Thursday, November 29, 2012

How Do Utah's Largest Metro Areas Stack Up in Terms of Economic Competitiveness?

When evaluating the 100 most populous metropolitan statistical areas (MSAs) in the U.S., how do Utah's major metros stack up in terms of economic competitiveness? Very well, in fact.

A report out earlier this month on says the Provo-Orem, Salt Lake City and Ogden-Clearfield metro areas all rank in the upper third of the top 100 metros in terms of competitiveness. Provo-Orem actually ranks fourth, behind San Jose-Sunnyvale-Santa Clara, CA, Austin-Round Rock-San Marcos, TX, and Bakersfield, CA, while the Salt Lake City metro ranks sixth. Ogden-Clearfield ranks 29th.

Of the Provo-Orem metro, NewGeography says: "This metro area just south of Salt Lake City has seen surprisingly large job gains in professional, scientific, and technical services; administrative and support services; specialty trade contractors; state/local government; and computer and electronic product manufacturing. says its goal with the rankings was to see which metros are becoming more competitive (gaining a larger share of total job creation) and which are losing their share of the jobs being created. Hence, all 100 metros were ranked based on the overall competitive effect and what percentage of jobs (from 2010-2012) are based on competitive effects.

To determine the competitiveness rankings, the organization analyzed data from Economic Modeling Specialists Intl (EMSI) using a method called "Shift-share." The analysis focused on overall job change from 2010-2012 in the 100 most populous metropolitan statistical areas (MSAs) in the U.S.

As explains, Shift-share analysis can also be referred to as "regional competitiveness analysis." It helped the organization distinguish between growth that is primarily based on big national forces (a rising tide lifts all boats) and local competitive advantages. The primary components of's Shift-share analysis are:

  • Industrial Mix Effect -- Representing the share of regional industry growth explained by the growth of the specific industry at the national level.
  • National Growth Effect -- This explains how much of the regional industry’s growth is explained by the overall growth of the national economy.
  • Expected Change -- This is simply the rate of growth of the particular industry at the national level (equals the sum of the industrial mix and national growth effects).
  • Regional Competitiveness Effect -- This explains how much of the change in a given industry is due to some unique competitive advantage that the region possesses, because the growth cannot be explained by national trends in that industry or the economy as whole.

"To generate our ranking, we summed the overall competitive effect for each broad 2-digit industry sector (e.g., agriculture, manufacturing, health care, construction, etc.) and added them together to yield a single MSA-wide number that indicates the overall competitiveness of the economy as compared to the total economy. We calculate the competitive effect by subtracting the expected jobs (the number of jobs expected for each MSA based on national economic trends) from the total jobs.

"The difference between the total and expected is the competitive effect. If the competitive effect is positive, then the MSA has exceeded expectations and created more jobs than national trends would have suggested. It is therefore gaining a greater share of the total jobs being created. If the competitive effect is
negative, then the MSA is below what we would expect given national trends. In this case the MSA is losing a greater share of the total jobs being created," explains. Utah Policy