Economy of Salt Lake City
The economy of Salt Lake City, Utah is primarily service-oriented. While nearby Bingham Canyon Mine (the world's largest open-pit mine) provided a strong source of income during the 19th century, the city has evolved to an economy built on transit hubs, call centers, and seasonal tourism. The 2002 Olympic Winter Games gave a great boost to the area's economy. Many hotels and restaurants were built for the Olympics, and although many survive, they have suffered post-Olympic market saturation.
Overview
Salt Lake City is also the largest industrial banking center in the United States.[1] The city is known as the "Crossroads of the West" for its central geography in the Census defined western United States. Salt Lake is about an equal distance from Los Angeles, Denver, San Francisco, Portland, Phoenix, and Seattle. As a result, Interstate 15 is a major corridor for freight traffic and the area is host to many regional centers such as Dannon Yogurt and Sysco.
World War II brought many military and industrial jobs to the Salt Lake Valley. Hill Air Force Base was activated on November 7, 1940.
Local, state, and federal governments have their largest presence in Salt Lake City, accounting for 21% of employment. Trade, transportation, and utilities account for another 18% of employment, with the major employers being the regional Delta Air Lines hub at Salt Lake City International Airport. Equally significant are the professional and business services, which account for another 18% of employment. Health services and health educational services comprise an additional 10% of employment. Other major employers include the University of Utah, Sinclair Oil Corporation, and The Church of Jesus Christ of Latter-day Saints.
| Rate of Unemployment* | |
| Year | % |
| 2003 | 6.7 |
| 2002 | 7.3 |
| 2001 | 5.0 |
| 2000 | 3.5 |
| 1999 | 4.0 |
| *UDWS Info | |
Economy sectors
GDP by industry
Salt Lake City Industries by GDP value added 2011
| Industry | GDP value added $ billions 2011 | % of total GDP |
|---|---|---|
| Finance and Insurance | 10,419 | 14.58% |
| Real Estate and Rental Leasing | 9,130 | 12.78% |
| Government | 7,768 | 10.87% |
| Durable Good Manufacturing | 6,056 | 8.48% |
| Retail Trade | 4,599 | 6.44% |
| Healthcare and social assistance | 3,567 | 4.99% |
| Construction | 3,004 | 4.20% |
| Non-durable good manufacturing | 2,884 | 4.04% |
| Transportation and Warehousing | 2,600 | 3.64% |
| Information | 2,399 | 3.36% |
| Administrative and Waste Management | 2,240 | 3.13% |
| Other services, except Government | 1,817 | 2.54% |
| Accommodation and Food Services | 1,770 | 2.48% |
| Mining | 1,062 | 1.49% |
| Arts, Entertainment and Recreation | 625 | 0.87% |
| Educational Services | 600 | 0.84% |
| Total | 71,451 | 100% |
Call centers
It is rumored that call centers prefer the Salt Lake City and Provo areas because of the mild western accent of Utah natives that is easily understood in all regions of the United States, and considered pleasant by many. Marriott Hotels, InterContinental Hotels Group, Delta Air Lines, Continental Airlines, and JetBlue Airways all have reservation call centers in Salt Lake City; Sprint also has a service center in the city.
Convention industry
A burgeoning convention industry has blossomed in recent years. A new convention center—the Salt Palace—as well as proximity to outdoor recreation has made Salt Lake City an ideal locale for such conventions as the annual Outdoor Retailers meeting. Recently, the Outdoor Retailers threatened to move to another city, unless Salt Lake could provide larger convention space. In the end, the city conceded, and kept the convention.
LDS Church
The LDS Church also provides a large percentage of jobs. Besides its central offices, the Church owns and operates a for-profit wing, Deseret Management Corporation (DMC). Subsidiaries include Bonneville International, which runs both KSL-TV and KSL AM as well as a number of other radio stations in and outside of Salt Lake City. DMC also owns the Deseret Morning News and Deseret Book. Smith's Food and Drug is based in the city, but is owned by national grocer Kroger. Other notable firms based near the city include Franklin-Covey in neighboring West Valley City, Overstock.com in nearby Cottonwood Heights, and Arctic Circle Restaurants (the inventor of fry sauce) in Midvale. Salt Lake City was once the headquarters of ZCMI, one of the first ever department stores, but it was sold to May Department Stores, which was later bought by Federated Department Stores. Former ZCMI stores now operate under the Meier & Frank label, and will soon operate under the Macy's label. Delta Air Lines operates its third-largest hub in Salt Lake City, and along with partner SkyWest Airlines is a major employer in the area.
Banking
Since Utah is one of seven states that allow the establishment of commercially owned industrial banks, a number of industrial banks have established their headquarters in Salt Lake City; they include UBS, BMW, CIT, Merrill Lynch, and Target. Additional banks located in nearby cities include American Express, General Electric, GMAC, Goldman Sachs, Morgan Stanley, Fidelity Investments, Sallie Mae, Volkswagen and Volvo. Wal-Mart, Berkshire Hathaway and Home Depot have applied for charters. High-tech firms with a large presence in the suburbs include e-Bay, Unisys, Siebel, Iomega and 3M.
