Research Weekly - Utah #1 in Economic Diversity
In 2015 Utah became the most diverse economy in the nation while maintaining industry expertise in Financial Services, Information Technology, Life Sciences, and Aerospace. This means that Utah has a wide variety of industries it serves. Having a diverse economy is like having a diversified retirement portfolio; when you have money invested in multiple places you mitigate your risk if one or two of your holdings crash. This is also the case with an economy; if a state has a diversified industry mix, the state is less likely to be impacted when one industry experiences recession. An example of this is the recent oil crisis. North Dakota has significant employment in the natural resources industry and is the second most undiversified state in the nation. Due to the drop in oil prices North Dakota has seen significant job losses which have been large enough to impact the overall state growth and has caused a shrinking economy.
Utah has also lost jobs in the natural resources industry, but because we are so well diversified, overall state job growth and unemployment have continued to have beneficial movement. In fact, Utah has among the lowest unemployment rates in the nation and the highest job growth rates in the nation despite losing jobs in the natural resources industry. Because of our economic diversity, Utah is less impacted in times of recession and is able to rebound more quickly than the nation when economic turbulence hits.
The Hachman Index is a measure of economic diversity that compares the industry composition of a state to the industry composition of the nation by taking the total employment of an industry in a state divided by total state employment, and comparing it to the nation’s equivalent.