Research Weekly - Why Utah's Growing Unemployment Rate is a Good Thing
Unemployment is very often looked at as a negative. The health of our country’s economy is often associated with unemployment. Naturally, the goal would be to decrease the unemployment in a state or county as much as possible. Though, from an economics stand point, this isn’t always the case.
“Full employment” is considered to be achieved when the unemployment rate is around 5%. An unemployment rate of 0% is never achieved because every time a student graduates college and attempts to enter the workforce without already having a job secured they add to the unemployment rate, and that’s not a bad thing. There is also natural churn in the workforce which can be a good thing. The category we want to keep small is people who lose their jobs due to company downsizing or related reasons.
In recent years Utah has attracted the attention of many prominent companies such as Goldman Sachs, Adobe, eBay, and Procter and Gamble to name a few. The unemployment rate is very important to companies that want to move to Utah, but not in the way you might think. Consider this; let’s say a large tech company wants to move to Utah and is looking to hire 80 computer programmers. If the unemployment rate is too low, this may be a sign to companies that they will have difficulty filing those positions as all of the quality employees already have jobs.
This is where Utah gets hurt and is why the ideal unemployment rate is around 5%. It keeps the doors of the state open to new companies who want to invest in the state and bring capital and jobs. In 2016 Utah lost at least three major projects due to our low unemployment rate. Each of the projects represented a company that was looking to bring 200 - 400 new jobs to Utah’s economy but decided not to move to Utah because our unemployment rate was too low—and those were only the projects we knew about.
With Utah’s unemployment rate now increasing toward the economically ideal 5%, you can be sure that Utah is, as always, on the right track.
The green circles in the map below indicate areas in the nation in which unemployment rates are increasing. Note, not all areas of the country benefit from this increase in unemployment in the way that Utah does.
Source: Bureau of Labor Statistics