Potato production
In 2006 the largest potato producer in Idaho, the United Potato Growers of America, announced that it would re-locate its headquarters to Salt Lake City, citing its need for a large international airport, being that Salt Lake City International is the 18th busiest in the world in terms of combined freight and passengers. The announcement led some members of the Idaho legislature to propose legislation changing the state license plate, which currently reads "Famous Potatoes".[2]
Economic factors
Major factors that have affected recent economic activity within the city have been the 2002 Winter Olympics, poverty, and urban sprawl. The 2002 Winter Olympics facilitated a need for many hotels and restaurants that have now led to market saturation. Urban sprawl has created fierce suburban economic competition resulting in inner-city economic decay. However, studies have shown that increased suburban growth has caused increased construction in the downtown area.[3] Poverty has become a consequence of rapid growth along the Wasatch Front coupled with large family sizes and low housing vacancy rates that have inflated housing costs, decreasing affordable housing. One out of every six residents resides below the poverty line. It has become a common occurrence for homeless shelters to overflow during winter months, leading some with no other option but to spend the night out in the cold, which results in numerous fatalities.
Economic indicators in 2005 found that the city, particularly the downtown area, was experiencing increased population growth. The number of residential units in the central business district have increased by 80% since 1995, and is forecast to nearly double in the next decade. Recent sales of high-rise condominiums have been brisk. One 12-story building, The Parc condos at Gateway, had its ground-breaking in 2002 and was sold-out in mid-2005; many new towers are planned within the next decade. One notably large development of over 1,000 units is being built by the LDS Church. This marks a turn in a half century's trend of stagnant population growth in the city contrasted with an average yearly growth rate of 6% in the surrounding suburban area.
Employment
Employment by industry in Salt Lake City [4]
| Industry | Employment thousands March 2013[4] | Percent of total employment |
|---|---|---|
| Trade, transportation and utilities | 132.2 | 20.4% |
| Professional and business services | 106.5 | 16.14% |
| Government | 100.7 | 15.26% |
| Education and health services | 71.8 | 10.88% |
| Leisure and hospitality | 69.9 | 10.59% |
| Manufacturing | 55.1 | 8.35% |
| Financial activities | 50.6 | 7.67 |
| Mining, lodging and construction | 37.2 | 5.64% |
| Other services | 19.2 | 2.91% |
| Information | 16.5 | 2.50% |
| Total | 659.7 | 100% |
Fiscal Budget
Salt Lake City Proposed General Fund for the fiscal year 2012-2013 [5]
| Revenue by Source | $ thousands | Percent of revenue |
|---|---|---|
| Property Taxes | 63,110 | 30.66% |
| Sales & Use Taxes | 50,795 | 24.68% |
| Other Revenue | 19,713 | 9.57% |
| Licenses & Permits | 18,664 | 9.07% |
| Fines & Forfeitures | 11,341 | 5.51% |
| Intergovernmental Revenue | 5,614 | 2.73% |
| Charges & Fees for Service | 4,937 | 2.40% |
| Parking (Meter and bagging revenue) | 3,255 | 1.58% |
| Total | 205,817 | 100% |
| Expense | $ thousands 2011 fiscal year | Percent of expenses |
|---|---|---|
| Police | 55,249 | 26.8% |
| Non-departmental | 40,028 | 19.44% |
| Fire | 33,658 | 16.35% |
| Public Services | 32,321 | 15.7% |
| Community & Economic Development | 16,958 | 8.24% |
| Attorney's Office | 5,612 | 2.72% |
| Finance | 5,579 | 2.71% |
| 911 Communications Bureau | 5,306 | 2.58% |
| Justice Courts | 4,100 | 1.99% |
| Mayor's Office | 2,612 | 1.27% |
| City Council | 2,341 | 1.14% |
| Human Resources | 2,048 | 1.00% |
| Total | 205,817 | 100% |
Vacancy rates
Office vacancy rates are also low in the downtown region. Recent estimates place empty Class A office space at about 3.5 percent. In response, two new skyscrapers of are being constructed. The first, at 8 stories, is located in the Gateway District and is being built for Fidelity Investments.[6] The second will be 23 stories high and is currently under construction on Main Street.[7] Construction of the Gateway District, light rail, and planned commuter rail service have supported the revival of downtown.
The Census estimates that the city's daytime population increases to 313,000 - the second largest increase for cities with at least 100,000 residents. This reflects the fact that a relatively small proportion of metropolitan area residents (18%) live within the city limits.
References
- ↑ FDIC Industrial Banks
- ↑ Idaho Statesman
- ↑ Deseret News - Suburban boom may be fueling projects in Salt Lake
- 1 2 http://www.bls.gov/eag/eag.ut_saltlakecity_msa.htm
- ↑ http://www.slcdocs.com/budget/2012summary.pdf
- ↑ Deseret News Office space hard to find. Vacancy rate for premium sites in downtown S.L. falls below 2%
- ↑ Hamilton Partners