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7/3/14: Hispanic Business is Utah Business

July 3, 2014

By: Natalie Gochnour

Originally published in Utah Business

We should always walk like one family.
We are all in the same cause and need.
Together we make up the same future.
Alone we are not worth anything.
Together, we have great value.

– Cesar Chavez

If you ever get the chance to interact with Javier Palomarez, take it.

Palomarez is the president and CEO of the U.S. Hispanic Chamber of Commerce. He not only sees the future, but he is also living it as the leader of America’s largest Hispanic business association. Our country’s economy benefits from his vision, hard work and commitment to commerce. By heeding his counsel to harness the strength of this country’s young, growing, creative and hard-working Hispanic population, we will be more prosperous as a state and nation.

Palomarez will bring his organization’s coveted national convention to Salt Lake City this September. For three days this fall, Salt Lake City will be the center
of business and Hispanic commerce in this country. Not bad for a small state in the interior West. It says something about Utah and about the national Hispanic chamber.

American Values

In his advocacy, Palomarez points out that America’s Hispanic population is business minded, entrepreneurial and hard working. He quotes from a recent report showing that America’s 3.1 million Hispanic-owned businesses contribute in excess of $468 billion to the U.S. economy each year. That’s real money.

But it’s more than the money; it’s the people—Hispanic business owners, employees and customers all contribute to American commerce. Palomarez suggests that in order to compete in today’s economy, and more importantly, in the economy of the future, businesses must target, recruit and sell to the rapidly growing Hispanic population. That’s true nationally and in Utah as firms like Zions Bank, which recently became a major supporter of the U.S. Hispanic Chamber, make Hispanic business a priority.

Other business partners of the U.S. Hispanic Chamber include major companies like American Express, AT&T, BMW, Cisco, The Coca-Cola Company, Intel, FedEx, Google, Marriott, Target, Toyota, Visa and Wells Fargo, to name just a small subset. Hispanic business is American business. American companies understand the importance of this country’s vibrant and talented Hispanic population.

Utah Values

There’s an old trick in economics. If you want to understand the future economy, look at the children in elementary and secondary education. Palomarez says one in four school kids in the United States are Hispanic today. It’s even greater in some areas in Utah, like the Salt Lake City School District, where Hispanics comprise over 40 percent of total enrollment. Next time you hear someone reference the “rising generation,” think about a multi-cultural, ethnically rich and often bi-lingual talent force. That’s America and that’s Utah. Those who cultivate this asset will be the economic winners of tomorrow.

Importantly, Palomarez emphasizes that the national Hispanic chamber chose to host their national convention here in part because the Beehive State appreciates the contributions of Hispanics to our economy and culture. He values the collaborative spirit that exists in Utah and the way community leaders rallied to support sensible immigration reform through the genius of The Utah Compact. Palomarez says it’s no accident that Utah is a top-performing state economy and a state that welcomes immigrants. I agree.

Natalie Gochnour is the associate dean of the David Eccles School of Business and the director of the Kem C. Gardner Policy Institute.

6/5/14: World Cup Soccer Fever

June 5, 2014

By: Natalie Gochnour

Originally published in Utah Business

I love World Cup summers. It’s a time to give your work-a-day life a pause and pay attention to what really matters in life—futbol, or what us yanks like to call soccer. It turns out I’m not alone—far from it. The cumulative viewing audience for the 2014 World Cup will exceed an estimated 5.9 billion people, making it, by far, the world’s most watched sporting event.

Get ready for the global GDP to take a temporary hit as human productivity suffers. Here’s one soccer fan and economist who really doesn’t mind.

The 2014 World Cup kicks off June 12 and concludes one month later. During this time, an estimated 80 percent of the world’s population will watch games. There’s really no sporting event that can hold a candle to the World Cup. Consider these viewing audience stats from 2010, the year of the last World Cup:

The competition started two years ago as 204 countries from six continents competed for 31 available spots. The host country, which is Brazil this year, makes up the last spot in a 32-team field. To secure an invite to the tournament, national teams around the globe played approximately 850 matches.

The drop in productivity is easy to explain. Employers and employees who have World Cup fever stay up late, come to work late (or tired), call in sick, close up shop and otherwise waste time at work while participating in betting pools, checking scores or gabbing about the players, the games and the referees.

There are lots of stories about crazy economic events that happen in World Cup years. Italian autoworkers that were told they couldn’t watch a World Cup game while working went on a two-hour strike a half hour before game time.

