Cost of living is an important issue in Utah and across the U.S., especially as inflation has had  far-reaching impacts on Americans over the past few years. Some states have seen more significant changes in cost of living than others, and Utah is one of those. In 2014, Utah’s metro areas had an average cost of living index score of 93, lower than the national average of 100. In 2024, every Utah metro area has an index score over 100, with Salt Lake and St. George at 109.5 and 108.1 respectively. How is this index calculated, and what has caused the drastic increase in Utah metro areas?

The Council for Community and Economic Research (C2ER) Cost of Living Index is a quarterly publication produced and published by tC2ER, a national association of research professionals working in community and economic development. C2ER’s Cost of Living Index sheds light on changing costs across the U.S. and is nationally recognized as one of the best sources for cost of living data.

Each quarter, partner organizations all around the nation, including EDCUtah’s research team in Utah, sample prices of common goods and services. These goods and services fall into the following categories: grocery items, housing, utilities, transportation, health care, and miscellaneous goods and services. These categories are then used to produce the overall composite index score. Each category is weighted differently, according to C2ER’s methodology, as follows:

Here is how Utah’s metro area scores in each of those areas, with 100 being the national average:

Since Utah’s index scores have increased substantially over the past decade, this shows that cost of living has been more rapidly increasing in Utah compared to other locations in the United States since the score of 100 is always equal to the national average in any given quarter when the index is calculated. The two areas where Utah scores considerably higher than the national average are housing and transportation. Since housing is such a significant portion of the cost-of-living index score, and a highly significant cost for Utahns each month, it’s one of the reasons behind the high composite index score.

It’s not surprising that Utah’s much lower average composite index score of 93 in 2014 showed a much lower index score in housing and transportation, 97.1 and 101.6 respectively. While some of the other categories have also increased, none have increased so drastically as housing and transportation. According to Zillow, the median home value in Salt Lake City was $282,946 in 2016. Today, that number has increased to $548,351, an increase of 94%. Utah has seen significant increases in housing costs in all other metro areas as well, although housing costs are not growing as rapidly today. For transportation, the index measures the cost of gasoline and common automobile repairs. Those costs have steadily increased in Utah.

The entire nation has seen rising costs of living, but it has been more acute in in the Intermountain West and Utah specifically over the same period. This is a result of a variety of factors including rapid population growth and increased in-migration, microeconomic forces including housing undersupply, and a tightened labor market.  Utah’s cost of living is still comparable to other major competitor metro areas, and Utah leaders are tackling rising costs with a number of strategic initiatives such as the Olene Walker Housing Loan Fund, the Low-Income Housing Tax Credit (LIHTC) Program, and other investments into affordable housing and cost of living.

Utah business leaders are also doing their part. For example, Utah Rising is a comprehensive statewide vision led by the Salt Lake Chamber in collaboration with public and private sectors. The initiative is designed to ensure sustainable economic growth, enhance quality of life, and drive prosperity across Utah by uniting diverse stakeholders around innovative, long-term solutions.

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For more information about the Cost of Living Index, email us at connect@edcutah.org or explore the benefits of investing with EDCUtah.

For additional information or to schedule an interview, please contact us.

Data Source: C2ER Cost of Living Index

EDCUtah’s Research Minute highlights interesting economic development data and timely research insights. This month, we explore productivity by industry in Utah.

An analysis of Utah’s most productive industries reveals interesting insight into what cities, counties, and the state might consider when planning for the future and targeting expansion and development opportunities.

What qualifies as a productive industry, you ask? Productivity is the total industry output (gross domestic product, plus the value of products and services used as inputs to produce other products and services) divided by industry employment. The measure is used to estimate the dollar amount per employee, per year for an industry. The higher the dollar amount, the more productive a hypothetical employee would be in that industry.

Any increase in productivity leads to economic growth as measured by GDP, and improved economic growth diversifies industry and raises wages thus improving the standard of living. Higher productivity also often means greater impact to communities in tax revenue, higher quality jobs, and a greater multiplier effect for economic growth.

EDCUtah’s research team analyzed all 96 3-digit NAICS (North Atlantic Industry Classification System) codes in the state to determine which industries contribute most to economic growth and prosperity. To do this, EDCUtah considered metrics like productivity, employment, labor density, GDP per employee, gross surplus, and the cost of labor.

Utah’s 5 Most Productive Industries:

1. Petroleum and Coal Products Manufacturing

2. Real Estate

3. Financial Services

4. Software Publishing

5. Computer Infrastructure, Processing, and Web Hosting

Utah’s 5 Least Productive Industries:

1. Food Services and Drinking Places

2. Amusement, Gambling, and Recreation

3. Most Retail Industries

4. Social Assistance / Residential and Nursing Care

5. Museums, Historical Sites, and Similar Institutions

In the analysis, the most productive industries tended to be the industries with the highest GDP per employee and the highest gross surplus. This makes sense because GDP is used in the calculation for those metrics. Some of the most productive industries in Utah have high employment, and some don’t. Utah has a competitive labor density for some of these industries, but not for others. The cost of labor for the most productive industries tended to be higher than those of less productive industries, since those industries generally required higher skilled labor.

The most productive industries tended to be industries that fit into one of two categories:

• Industries that produce complex products with large supply chains and extensive infrastructure needs.

• Industries that produce high dollar outputs, like software and information technology.

Petroleum and Coal Product Manufacturing is based on the transformation of crude petroleum and coal into usable products. The process for petroleum refining involves the separation of crude petroleum into component products using complex methods. Utah has a relatively low employment in this industry, with only about 1,800 employees statewide, but a high labor density, since this industry does not have high employment nationwide. Nevertheless, this industry has grown rapidly over the last five years (+108.9% growth) and produces an astounding $1.7 million in GDP per employee.

Contrast this industry with Food Services and Drinking Places, with 119,000 employees and only $37,000 GDP per employee, and it’s clear that some industries are far more productive than others. These two industries produce roughly similar GDP, despite one having less than 2% of the employment compared to the other.

It makes sense that some industries are not highly productive. Social assistance and residential and nursing care services do not exist to produce a product output, but to provide necessary community care. The same can be said for other institutions, like museums and historical sites, which exist to serve the public and offer cultural enrichment.

Additionally, many municipal leaders prioritize attracting retailers as part of their economic development efforts. While retail industries typically rank low in productivity, GDP per employee, and gross surplus, they can provide a significant source of local sales tax revenue. Retail and service industries also contribute to a community’s livability and workforce diversification.

Productivity data can provide community leaders with an alternative lens for assessing developable areas and evaluating their economic development plans. Some communities might choose to increase their investment in real estate and infrastructure to attract non-retail commercial businesses. Other communities may not be interested in new industry development. Prosperity and “good growth” look different for every community – that’s why EDCUtah collaborates with community leaders to understand their unique needs and help them achieve their economic development goals.

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For more information about how industries performed in this analysis, email us at connect@edcutah.org or explore the benefits of investing with EDCUtah.

For additional information or to schedule an interview, please contact us.‍

Data Sources: JobsEQ, US Bureau of Economic Analysis, US Bureau of Labor Statistics.