By Gwen Kervin, Senior Economist
The Governor’s Office of Economic Opportunity (GOEO) has identified five strategic industries to help strengthen and diversify Utah’s economy:
Advanced manufacturing
Aerospace and defense
Financial services
Life sciences and healthcare
Software and information technology
Each of these industries directly support skilled, high-paying jobs in the state. In 2024, the targeted industries employed nearly 494,900 people and paid $41.4 billion in wages. This amounts to an average annual wage of $83,713 compared to average wages of $58,059 for other industries. Aside from their direct impact, these targeted industries have ripple effects across the economy, supporting local employers in other industries and encouraging the growth of new businesses. As businesses grow, they require various inputs from suppliers, spurring further economic expansion and creating a virtuous cycle of growth.
These targeted industries are quite diverse and there is some overlap between them.
Advanced manufacturing
The advanced manufacturing sector includes companies that utilize innovative technologies to improve the manufacturing process. These companies often employ artificial intelligence, machine learning and data science in their production operations to create more efficient, streamlined and adaptable processes. The advanced manufacturing sector is a subset of the broader manufacturing industry, but remains quite large, employing 77,170 people in 2024, accounting for 50% of total manufacturing employment in the state. Moreover, with average annual wages of nearly $86,980, the advanced manufacturing sector pays 29% more than the non-targeted portion of manufacturing. This targeted group includes a variety of companies ranging from petroleum product or chemical manufacturers to electronic and transportation equipment manufacturers.
Aerospace and defense
The presence of the Hill Air Force Base along with Utah’s robust manufacturing sector provides a strong foundation for the aerospace and defense industry to thrive. This sector employed approximately 76,200 civilians in 2024, paying an average annual salary of nearly $81,400. The aerospace and defense sector includes companies in both manufacturing and technical services. Aerospace manufacturers are involved in the creation of drones, avionics, propulsion, spacecraft and aircraft, along with research and development. Companies supporting defense offer engineering, custom computer design and system design services.
Financial services
A strong financial services sector ensures money can move freely and efficiently through the economy, providing individuals and businesses access to funds and allowing them to purchase homes, buy cars or build new factories. The portion targeted by GOEO is a subset of the broader financial services sector, employing nearly 66,200 people and paying average annual wages of over $101,800. The targeted financial services sector includes credit unions and banks along with companies that underwrite securities, act as brokers or manage funds. Companies that provide accounting and bookkeeping services are also included in the targeted financial sector subgroup.
Life sciences and healthcare
The life sciences and healthcare industries work together to support the health of Utah’s growing population. Together, these industries employ approximately 247,050 people and pay an average annual wage of $63,740. The healthcare component includes a variety of companies, from hospitals to assisted living facilities to dentist’s offices. Companies in the life sciences sector are involved in both research and development of new healthcare technologies and the manufacture of products for the healthcare industry. For example, life sciences manufacturers include companies involved in biotechnology, pharmaceutical and medical device manufacturing. The life sciences portion also includes companies involved in environmental, agricultural technology and remediation product manufacturing.
Software and information technology (IT)
While software and IT jobs can be found in all sectors of the economy, the targeted software and IT sector focuses on the industries tied to the production, manufacture and distribution of information and technology. While there is some overlap with the larger Information sector, there are some differences. The targeted software and IT sector includes both companies that are core to the industry and those supporting it. Core companies in the industry are involved in software publishing, telecommunications, data processing and computer systems design. The supporting subgroup includes companies involved in the production of computer, telecommunication and electronic components along with online retailers. All together, the software and IT industry employs nearly 78,200 people and pays an average annual wage of $133,540.
Employment and wages
Together, this group of targeted industries accounted for 31% of the state’s employment and 39% of total wages in 2024. Each of the targeted industries has higher average annual wages than those seen in non-targeted industries.
The healthcare industry employs the largest portion of people. This sector will continue to expand to support Utah’s growing population. The Kem C. Gardner Policy Institute expects Utah’s population to grow to nearly 5.5 million by 2060, an increase of nearly 2 million from today. Moreover, an increasing portion of the population will be over the age of 65, significantly increasing the demand for healthcare services. Among the targeted industries, this sector employs the largest number of people but, at $60,253, pays lower average annual wages. The life sciences subsector, on the other hand, pays an average annual wage of $83,958, but only accounts for 15% of employment in the life sciences and healthcare group.
