Utah’s economy is booming, thanks in part to the growing tech industry across the state. Levi Pace, a senior research economist with the Kem C. Gardner Institute who led a study on Utah’s Tech Economy last year, found that in terms of total employment and wages in the private sector, no state with an economy Utah’s size had a larger tech industry in 2018.
This has been great for job growth (nearly 1 in 7 jobs) and economic impact (an estimated $29.7 billion); however, with it comes enormous challenges.
Utahns have experienced heightened demand for housing, pressure on transportation, and wage inequities (average compensation for tech employees is around $106,000, where other industries are $58,500).
With real estate prices at an all-time high, housing affordability is a particularly challenging problem leading to an estimated 54,000 unit housing gap. As the number of building permits being issued continues to grow, there is still not enough affordable inventory to meet the needs of Utahns.
We can, however, learn from other cities across the west that have grown due to the tech expansion and seen similar provocations. It is widely understood that this growth has contributed specifically to housing problems in their respective communities. Tech workers are often well-paid, earning proportionally larger salaries than locals. These tech employees are then able to pay a premium for the best housing in those areas, which drives up prices across the board.
Large companies in other areas are able to see the effects of their growth and what it has done for the local housing market and are taking action.
Recently, Microsoft announced that it was creating a $500 million revolving loan fund to build and preserve low- and middle-income housing in Seattle, which some of its own employees have struggled to afford. In the Bay Area, Google has pledged $1 billion into building 20,000 new homes, Airbnb has announced a smaller commitment of $25 million, and Facebook has promised a commitment of $1 billion. Facebook has also planned $225 million in donated land and $25 million for teacher housing in San Mateo and Santa Clara Counties. Most impressive was Apple’s comprehensive $2.5 billion housing availability and affordability plan for California unveiled earlier this month.
Our state has been generous with massive property and sales tax incentives designed to attract data centers. Our industrial-bank charter is not subject to the Bank Holding Company Act which allows the banks to be free from more onerous federal regulation and also allows them to be more responsive to changes in the economy. Utah has become an ideal location for more than 6,500 startup and tech companies.
Both the economic and population growth have rapidly changed the availability and affordability of homes. Housing should be prioritized as a social determinant of health, especially with rates of mental illness rising to crisis levels in some neighborhoods across the state.
If Utah’s tech sector invested more into the communities they serve, we could better promote quality of life, healthy development, and healthy behaviors across all life stages. The housing crisis would be better solved by engaging with both public and private sectors to more effectively take action and improve practices. In addition to environmental impact statements, we should include evaluations on how major companies will impact housing in proposed communities.
The housing crisis affects everyone and will require partnerships across sectors. It is imperative we see recognition and support from those companies who have major economic and environmental impact.
Angela McGuire
Angela McGuire is a proud Brooklyn, N.Y., transplant in Salt Lake City. She is currently a policy fellow with Action Utah, where she supports non-partisan, solution-based civic engagement.