In fanatical soccer countries like Brazil, everything shuts down during games so people can party in the streets. Government agencies, schools, banks and other businesses close. Even hospitals slow down as elective surgeries are postponed. Can’t you just hear the drums pounding in your head?

My favorite is a claim by a South Korean retailer that monthly sales for adult diapers increased by 168 percent during the World Cup because fans, many of whom watched the games at outdoor plazas, didn’t want to miss a minute of the action!

This summer’s competition promises to draw even more attention because Brazil, the international face of the “beautiful game,” plays host. Eight different teams have won the competition since it started in 1930 (1942 and 1946 were skipped because of the Second World War). Brazil has won five times, Italy four, Germany three, Argentina and Uruguay two, and England, France and Spain one.

There is a definite Utah connection to this year’s tournament as local Real Salt Lake stars Kyle Beckerman and Nick Rimando were selected to be on the U.S. team. Only five other U.S. Major League Soccer cities have players on the national team, which is a huge tribute to the caliber of soccer played in Utah. Since an estimated 95 million people will view each match via the international television feed, any shout out for Real Salt Lake would be a huge tribute to our capital city and state.

To those of you who are not soccer fans, I invite you to join the international community and experience the largest sporting phenomenon known to man. Remember, it’s not about endless scoring like you see in basketball. That’s too predictable. It is about a sport where the action never stops (no time outs, no television ads and very few breaks in play), where physical endurance rules, where skill and tactics dominate, and where just about the whole world stops for about a month and celebrates the joy of sport.

GDP growth may experience a hiccup, but even an economist like me believes there’s much more to life than counting money.

Natalie Gochnour is the associate dean of the David Eccles School of Business and director of the Kem C. Gardner Policy Institute.

4/4/14: Good choices allow Utahns to enjoy economic success

April 4, 2014

By: Natalie Gochnour

Originally published in the Deseret News

You wouldn’t call somebody who just won the lottery “prosperous.” They may be rich and they are certainly lucky, but they are not prosperous. Prosperity has to be earned.

On Thursday, Gov. Gary Herbert hosted his annual Utah Economic Summit. Unlike his first year in office when unemployment hovered around 8 percent, Utah’s unemployment rate now stands below 4 percent, a level many economists would call near-full employment.

The Utah economy created 32,200 jobs during the past 12 months and nearly every major industry is growing. Utah’s level of income equality is among the highest in the nation. The governor’s vision of having the state become one of the strongest economies in the nation and a global business destination has largely been met. It may just be time for the governor to claim victory and set an even higher bar.

I made up a new word that characterizes what’s happening in Utah: I like to think of Utahns as Prospertarians. Taken from the root word prosperity, Prospertarians are people who experience remarkable economic success because of the choices they make.

Economics teaches us that large differences in economic performance can be explained. There are reasons some countries and states do well and others do poorly. Usually, places that motivate investment and spur productivity outperform those that don’t.

Consider North and South Korea. At the end of the Korean War the countries shared similar situations. They were both devastated by war, possessed similar natural endowments and tallied similar income and education levels. The Korean War ended in 1953. Today gross domestic product per capita in South Korea exceeds that of North Korea by a factor of 17!

We can learn similar lessons by looking at East and West Germany, or even today’s China, as it has been more accepting of market forces.

So what are the lessons learned? First, markets work. We know of no better way to organize economic activity than through the rules of free enterprise. Thanks to reasonable regulations and tax policies, Utah’s market is performing better than most and we are reaping the rewards in terms of increased economic opportunity.

The corollary is that even in a market economy, governments play a vital role. Governments set the rules of the game in motivating investment and in fueling productivity growth. Nothing kills an economy faster than a misbehaving government. Just watch and see how Russia’s macroeconomic indicators plunge over the next several months because of the actions of President Vladimir Putin.

But there’s more.

To be a true Prospertarian you have to be willing to help those in need, a trait we possess in abundance as Utahns. The Community Foundation of Utah recently celebrated raising $1 million during the 24-hour Love Utah, Give Utah campaign. That’s success.

Primary Children’s Hospital just raised $521,619 during the KSL Radiothon. That’s success.

Catholic Community Services is an amazing force for good in this state. It administers compassionate service to the poor, the hungry and the homeless. It admirably serves immigrants in this state. That’s success.

Then there’s the well-known story about the aid provided by the LDS Church after Hurricane Katrina. A man was asked about the service rendered to the people of New Orleans. He said two different churches really stood out — The Church of Jesus Christ of Latter-day Saints and the Mormons! That’s success.

