rate of inequality nationwide. During the second and third quarters of 2016, Utah’s economy expanded 2.24 percent, almost twice the U.S. rate of growth during the same period, according to data compiled by Bloomberg. Only Idaho experienced greater employment growth in 2016, Bloomberg data show.

The Utah boom is partly attributed to its youth: More than 30 percent of the state’s 3 million residents are under 18, compared with 22.9 percent for the U.S. At the other end of the scale, only 10.3 percent are older than 65, as against 15 percent all Americans.

Demographics isn’t Utah’s only advantage. Another is the educational and cultural influence of the Mormon Church, to which 62 percent of state residents belong.

“It matters to Americans that someone born poor can retire rich,” my Bloomberg View colleague Megan McArdle wrote on March 28, citing the benefits of the state’s tough-love-inspired social-safety net, among other things. “That possibility increasingly seems slimmer and slimmer in most of the nation, but in Utah it’s still achievable.”

The 2012 Gallup survey predicting that Utah would soon become the nation’s best-liked place to live cited “low-smoking habits, ease of finding clean and safe water,” and “having supervisors who treat workers like a partner rather than a boss.” Respondents were unusually likely to say that they learned “something new or interesting on any given day” and perceived their hometowns as “‘getting better’ rather than ‘getting worse.’”

“Here in Utah, we thread the needle very well,” Governor Gary Herbert said in a March 24 interview in his Salt Lake City office. Unlike neighboring Arizona, which initially resisted the establishment of a national holiday to observe the birthday of Martin Luther King Jr., or North Carolina, which passed a law -- since repealed -- assailed as hostile to gay, lesbian and transgender residents, “we came together as a community and we had nobody boycotting us,” Herbert said.

While Utah is one of the most reliably Republican states, having last voted for a Democratic presidential candidate in 1964, Herbert said its citizens are “not anti-government.”

“We know government has a role to play,” he said, citing pressures on water, roads, transportation and schools. “But we want government to be efficient and effective and let the private sector solve the problems.”

Utah’s free-enterprise ethic and competitive workforce help make it a western hub for global companies despite ranking only 31st in population. Thirteen years after establishing a presence in Utah, Goldman Sachs Group Inc. has about 2,200 people in Salt Lake City. Only New York, London and Bangalore, India, have more Goldman employees. 

The Delta Airlines Inc. reservation and customer-service center in Salt Lake City is the most profitable of the company’s 14 comparable operations, accounting for $318 million of the $2 billion generated worldwide, according to Delta spokesman Russell Carson. Salt Lake City International Airport is Delta’s western hub with 3,450 employees, including about 600 pilots.

Ebay Inc., the global commerce company, made Draper, Utah one of its three international centers (the other two are in Ireland) with about 1,800 employees who develop software for the company’s human resources, legal and finance departments.

The low-cost, young workforce that makes Utah a magnet for call centers is driving local industry as well.

Zions Bancorporation, Utah’s biggest financial institution, outperformed 64 companies in the S&P 500 Financial Sector Index during the rally after the Nov. 8 election, returning 33 percent, according to data compiled by Bloomberg. Salt Lake City-based Control4 Corp., which develops home-automation software and hardware for businesses and individuals, gained 56 percent this year, beating the Russell 3000 Index’s 5 percent and the 6 percent for the S&P 500.

To be sure, Utah’s conservative politics occasionally bring it into conflict with its business interests. Earlier this year, for example, the Outdoor Retailer Association decided to end an annual trade show that brings about 40,000 visitors and $45 million to Salt Lake City each year. That was a reaction against the state’s efforts to rescind President Barack Obama’s designation of 1.3 million acres of Native American ancestral land as the Bears Ears National Monument.

Herbert said he hasn’t given up hope that an agreement on Bears Ears can be reached, and is confident that Utah won’t lack for new business. “There are still some backdoor negotiations going on, so I don’t want to spoil an opportunity to find the proverbial win-win,” he said, adding that “we already have people lining up” to establish operations in Utah.

“We’ll find the win-win because this is the best location,” he said.

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Bloomberg Wed, 04/26/2017 - 09:24