Can Your Employees Afford Utah?
Allison Clements, an attorney who heads energy marketing policy for a San Francisco-based foundation, moved to Salt Lake City from Brooklyn two years ago and she’s still shocked by the relative affordability of Utah. “When we think about where else we might move,” she says, “we have trouble coming up with another city in the US that matches up with the combination of affordable living, outdoor access, and culture that Salt Lake City provides.”
Compared to the coasts, Utah cost-of-living is indeed a steal. Compared to the coasts, Utah cost-of-living is indeed a steal. But can you actually afford Utah? If you are comparing the cost of living to earning potential and measuring how do the two shake out?
Utah Offers Lower Wages Than Bigger Cities
“Utah’s wages are much lower than the rest of tech-dominated communities in the US,” says Parry Jarman, Vice President at Ivanti. Though he believes wages will rise over the next few years in order to compete with markets in Silicon Valley, Seattle, and Austin, right now Utah is not competitive in terms of wages alone.
That being said, the cost of living here is much less expensive. “In New York City or London it wouldn’t be surprising for an investment professional to earn two times what they earn in Salt Lake City,” says Peter Madsen, Chief Investment Officer for the Utah School & Institutional Trust Funds Office. “[But] the cost of living is four times [what is spent in Utah].”
In other words, if you move to the big city you might earn twice the income but receive half the value.
But wages aren’t the only consideration for employees looking to move to the state. Two years ago, Mr. Madsen and his family returned to Utah after a four-year stint in London, only to discover there were much fewer high-level job opportunities available to him in Salt Lake City. Though big firms like Goldman Sachs were locating an increasing amount of their operations in Utah, they tended to be “lower cost and lower value-add jobs.”
“While living in Salt Lake City is less expensive and has good quality-of-life,” Mr. Madsen says, “career trajectories can be limited relative to a more expensive city.”
But Your Money Might Go Father In Utah
Online, one can find tables of the average salary by state. Some of them, like the one by Rasmussen College, have a second table called “average salary, adjusted for cost of living.” It’s sort of like wind chill: feels like $100,000.
Washington, at the top of both tables, boasts a $110,000 average salary, which feels like $106,000. California comes second on the actual but falls to 9th on the adjusted: $108,000 feels like $96,000. New York’s $98,000 feels like only $85,000 while Missouri punches far above its weight in an almost exact inverse of New York: $84,000 feels like $95,000. As to Utah? Average wages are $85,000 and they feel like $87,000. In other words, your money will go a lot farther here.
For Ms. Clements, who was coming from New York City, she found that her dollars went really far when it came to day-to-day living expenses, though she admits she expected housing prices to be much lower. Perhaps, she says, the secret is out in Salt Lake City.
There Are Big Benefits for Companies Who Headquarter In Utah
Of course, low wages are especially beneficial to the ones writing the paychecks. If a company can pay 10 percent less compensation for equivalent work, that’s an additional 10 percent profit. “Today you are seeing high-tech companies slow all hiring in Silicon Valley and Seattle because of the much higher wage they have to pay,” says Mr. Jarman.
Sure, Silicon Valley companies could set up shop in Mississippi (average salary $77,000), where labor costs are considerably lower than those in Utah (average salary $85,000). But there’s a lot more to the equation than earnings alone. Technical education—Utah has a well-educated workforce relative to other states—and other factors also play in.
Mr. Jarman talks about “full burden rate dynamics,” by which he means the number of holidays, vacation days, training requirements, productivity assumptions, turnover rates, quality of skill set, additional travel, logistics, taxes, infrastructure or capital costs, hiring costs and wage inflation it takes to run a business.
“I have seen many companies make the mistake of not looking comprehensively at all these costs and then realize they didn’t realize the cost per output they originally assumed,” Mr. Jarman says.
Utah seems to offer a fairly attractive proposition to both labor and corporations. Wages are still low enough to benefit the corporations, while still high enough to offer a pleasant quality of life for their employees. Reduced commute times help, as does access to the mountains. And because so many companies are choosing to join the Silicon Slopes, wages will likely increase, and higher-level positions will become more available. In short, it’s good to do business here. Both now and in the future.