All this is not to say we don’t have problems in Utah. An estimated 57,100 people remain unemployed. Approximately 12 percent of Utahns live in poverty. Far too many Utahns are without health insurance. We really need to expand Medicaid in this state. And we must invest more in public and higher education if we wish to remain prosperous.

But we are Prospertarians because of the choices we’ve made. We’ve made smart investments in human and physical capital. We’ve provided the right incentives for innovation that spur productivity. And, importantly, we hold out a helping hand to those in need. Taken together … smart decisions, hard work and compassionate service create a winning combination. Join me in celebrating Utah’s current economic success and commit to an even better future.

Natalie Gochnour is an associate dean at the David Eccles School of Business and director of The Kem C. Gardner Policy Institute.

3/12/14: Income Inequality Less of a Problem in Utah

March 12, 2014

By: Natalie Gochnour

Originally published in Utah Business

“Some people are born on third base and go through life thinking they hit a triple.”

That classic line was made famous by Barry Switzer, the well-known Oklahoma football coach who was raised poor and went on to win a college football championship and the Super Bowl. And while I don’t hold him up as a role model, his famous quote about inequality and hubris hit a chord with me. We are all born into different economic circumstances and income inequality is a problem.

What’s interesting is that as income inequality and social mobility have garnered increasingly more attention, Utah has gained national notoriety for our performance in these areas. People are asking: Why is income inequality less of a problem in Utah?

I’m not aware of any studies that comprehensively answer this question, but we can gain insight by looking at recent research.

Opportunity Abounds

This past summer a group of Harvard and U.C. Berkley economists published some studies as part of The Equality of Opportunity Project. They examined upward mobility across metropolitan areas in the United States and found that Salt Lake City ranked best in absolute upward mobility. Said another way, children born in low-income families in the Salt Lake metro area are more likely to achieve the American dream than anywhere else in the country. The authors found that areas with greater mobility tended to have “less segregation, less income inequality, better schools, greater social capital and more stable families.”

Another study published by the Census Bureau examined income inequality among states. They used a statistical measure known as the Gini coefficient, a measure of statistical dispersion that is commonly used as a summary measure of income distribution.

Utah has relatively low Gini coefficients at the state and sub-state level. In the most recent data, Utah tallied the third-lowest income inequality among states. Salt Lake City scored the lowest income inequality among the 51 metropolitan areas with more than one million in population, and West Jordan City scored the lowest income inequality among the 267 cities over 100,000 in population. These are impressive rankings, but it gets even crazier. A neighborhood in Kearns (census tract 1135.26) measured the third-lowest income inequality among 65,000 census tracts nationwide.

Bootstraps—and Safety Nets

What’s going on? Why does Utah have more income equality?

I won’t pretend to know the answer, but I will offer a few observations.

First, Utahns are hard workers. We participate in the labor force at high rates and have a high number of workers per household. Both of these measures reflect Utah’s young age structure, but the incomes received still fortify household incomes. In 2012, Utah’s median household income ranked 11th among states.

Second, Utah’s economy is diverse and growing. We currently have the sixth most economically diverse industrial structure in the nation and are typically in the top tier of states for the rate of job creation. Ours is an economy of opportunity, a characteristic that likely helps with our income equality.

Third, educational attainment may be an important factor. While not determinative, a Census Bureau analysis found that lower income inequality correlates with higher levels of education. Utah ranks 19th among states for the percent of the adult population with a college degree.

Finally, Utah’s extensive social capital may contribute to greater income equality. Well-developed social networks such as United Way of Salt Lake, Catholic Community Services, Jewish Family Services and LDS Community Services, to name just a few, make important contributions in our community.

A journalist appearing on CNN’s Global Public Square recently praised what she called Utah’s “private welfare system.” She said, “[Utahns] are extremely good at investing in people. If you are in a Mormon parish, call it, and something’s going wrong in your life, you’re going to have intensive, kind of tag-team efforts by people in your community to get you back on track.”

It’s been my experience that Utahns of all faiths and circumstances do a darn good job at taking care of one another.

I have no illusions about the economic hardship that exists in this state. An estimated 360,000 Utahns live in poverty, an alarming 12.8 percent of our population. Nevertheless, my reading of the economic data is that we do far better than most states on the income inequality scale. We need to understand why we perform well and continue to cultivate it. That way, no matter what base you are born on, our community will hit a home run.

Natalie Gochnour is the associate dean of the David Eccles School of Business and director of the Kem C. Gardner Policy Institute.

