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States Should Look Beyond Economic Incentives When Attracting Businesses

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Aerial view of Utah State Capitol Wangkun Jia

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Connecting state and local government leaders

COMMENTARY | The executive director of the Utah Gov. Gary Herbert’s Office of Economic Development on what state leaders should be thinking about.

One hundred and fifty years ago, workers for the Central Pacific Railroad and Union Pacific Railroad met on a bluff just north of the Great Salt Lake. After driving a final “Golden Spike” into the ground to connect the two railways, they created America’s first transcontinental railroad, linking the sparsely populated western half of the nation to more industrialized areas in the east.

With a single spike, and after years of difficult work, Utah became the “Crossroads of the West.” For almost a century, the railroad ensured the state was a major economic player. However, after decades of globalization and a shift to a service economy, Utah had to reassess and develop a new strategy to ensure it remained at the crossroads of American commerce.

How did Utah find its 21st Century “Golden Spike?” Under Governor Gary Herbert’s leadership, we created pathways of opportunity with consistent business-friendly policies—such as low taxes and purposeful workforce development programs, investments in education, and a culture that values perseverance, hard work and entrepreneurship.

While economic incentives are a vital tool to attract businesses, governors and mayors should look at improving existing community resources first. Here are a few ways local governments can attract new business and create opportunities for residents:

Help Companies Reach Foreign Markets

Access to foreign markets is crucial to businesses. Seventy percent of the world’s purchasing power is located outside of the United States, and 95 percent of the world’s consumers live outside the United States. For example, if Utah businesses were to only buy and sell in Utah, their customer base would be a little more than 3 million people. However, when they take goods and services to the world, Utah businesses can market and expand their services to more than 7.6 billion people.

To help Utah businesses, we are currently undergoing several major development projects that will increase international trade and investment opportunities while setting a new standard for global connectivity. The first is an inland port that will serve as a logistics and distribution hub for cargo from international and America’s West Coast ports. The second is a self-funded $3.6 billion reconstruction of the Salt Lake City International Airport with new, state-of-the-art terminals coming online between 2020 and 2024. This will increase availability of direct flights to almost every major metropolitan area in the country, making it easier for companies to stay connected to markets across the United States and the world.

Invest in Education, Especially Computer Science

To ensure that the next generation of billion-dollar startups are created in tech hubs outside of San Francisco and New York, states need to invest heavily in computer science education. The Utah Legislature took an initial step in this direction by appropriating $3.15 million this year to help every school in Utah provide at least one computer science class by 2022.

Governors and mayors also need to focus on keeping the most talented young people in their state or city after high school by providing affordable, world-class higher education opportunities. Utah regularly ranks as one of the best states to raise a family, in part, because of low college tuition costs and the ability for college graduates to avoid large amounts of student loan debt.

Provide Pathways for Workers

The U.S. economy needs approximately 100,000 new information technology workers per year, but only about 60,000 are entering the workforce each year, according to the Bureau of Labor Statistics. This is why it is important for governors and mayors to focus on providing alternative pathways to IT jobs for people who are not best served at a four-year college or university and those who are looking for a career change. Students should be able to easily transition into careers in tech, construction, aerospace and life sciences with the help of partnerships between schools, government agencies and businesses.

In Utah, railcar manufacturer Stadler US recently launched a new apprenticeship program in partnership with Salt Lake Community College, Salt Lake City School District and Salt Lake Education Foundation to support seniors from 16 Salt Lake City high schools transition into good paying jobs with the company when they graduate. Students split their time 50/50 between school and apprenticing at Stadler US. After the students graduate high school, they will attend Salt Lake Community College, with their tuition fully paid by Stadler US, and continue the apprenticeship for an additional two years. This type of partnership insures students are developing career skills without incurring huge student debt.

Promote Quality of Life

Every city, county and state have outdoor recreation opportunities that should be promoted and protected. A recent study by Headwaters Economics found that a county with recreational opportunities attracts more new residents, higher incomes and faster earnings growth, especially for rural and small cities. Companies and site surveyors want to build offices where employees will be happy and have opportunities to enjoy the great outdoors. Utah’s “Mighty Five” national parks and world-class skiing venues have helped the state attract new workers.

Focus on Sustainable Development

As coastal cities deal with congestion, housing affordability and quality of life concerns, many tech workers are moving to places like Utah because they can afford to buy a home and raise a family here. With this rapid growth, Utah is experiencing growing pains. We know we have a once-in-a-generation opportunity to create neighborhoods where families can live, work and play all in the same area, reducing the need to commute long distances. This is why public officials need to be committed to smart development, especially mixed-use real estate, public transportation, and preserving green spaces to create communities where people want to live.

Find the Secret Ingredient for Your Community

Every community has the people, institutions and fierce determination to succeed. It is up to leaders in these communities to find new pathways of opportunity that empower residents through consistent business-friendly policies, investments in education and entrepreneurship.

Val Hale is the executive director of the Utah Governor’s Office of Economic Development (GOED), which promotes state growth in business, tourism and film. Hale was appointed to the position in 2014 by Gov. Gary R. Herbert. 

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