Thursday, July 28, 2016

The Infrastructure Labor Market - Provo-Orem MSA

By Mark Knold, Supervising Economist, and Cory Stahle, Regional Economist

The labor force is made up of people. People vary in every conceivable way. One person is artistic while another can only draw stick people. One person might be able to disassemble and reassemble a car engine while another might not know what an alternator is. We are different. We have different aptitudes and abilities.

Parallel to this variability, jobs are different. High levels of education do make it possible to work in high-skill occupations that return high incomes. But not everyone is cut out for higher education or has the means to obtain higher education. Therefore, they might end up in “lesser” or “unimportant” jobs.

But is that accurate? Are their job options inferior and unimportant? A recent Brookings Institution report brings to light a segment of the economy that is highly important yet is dependent upon the labor force that may not be built for, have the economic means, or desire to attain a college degree or higher.

Brookings identifies a niche they call the infrastructure economy. As Brookings notes, “Infrastructure helps facilitate the exchange of information, drive production, and deliver resources, spanning multiple sectors of the economy and serving as a foundation to long-term growth.” It goes further to note that “Infrastructure jobs depend on a steady stream of talent to construct, operate, design, and govern the country’s major physical assets.” (article continues below) 

**Filter the viz below to see information on the infrastructure jobs in your area**

Brookings also documents why these infrastructure jobs can appeal to the individual. “Infrastructure occupations also boast competitive wages with relatively low barriers to entry, frequently paying up to 30 percent more to workers with a high school diploma or less compared to those in all other occupations. Plumbers, truck mechanics, and power line installers are among the numerous infrastructure occupations that fall into this category, which tend to emphasize on-the-job training rather than higher levels of formal education.”

Brookings identified 95 occupations that support the infrastructure foundation. Their work was well founded and designed. This intrigued us to develop a profile of said infrastructure configuration for the Utah economy. We could not replicate the Brookings work in terms of finalizing upon infrastructure industries, but we could place our focus instead upon all infrastructure occupations.

Infrastructure occupations do not have to be found in only infrastructure industries. A helicopter pilot, an infrastructure occupation, may fly a medical helicopter for a hospital, even though said hospital is not categorized as an infrastructure industry.

What is important is that there are occupations that Brookings has identified as key occupations that help to keep the economy operating, growing, designed, and governed. And a practical appeal is that many of these jobs offer low barriers to entry while supplying competitive wages.

Across the nation, these occupations number 11.9 million, or 8.8 percent of all occupational employment. In Utah, these jobs number around 121,400, also 8.8 percent of all occupational employment. Again, the appeal of these jobs is not just that they fundamentally support so many other jobs and industries in the economy, but that these jobs don’t require a high level of education or formalized training for entry. Oftentimes these occupations emphasize only on-the-job training. Yet, these jobs pay on average 22 percent higher in Utah than other occupations that are willing to accept only a high school diploma or less.

Utah does have its unique structuring across its different geographic regions, and this will include the possibility of a different profile of the Infrastructure economy in each local region. The following is an infrastructure profile for the Provo-Orem metropolitan statistical area (MSA).

Provo-Orem MSA 

In this area, which includes Utah and Juab counties, infrastructure occupations number about 13,700, or 6.4 percent of all occupational employment. This share is significantly lower than the Utah and United States averages due in part to the near proximity of Salt Lake City, which lessens the need for some infrastructure occupations in the Provo-Orem MSA. An example, occupations like airline pilots, commercial drivers, public transit operators and even engineers may be based in Salt Lake City, but serve and benefit areas of Utah and Juab counties.

Another way to analyze infrastructure occupations is through the use of location quotients. Location quotients act as a measure of relative employment concentration by comparing the share of employment in a local area (Provo-Orem MSA in this case) to the nation.

Upon applying location quotients, we find that the concentration of total infrastructure employment is lower in the Provo-Orem MSA area relative to the United States. However, a breakdown of employment reveals several occupations which have higher proportions of employment relative to the nation. Among these are electricians and their assistants, pipelayers/plumbers and their assistants, forest and conservation technicians, radio/cellular repairers and powerhouse electrical repairers.

As mentioned, infrastructure jobs assist in designing, operating, growing and governing the economy. The appeal of these jobs is twofold, manifested in the form of low educational barriers to entry and higher than average wages. Both of these factors are illustrated in the Provo-Orem MSA, as 95 percent of infrastructure employment requires education of an associate’s degree or less and also pays 27 percent higher when compared to all jobs requiring an associate’s degree or less.

By the year 2024, infrastructure jobs are projected to increase to nearly 19,000, producing an estimated 800 new jobs annually. This total increase translates to a 10-year growth rate of 38.8 percent, slightly above the projected growth for all occupations.