2/7/14: Time to raise Utah’s motor fuel tax

February 7, 2014

By: Natalie Gochnour

Originally published in the Deseret News

Don’t tax you, don’t tax me, tax that fellow behind the tree.

This quip, made by Louisiana Sen. Russell Long, captures Utah’s approach to the motor fuel tax. We’ve been kicking the can down the road for 17 years. It’s time for a serious and informed discussion about raising Utah’s motor fuel tax to make up for lost purchasing power and improved fuel efficiency.

I’m not alone in this viewpoint. Several conservative legislators, like Sen. John Valentine, R-Orem, Rep. Jim Nielson, R-Bountiful, and Rep. Johnny Anderson, R-Taylorsville, have proposed changes to Utah’s gas tax this session. And with good reason. Unlike sales or income taxes, which increase with the price level, the motor fuel tax loses purchasing power over time because it is a per-gallon tax. In inflation-adjusted terms it’s dropped from 24.5 cents per gallon in 1997 (the last time it was raised) to 16.9 cents per gallon today, a 45 percent loss in buying power.

Making matters worse, passenger cars are becoming more fuel-efficient — a good thing except when it comes to paying for the impacts. For every gallon consumed, more wear and tear is placed on the roads. The average fuel efficiency of U.S. passenger cars has increased from 28.7 miles per gallon in 1997 to 35.6 today.

Bottom line: You have to periodically raise the motor fuel tax just to stay even. Staying even is not a tax increase.

And let’s be honest. We have to do a lot more than stay even. Utah’s population grows by approximately 50,000 people each year. Ninety-one percent of Utahns live in urban settings. We have urban problems like traffic congestion and air pollution. If we don’t take care of our road maintenance needs we increase our costs in the future. We must make mighty investments in transportation to support commerce and maintain our life quality.

The Utah Legislature understands this. They’ve invested substantially in Legacy Parkway, I-15 in Davis, Salt Lake and Utah Counties and other projects throughout the state.

But it’s come at a cost.

We’ve borrowed huge sums of money increasing our net general obligation debt per capita from $434 just five years ago to $1,161 today. Today our debt ratio is second highest among Moody’s AAA-rated states. This year in the Transportation Investment Fund we will spend more money on debt service than on projects. We can’t borrow more and remain fiscally responsible.

We’ve also earmarked record amounts of sales tax to transportation projects. In 1997, the state earmarked less than $10 million of sales tax revenue. Today, we earmark over $450 million. We can’t earmark any more and adequately fund other needs.

That leaves us with four options: do without (not a good choice for the economy), take from other government services like education (ill-advised when investment is already low), raise general taxes (poor choice in an uncertain economy) or adjust the motor fuel tax to recover lost purchasing power.

Raising the motor fuel tax is by far the best option.

The motor fuel tax is a user fee. Unlike most government services, transportation is metered at every pump. It you drive more, you pay more. That’s fair. If you pay more, you are incentivized to use less — a good thing for congestion and air quality. Such is the magic of a user fee. It brings the power of market forces to the provision of government services.

Some will say the motor fuel tax is a dying revenue. I disagree. It’s only dying if the Legislature refuses to act. Some will say motor fuel taxes hurt low-income families. Let’s find other ways to help them. Some will say it’s an election year and the Legislature won’t entertain a tax increase. Maybe so, but when you kick the can down the road the pile gets bigger and bigger.

The Utah economy benefits from transportation infrastructure. We need to have the foresight to have users pay for it.

Natalie Gochnour is an associate dean at the David Eccles School of Business and director of The Kem C. Gardner Policy Institute.

1/14/14: Fast and Furious: Utah’s Economy Ready to Rock in 2014

January 14, 2014

By: Natalie Gochnour

Originally published in Utah Business

I love the start of a new year. It’s a time to begin anew and take a fresh look at life. I find it’s also agood time to take a pause, learn from the past and build a better tomorrow.

The Utah Legislature understands the value of this type of introspection and long-term thinking. Last month they took time out of their busy schedules to attend a Legislative Policy Summit hosted by the David Eccles School of Business. It was my job to brief them on Utah’s current economic positioning. Here’s what I told them:

The Great Recession thumped our state. We lost 104,000 jobs from the monthly employment peak to the monthly employment trough. Utah was the 18th hardest hit state and got hurt worse than the nation. Then … something really amazing happened.

The Utah economy popped. We leapfrogged 30 other states and the District of Columbia and emerged with the third-strongest recovery of any state.

