How Business is Organized in Utah and in the Uintah Basin

Utah has a diversified economy meaning employment is spread out across many industries. Some industries, like banking, tend to have many employees spread among many locations. Others, like hospitals, tend to cluster around a single location. “Mom and Pop” restaurants and law offices usually have one location and a small number of employees.The Department of Workforce Services has constructed an interactive data tool to flesh out these relationships. It uses data collected through Utah’s Unemployment Insurance system. This system produces a comprehensive tabulation of employment and wage information for workers covered by Utah Unemployment Insurance laws and Federal workers covered by the Unemployment Compensation for Federal Employees program.

The program makes two key definitions important for this analysis:

• A firm, or a company, is a business and may consist of one or more establishments, where each establishment may participate in different predominant economic activity. 
• An establishment is an economic unit, such as a farm, mine, factory, or store that produces goods or provides services. It is typically at a single physical location address and engaged in one, or predominantly one type of economic activity for which a single industry classification may be applied. 

As an example, Wells Fargo is a firm. Its branch locations are establishments.

The visualization’s first tab makes an important generalization about where people work. A typical Utahn is employed at a large company and works at a location employing 20–250 people.

The second tab shows that larger locations generally pay more than smaller locations. The prominent exception, of course, is shown in the 1-4 employer category. Analyst speculate that the large average wage is due to tax reasons. Sometimes there is a financial advantage in a sole proprietor (which of course would report as one location only) claiming his/herself as an employee. Again, these sort of tax vehicles would benefit higher earning professionals.

Tab 3 shows the percentage of total wages and employment sorted by location size. As expected from the distribution of employment, the bulk of the state’s wages are paid by locations employing 20-250 people with a sizable contribution coming from locations employing more than 1000. However, locations employing more than 100 workers contribute five percent in wages more than their employment would suggest. Schools, universities, and hospitals would be included in this employment range and generally pay higher wages.

The fourth and last tab focuses on firms (companies) by time. Here the results are unambiguous; these firms employ the biggest share of workers. However, it is interesting to note that firms employing 10-49 employees rank third in terms of share. These firms are commonly thought of as small businesses.

Uintah Basin

Because of confidentiality problems, it is problematic to separate firm data by county. Data is suppressed to protect the identity, or identifiable information, of cooperating employers. Most of the suppressed data are provided by or are substantially attributable to an individual employer. In many cases, suppressions may also be necessary for otherwise disclosable data that may be used to derive sensitive information from another industry or area.
However it is widely understood that employment in the Uintah Basin is dominated by the oil and gas industry.

An examination of the Average Monthly Wages by Establishment Size tab (Tab 3) for Uintah County shows that larger establishments tend to pay more than smaller establishments. Furthermore, establishments employing more than 10 employees pay decidedly more than their statewide counterparts; those employing less than 5 employees pay decidedly less than their statewide peers. This generalization is also true in Duchesne County. It is worth emphasizing that that the inflection point in both counties is exactly the same. Analysts speculate that this is because of the relative lack of small professional businesses in rural areas such as accounting and law firms.

The Quarterly Employment and Wages by Establishment Size (Tab 3) shows employment and wage share by establishment size. As noted above, locations with employment greater than 100 make up 45 percent of total state employment but contribute 50 percent of all wages. In Uintah County, locations employing more than 100 workers total 24 percent of employment but contribute 30 percent of county wages. The analogous numbers for Duchesne County are 37 percent for employment and 43 percent of total wages. On the small side of the spectrum, locations with less than 10 employees make up 13 percent of statewide employment and contribute 12 percent of wages. In Uintah County, these locations make up 18 percent of the employment base but only contribute 14 percent of wages. In Duchesne County these firms comprise 20 percent of total employment but only contribute 15 percent of total wages. This again is due to the relative scarcity of small professional firms in the Uintah Basin such as accounting and law firms.