Utah’s Tech Employment

Utah's Tech Employment

By Gwen Kervin, regional economist

Employment in Utah's tech sector has been steadily growing, making up a larger share of U.S. tech employment over the last several years. The Governor's Office of Economic Opportunityhas targeted the Software and IT industry in its mission to foster economic growth in the state. Within Utah, the tech industry accounted for just over 67,400 jobs in 2023 and paid a total of $9.28 billion in wages, the majority of which were paid out by software publishers and computer systems design and related services companies. However, this does not capture the entire picture, as employees with technical skills can be found across all sectors of the economy. Moreover, high-paying technical jobs don't just benefit those who work in the tech sector or hold technical jobs. As tech employees spend money locally, they increase demand for goods and services in a variety of industries, supporting local employment and wages.

Tech Industry

The tech sector can be defined in a variety of ways. The North American Industry Classification System (NAICS) classifies businesses at various levels of specificity, which can be used to filter businesses into relevant categories. For the purposes of this article, tech sector businesses are defined as those who provide products and services related to software, telecommunications, data processing, systems design, web hosting and social media platforms.

Certain regions have a unique specialization in various industries or occupations when compared to the nation. One way to measure the level of specialization of an industry or occupation is to use a location quotient(LQ), which compares the local specialization to that of the nation. A location quotient above one (1.0) indicates a higher degree of concentration locally than exists nationally. For example, if a given industry accounts for 2.0% of jobs locally and only 1% of jobs nationally, the region would have a location quotient of 2.0 and thus would be twice as concentrated in that industry as the nation.

The map below shows location quotients by state for tech sector employment. Utah's tech sector location quotient is 1.34, indicating that the concentration of tech employment in Utah is higher than it is nationally, implying a local specialization. In fact, Utah's location quotient is the same as California's, which is the state that employs the largest share of workers in the tech sector.

Source: Lightcast, Quarterly Census of Employment and Wages

The geography of tech sector employment has been shifting in recent years. From 2020 to 2023, California's share of national tech sector employment declined from 17.0% to 15.8%, while Texas, Florida and Washington increased their shares. By 2023, Texas accounted for 9.9% of national employment in the tech sector and Florida and Washington accounted for 5.6% and 5.0%, respectively. Utah was among the states that increased its share of employment in the tech sector the most during this time, growing employment in the sector by 19% and increasing its share of tech employment by 0.08%, to account for 1.5% of national tech sector employment by 2023.

Within Utah, the majority of jobs in the tech sector can be found in the Salt Lake and Provo-Orem Metropolitan Statistical Areas (MSAs). The Salt Lake MSA accounts for 52% of the state's employment in the tech sector, while the Provo-Orem MSA makes up 33%. However, because of its smaller employment base, the sector makes up 7.9% of employment in the Provo-Orem region and 4.9% of employment in the Salt Lake area.

Amid a slowing economy and increased funding costs, Utah saw a decline in tech sector employment in 2023 along with many of the states with a large share of tech employment, including California, Massachusetts and Illinois. The majority of the state's job contractions were seen in the Provo-Orem MSA, while the Salt Lake MSA increased employment in the sector. By the end of 2023, tech sector employment in the Provo-Orem MSA declined by 12.9% from January 2022 levels, while the Salt Lake MSA saw a 1.7% increase in sector employment.

Mathematical and Computer Occupations

All sectors in the economy have a need for people with technical skills. Thus, not all technical jobs are found in the tech sector. Jobs ranging from software developers and computer support specialists to data scientists and actuaries can be found across a variety of industries within the state. To better understand the concentration of these technical occupations across the state we again turn to the location quotient. Within Utah, the Provo-Orem MSA and the Salt Lake MSA have the highest specialization in computer and mathematical occupations. With a location quotient of 1.56, the Provo-Orem MSA has the largest specialization in these occupations, followed by the Salt Lake MSA with an LQ of 1.38. These regions also make up the largest share of employment for this group, with Salt Lake and Provo-Orem housing 55% and 23% of the state's mathematical and computer jobs, respectively.

The Professional and Business Services and Information sectors are those with the highest share of employment in the mathematical and computer occupational group, as many of the NAICS industries in this tech sector analysis are classified as Information or professional and business services. However, financial activities, education and health services, government and trade, transportation and utilities also employ many people in the mathematical and computer occupational group as well.

Computer-related occupations make up the majority of jobs in the mathematical and computer occupational group. Specifically, software developers account for 34.1% of Utah jobs in this group, followed by computer user support specialists, which make up 17.4%. The majority of software developers and computer support specialists are employed in the information and professional and business services sectors. However, the financial services and manufacturing sectors have a significant demand for software developers, employing 14% of software developers in Utah. The government, education and health services and trade, transportation and utilities sectors employ a large number of computer support specialists, accounting for 25% of these jobs in the state.

Among the various occupations in this group, software developers stand out. Not only did the state have nearly 26,000 software development jobs in 2023, but with an average annual salary of $116,800, these jobs paid higher than average wages. The location quotient for software developers in Utah is 1.42, implying a regional specialization. Locally, the location quotients stand out even more. The Provo-Orem MSA has a location quotient of 2.03 for this occupation, implying that the region has more than double the national concentration for this occupation. At 1.65, the location quotient for software developers for the Salt Lake MSA is also higher than the statewide number.

High-paying technical jobs fuel economic growth in the state. Utah has a local specialization in both the tech sector and mathematical and computer occupations, specifically in the Provo-Orem, Salt Lake and Ogden-Clearfield MSAs. In spite of a dip in tech sector employment in 2023, Utah has managed to increase its share of tech employment in the United States. Job gains in the relatively high paying tech sector stand to benefit the state, feeding money back into the local economy and supporting local businesses.

Public link

Please use the above public link if you want to share this noodl on another website.