What happened? Why did Utah’s economy show so much resilience, vitality and strength? The answer lies in a little bit of luck, some great decisions and strong economic fundamentals. Let’s take a look at each of these.

Luck

The multi-billion dollar investment by The Church of Jesus Christ of Latter-day Saints in City Creek Center could not have come at a better time. At peak construction, the project employed 1,700 construction workers right when the economy needed it most. The massive project would have added tremendous economic value any time, but during the worst economy of most Utahns’ lifetimes, it added even more value. We got a new downtown and the project put people to work in an otherwise gut-wrenching downturn.

Great Decisions

The Utah Legislature made the decision to rebuild I-15 in Utah County at the perfect time. This massive public works project included 10 highway interchanges, 63 bridges, 385 lane miles and 2.6 million square yards of concrete pavement. At peak construction, it involved 1,600 workers, a godsend to many families in Utah. The investment not only served Utah’s long-term economic interest, it softened the blow of a terrible recession. Private investment was largely frozen on the sidelines, but Utah had a large public works project to lubricate economic activity.

Economic Fundamentals

The luck of City Creek Center and the smart decision about I-15 in Utah County played out over a foundation of strong economic fundamentals.

At the top of the list is our fiscal fitness. In Utah we set the gold standard. My checklist of fiscal responsibility includes a constitutional balanced budget requirement, AAA credit rating, line item veto, appropriation limitation and budget reserve accounts to save for a rainy day. Other states have some of these attributes; most do not have all of them. We have our governor and Legislature to thank for Utah’s top-of-the-class fiscal discipline among states.

Utah’s economic diversity also played a significant role in our recovery. The state’s residential construction industry took a nosedive, losing 40,000 jobs. Fortunately, other industries picked up the slack. Utah’s energy, technology and tourism industry made particularly strong contributions to the recovery. Utah’s economic diversity ranks fourth highest in the nation, an economic fundamental that improves our economic stability.

Another important factor in Utah’s economic success is our young, healthy and growing population. Our youthfulness means we have an affordable, tech-savvy workforce with low healthcare costs—a real cost savings to businesses. Utah’s median age is 7.5 years younger than the nation and the lowest among states. And it’s not just our youthfulness. Utah’s third-highest in the country population growth rate propels economic growth. Every year approximately 50,000 more Utahns are born in this state, which means we fuel demand with our growth.

A final fundamental Utah strength I’ll highlight is Utah’s global engagement. Utah’s merchandise exports doubled in the last five years. Primary metals (like gold, silver and copper) dominate, but the export of computers and electronics, transportation equipment, chemicals and food also increased over this period. Utah also has the most bi-lingual population per capita of any state, an attribute that makes our workforce even more attractive. And we are not resting on our language laurels. We have 20,000 Utah students in public education enrolled in dual-immersion language classes. In an increasingly global economy, Utah’s global engagement bodes well for the present and future.

I’m grateful our Legislature took the time to learn about the Utah economy. We stand today as one of the most well-positioned states in the country. Looking forward, everything is changing. We are growing, diversifying and aging. Our decisions really matter. And, as I reflect upon the beginning of a new year, I’m super pleased to be a Utahn.

Natalie Gochnour is the associate dean of the David Eccles School of Business and director of the Kem C. Gardner Policy Institute.

12/6/13: Gov. Gary Herbert’s budget hits the mark

December 6, 2013

By: Natalie Gochnour

Originally published in the Deseret News

This week Gov. Gary Herbert released his fiscal year 2015 budget. He recommended $13.3 billion in spending – a cool $36 million a day to pay for Utah’s education system, transportation network, human services, public safety and other important public functions. I worked in the state budget office for 18 years, and I think the governor got it right. Here’s my take on state finances:

Fiscal fitness – Every year the governor and Legislature deliver a carefully crafted, fiscally conservative and economically smart budget. They balance revenues and expenses, keep spending under control, and bond only when prudent to do so. Our credit worthiness is the best in the business; nobody borrows more cheaply than the state of Utah. And our governor has line-item veto authority as a check on spending. When it comes to fiscal responsibility, it doesn’t get any better than Utah.

Education funding – Gov. Herbert made it no secret that education is his top priority. I was pleased to see in the news coverage that House Speaker Becky Lockhart agrees. Utah has reached a tipping point in education funding. Our commitment to public education (education revenues per $1,000 of personal income) has fallen from seventh among states in 1995 to 29th in 2010. It’s time to reverse this trend. Herbert’s budget is a step in the right direction.

