The EDCUtah’s Research Minute highlights interesting economic development data and timely research insights. This month, Olivia Midgley highlights EDCUtah’s participation in a national cost of living index and how Utah measures up.

When a new corporate expansion or retention project is considering Utah for a business location, EDCUtah’s research team provides several reports to the client. One of these reports, the Operating Cost Comparison, measures the cost of doing business in Utah against other regions being considered by the company. We include wage estimates, real estate prices, utility rates, taxes, and the cost of living index.  

Cost of living impacts the decisions of both individuals and companies, and site selection consultants often compare the cost of living in Utah against other states in the region. How does cost of living impact business? In some instances, a higher cost of living in a particular area may mean employers must offer higher salaries to attract and retain workers. Additionally, higher cost of living can translate to higher building costs and operating costs for the company.  

How is cost of living calculated?

Each year, researchers and regional organizations like EDCUtah collect cost of living data and submit it to the Council for Community and Economic Research (C2ER). C2ER compiles the data into a national index that measures cost of living differences among metropolitan areas. We collect price data in six categories: housing, utilities, grocery items, transportation, health care, and miscellaneous goods and services. The average of all locations that collected data that year is set to 100, and regions are then compared as a percentage above or below the average.  

Policy impacts pricing! In this quarter’s collection, we noticed that the cost of name-brand insulin is down significantly. This likely reflects recent changes in legislation and the availability of insurance-covered alternatives for those with type 1 diabetes.

‍

What can we glean from this data, and what are the limitations?

Because the cost of living is measured at a specific point in time and the composition of data participants changes slightly each quarter, the index cannot be used to measure price increases over time. However, it is useful to compare regional costs in relation to each other and to the nation as a whole. It’s especially helpful for comparing different regions that may be experiencing similar trends in inflation, housing costs, and more. This index is often cited in national news by outlets including Wall Street Journal, Forbes, CNNMoney, US News and World Report, and ABC News.

How does Utah measure up?

C2ER recently published their 2023 cost of living index, which is calculated based on the average of the previous three quarters of data. Salt Lake City received a score of 108.7, St. George 107.8, Provo 103.6, Ogden 99.9, and Cedar City 96.2.  

The main reason many Utah metros measure above the national average is the price of housing—which includes both purchase price and apartment rents. The rest of the country has also seen rapid increases in housing costs, and housing costs continue to be a pain point for states including Utah, Idaho, Arizona, Washington, and Colorado.  

Utah’s index scores are similar to or lower than the index scores of markets we often compete with. The index score for Miami is 116.9, Denver 110.3, Reno 104.4, Phoenix 101.9, Austin 98.9, Atlanta 98.3, and Charlotte 96.5. Utah metro areas are competitive in terms of affordability and provide a balance between costs and quality of life.

Technology’s impact on data collection

EDCUtah recently finished our first quarter data collection for four Utah metropolitan statistical areas (MSAs): Salt Lake City, Provo-Orem, Ogden-Clearfield, and the St. George metros. In the past, EDCUtah collected local data for the Salt Lake, Ogden, and Provo metros, but we recently added the St. George metro due to process developments that allow data to be collected remotely. Previously, grocery prices were collected by walking through each store—five stores per metro—and writing down prices. As grocery delivery services became more prevalent over the last few years, this data became more widely available online, which allows for web scraping.

Research activities that put Utah on the map

One of the competencies that sets EDCUtah apart from other economic development organizations is our focus on quality research and economic data. Not only do we provide reports that inform decision-makers as they evaluate Utah for their next business location—we also represent Utah communities in valuable data collection projects that contribute to economic benchmarking.

Want more data? Explore the benefits of investing with EDCUtah.