No new general taxes – Gov. Herbert has always made the Utah economy his focus and has lots to show for his leadership. His string of economic development successes is without peer. The governor also consistently has held the line on taxes, a stance most of his legislative colleagues also support. Utah still has 60,000 unemployed people and arguably a similar amount of workers who have dropped out of the labor force. For this reason I support the governor and Legislature for their no new tax stance, with one important exception.

Raise the motor fuel tax – The motor fuel tax needs to be raised to make up for lost purchasing power from inflation. In inflation-adjusted terms the tax per gallon has dropped from 24.5 cents in 1997 to 17.1 cents today. As a consequence, state policy makers take money from other important state needs to pay for needed investment in Utah’s transportation system. We need the transportation investment, but highway users should pay more. It’s time to raise Utah’s motor fuel tax to make up for lost revenue. While the governor did not propose this, I’d like to see the Legislature consider it.

Earmarks – Revenue earmarks have become a dangerous trend, a point highlighted in the governor’s budget recommendations. When I left state government in 2003 sales tax earmarks were less than $50 million. Today they are over $500 million. I have a philosophical problem with earmarks. I call them “intravenous funds” because they go to their intended use without being vetted in the marketplace of priorities. Budget conditions change year to year and I think it’s better to give elected officials more flexibility in meeting state needs.

Debt – This is my biggest concern with Utah’s current budget. Per capita debt in Utah tripled between 2008 and 2012, rising from $445 in general obligation debt to $1,283. Don’t get me wrong, this rapid increase occurred for a really important reason. We re-built I-15 in Utah County, which is critical to our long-term economic growth. And it could not have happened at a better time – the economy needed the jobs and interest rates were low. But it’s time to pay down this debt. Our target should be to bring the debt to the $600 per person range over the next five years. Gov. Herbert wisely chose to pay cash for state capital projects in this year’s budget, a point that Senate President Wayne Neiderhauser agreed with in his public commentary.

Gov. Herbert has provided a useful framework for the Legislature to fulfill its constitutional duty. The partnership between the executive and legislative branch works. The governor proposes; the Legislature disposes. Utah is well positioned for the future. We have our good governor to thank for setting the framework. It’s now the Legislature’s task to get the job done.

Natalie Gochnour is an associate dean at the David Eccles School of Business and director of The Kem C. Gardner Policy Institute.

10/08/13: A Real Impact

October 8, 2013

By: Natalie Gochnour

Originally published in Utah Business

I can still remember the flyers plastered in the hallways of my junior high school: “Bonnet ball begins next month. Sign up now.” The flyers started a conversation between a good friend and me—should we sign up for bonnet ball or try an alternative sport known as soccer? The year was 1975 and soccer, especially for women, was a largely unknown sport in the Beehive State.

Soccer prevailed—largely because I found the title “bonnet ball” off-putting—and I started playing soccer in the Utah Soccer Association’s inaugural year of competitive women’s soccer. Turn back your clocks … there were no soccer programs in Utah for girls in the recreation leagues, competitive leagues, high schools or colleges. I was an early adopter and started what was to become a 25-year playing career, playing for competitive clubs like Alemania, Berlin, Pan World, the University of Utah and FC Utah.

Times were different then. The only place you could purchase authentic soccer cleats was in the basement of a German immigrant’s Sugar House home. Mia Hamm was only four years old when I started playing, and Abby Wambach, a current star on the U.S. Women’s National Team, wasn’t even born yet.
So you can imagine the smile on my face at each Real Salt Lake home game when roughly 20,000 soccer fans pile into Rio Tinto Stadium. This is my hometown and soccer is here to stay.

Major League Exposure
Real Salt Lake enters the playoffs this month as one of the best teams in the league. We seem to have it all—the best goalie in the league, a scorer in Alvaro Saborio, two U.S. national team members in Kyle Beckerman and Nick Rimando, the speed of Robbie Findley and Joao Plata, the creative play of Argentine star Javier Morales, and the gritty and talented play of Ned Grabavoy, Nat Borchers and the others.

Dave Checkett’s vision and perseverance brought the team here; current team owner Dell Loy Hansen’s skill and generosity keeps it here.

I once had a revealing conversation with Hansen about the economic impact of Real Salt Lake on the state of Utah. He reminded me that eight of the 10 largest metropolitan areas in the country field Major League Soccer (MLS) teams. He said every time we play New York, Los Angeles, Chicago, New England, Philadelphia, Dallas, Houston or D.C. we receive coverage in these massive media markets. Hansen said, “You’re the economist. You must place a high value on that.”

Hansen is right. We live in the interior West. It used to be the “flyover zone,” but not anymore. When it comes to soccer we are in the premier league in this country, and every time we play one of the 18 franchises from larger MLS markets, we benefit.

Economists calculate economic value by measuring new money attracted to the state. TV revenues and visitor spending add up. Then there’s the out-of-state media exposure we receive during every game. The Utah economy is larger and stronger because of the economic contribution of Real Salt Lake and Rio Tinto Stadium.

Hometown Pride
But the actual economic benefit of soccer transcends traditional economic bean counting. It’s something called “life quality,” and it has value just as valid as the traditional economic measures of jobs and wages. It’s just more difficult to calculate.

It’s the satisfaction Real fans feel when they leave the daily grind and settle in to watch a match. It’s the unity they feel as they walk into the stadium with thousands of other fans dressed in soccer jerseys. It’s the fulfillment a father feels when his athletic daughter watches and learns soccer, a sport that may earn her a scholarship to college someday. It’s the pride we feel as Utahns when ESPN or another major broadcaster pans in over Lone Peak and downtown Salt Lake City, showing our beautiful home to national and international television audiences. It’s the inspiration we feel when we watch these amazing athletes, urging us all to be just a little better in what we do.

I started playing soccer for the love of team sports. I learned the thrill of competition, the value of team play and the joy of effort. It made me a better person on and off the field. I never imagined the uncommon sport I started playing so many years ago would inspire so many Utahns.

For me, the power to inspire is the true economic value of Real Salt Lake. To this we owe our gratitude to the players, Hansen, club president Bill Manning and others on the professional staff. From a grateful fan, thank you.

Natalie Gochnour is the associate dean of the David Eccles School of Business and director of the Kem C. Gardner Policy Institute.

9/9/13: Reaching New Heights

September 9, 2013

By: Natalie Gochnour

Originally published in Utah Business

Economists love investment because it helps transform lower value inputs into higher value outputs. That’s economist-speak for economic development, and we are fortunate in Utah to have another major infrastructure investment project taking off … literally.

The Salt Lake City International Airport begins a decade-long redevelopment program this year. The airport will be completely rebuilt. The result will be a seismically safe, tech-savvy and customer-friendly facility that will accommodate a growing state. The airport redevelopment program joins I-15 CORE, Frontrunner and TRAX as another major transportation investment in the future of the Utah economy.

I serve on the Salt Lake City Department of Airports board. Here’s my list of things to watch for, get excited about and plan on in your new airport:

1. LEED certification. In keeping with Salt Lake City’s commitment to sustainability, the new airport will seek the U.S. Green Building Council LEED certification. They’ll either meet or exceed the silver-level designation, which means the new airport will conserve energy, reduce water consumption and improve indoor air quality. Utah’s our home and Mayor Ralph Becker and the city council are right to develop with the environment in mind.

2. No local tax dollars. The airport has been planning for this rebuild for years and has socked away $631 million in cash to invest in the new airport. Now that’s fiscal responsibility. This cash, combined with airline fees, car rental fees, revenue bonds and federal grants will pay for the $2.2 billion investment. Utahns will see no general tax increase.

3. Jobs. The new airport means jobs, both in the short and long term. During construction, the airport will require architects, electricians, plumbers, mechanical engineers, structural engineers, civil engineers and other skilled craftsmen. The airport will purchase concrete, steel, drywall, woodwork, stone, paint, wall coverings, signage and other products. But the biggest economic impact is and will continue to be a well-run airport that meets the economic needs of a growing economy.

4. Transit friendly. Look for the airport to treat transit passengers with first-class service. The new terminal will welcome TRAX travelers at grade level, which means you can check your baggage and be on your way without using an elevator, escalator or stairs. Watch for the 4 percent of travelers and employees who currently arrive using transit to double and triple in ensuing years.

5. Oversized bags. Utah’s a unique market because we have lots of oversized bags—skis, snowboards and golf clubs. The new airport will make skiers and snowboarders feel right at home, elevating our stature as a winter sports capital. The airport calls it oversized bags; I call it winter tourism, a major industry in our state.

6. Tech equipped. Another unique feature of Utah is our young, tech-smart population. Look for the airport to be equipped with all of the latest technology, making the airport efficient and customer friendly. This won’t be your grandfather’s airport.

7. LDS missionaries and service people. I’m hopeful returning missionaries and members of the armed services will get the welcome home they deserve—a large greeting area for families and other loved ones. No more cramped space at the bottom of an escalator. Missionaries and service men and women have made a sacrifice for the principles they believe in. Let’s welcome them home with style. It’s an “only in Utah” phenomenon we should celebrate.

8. Great leadership. Mayor Becker and the Salt Lake City Council serve a statewide mission in leading our capital city. They are doing a great job. We are also fortunate to have an airport staff under the able leadership of Executive Director Maureen Riley. The airport staff deserves our admiration and support. This airport serves Utah.

Economic development starts and ends with investment. The investment in the Salt Lake City International Airport, our gateway to and for the world, is an investment whose time has come.

Natalie Gochnour is the associate dean of the David Eccles School of Business and director of the Kem C. Gardner Policy Institute.

6/13/13: Don’t rely on Utah’s ‘best run state’ accolades

June 13, 2013

By: Natalie Gochnour

Originally published in the Deseret News

We are fortunate in Utah to have had great governors through the years. I’ve had the pleasure of working directly with three of them — Norm Bangerter, Mike Leavitt and Olene Walker — and advising two of them — Jon Huntsman Jr., and Gary Herbert. I grew up admiring the service of Govs. Cal Rampton and Scott Matheson. To a person, Utah’s governors protect the public trust and serve as remarkable stewards of our state.

This stands in sharp contrast to a major state like Illinois where four of the past seven governors have served prison time. Leadership matters, and Utah is well led.

I worry in recent years, governors, legislators and other elected officials rely too much upon the claim that Utah is the “best-managed” or “best-run” state. They proclaim it in congressional testimony, veto letters, floor debates, political mailers, campaign ads and news stories. It’s used in economic development ads, highlighted in speeches and glorified in public decision making. It’s repeated so frequently we start to believe we really are incredible, like a performer who only hears accolades from his or her traveling posse. We start to think we are better than we are.

Like any claim, there’s a story behind it, and the best-managed rankings have a long history in this state. Here’s what you need to know.

Utah is not the best managed state; it is among the best-managed states. The entities doing the rankings have changed over time, moving from Financial World magazine in the 1990s, to the Pew Center on the States and Governing magazine in the 2000s, to 24/7 Wall Street (a financial news column) in the most recent tabulations. Utah ranked No. 4 in 2012, No. 6 in 2010, landed a three-way tie for No. 1 in 2008 and a two-way tie for No. 1 in 2005. Saying we are the best-managed state is convenient; it’s also out-of-date and misleading.

Every Utah governor in modern history gets to make the claim. The rankings stem from Utah’s long history of fiscal restraint, not from any particular personality on Capitol Hill. Under Gov. Bangerter’s watch, Utah achieved a No. 2 ranking for best-managed state in 1990, a No. 1 ranking in 1991 and a No. 2 ranking again in 1992. Utah was among the best-managed states under Gov. Leavitt’s leadership six times. Rating entities like Utah because we have a constitutional balanced-budget requirement and bond limitation, a line-item veto, an appropriation limitation and a triple A bond rating. A former Utah budget official I spoke with said it well, “Utah is small enough to control what happens and large enough to be sophisticated.”

Best-managed state doesn’t mean best led. Management is critically important, but it’s not leadership. Management is a set of processes that keep complicated systems running smoothly. It’s planning, budgeting, staffing and measuring performance. Thanks to great public employees we excel at these in Utah. Leadership is different. Leadership is about defining what the future should look like and then inspiring and aligning people to make that vision happen. Leadership is about producing useful change.

This is where the “best-managed” claim gets dangerous. If we are not careful it gets confused with leadership, creates complacency and stands in the way of needed improvements. Utah’s education system is the perfect example.

Are we comfortable having one in four Utahns drop out of high school? Are we pleased that our investment in public education as a percentage of our income has fallen from seventh to 29th among states in just 15 years? Of course not.

There are other needed changes — we need to modernize our election process, reform our tax system and assimilate Utah’s rapidly-growing racial/ethnic population, to name just a few.

Gov. Herbert, legislators and local government leaders throughout the state deserve our gratitude, praise and support. They do an extraordinary job. But becoming a better state means we should spend less time talking about our ranking as the “best-managed state” and more time investing in the right future and solving the problems we face today.

Natalie Gochnour is an associate dean at the David Eccles School of Business and director of The Kem C. Gardner Policy Institute.