The software and IT, aerospace and financial services sectors all pay average annual wages above $100,000. At $133,542, the software and IT sector pays the highest wages in the group and employs the second largest number of people of all the targeted industries. Within the software and IT group, the highest wages can be found in the core subsector, which pays an average annual wage of $146,407 and accounts for 84% of employment in the software and IT sector. Aerospace, which pays an average of $110,310 annually, accounts for 42% of employment in the targeted aerospace and defense sector and pays more than the defense portion, which pays an average of $60,791 annually.
Input-output
When measuring the importance of an industry on the overall economy, employment and wages only tell part of the story. Utah’s economy is integrated, and the spending behavior of each individual or company generates ripple effects throughout the economy. Thus, as a successful company expands production, it requires additional resources in the form of labor and supplies. A single company can have multiple suppliers whose products are utilized in the output it creates, whether that output is a product or a service. If these inputs are supplied locally, their demand will support regional jobs and wages. Moreover, the local economy is further bolstered by the spending power of its workers who spend money at local grocery stores, restaurants and barbershops.
Economists estimate the connections between industries and the impacts of a given industry through an Input-Output (I-O) model, which looks at the flow of money in an economy. The I-O model can be used to estimate how many jobs are supported by a given industry by calculating a jobs multiplier. The multiplier can also be used to estimate how many jobs are created in other sectors of the economy when the employment in a specific industry increases. Industries with a higher multiplier are often those spending more on locally-produced inputs. These multipliers can be broken out into the jobs created by the suppliers of a given industry (upstream jobs) and those created by the workers spending money on goods and services (induced jobs).
For example, the software publishing industry, which is included in the larger software and IT targeted industry group, has an upstream jobs multiplier of 1.10 and an induced jobs multiplier of 2.53. Thus, an increase of 100 jobs in the software publishing industry is expected to create 110 jobs among industry suppliers and 253 jobs in the local economy as workers spend money dining out at their neighborhood diner or buying flowers for their gardens, for a total jobs impact of 463 (100 + 110 + 253).
Aside from looking at the impact of an increase in employment in a given industry, one can also use these multipliers to estimate the number of jobs supported by a given sector. The chart below shows 2024 average annual employment along with the estimated upstream and induced employment of a handful of specific, targeted industries with relatively high employment and jobs multipliers. The software publishing industry has an average annual employment of nearly 16,700. However, the I-O model suggests the industry supports an estimated additional 16,900 upstream jobs providing goods and services to the industry, including computer hardware manufacturers and data processing and hosting services. Moreover, with average annual wages of $165,536, the 16,900 people employed by the software publishing industry support an estimated 38,800 local jobs in various industries ranging from construction to retail.
The impact of the broader, targeted industries can be estimated by calculating an aggregated multiplier. Each of the targeted industries supports a large number of upstream jobs and induced jobs. Manufacturing industries tend to have higher multipliers because inputs are often sourced locally. Moreover, companies that sell goods and services to the broader economy tend to have higher multipliers as they bring outside money into the local economy, while those that don’t simply circulate money within the local economy. With a multiplier of 3.04, advanced manufacturing in Utah is no exception. At 3.26, the core software and IT sector supports the largest number of jobs of all the targeted industries. However, the healthcare and software and IT supporting sectors both have ratios lower than those found in the rest of the economy. As an industry supporting the population rather than selling products and services to the broader economy, healthcare has a smaller ratio, closer to that found in non-targeted industries. Similarly, the software and IT supporting industry, which has a large retail component, has a lower multiplier.
Wrap up
Aside from providing skilled, high-paying industry jobs, Utah’s targeted industries support jobs at both upstream suppliers and local establishments that provide goods and services to the population. Moreover, their high multipliers indicate they support a larger portion of local jobs than those whose customer base resides primarily in Utah. Together, these industries help build and support a strong, diversified economy.
Targeted industry components
Targeted industries are largely defined using North American Industry Classification System (NAICS) codes. See descriptions for NAICS codes here.
Advanced manufacturing
NAICS: 3241, 3251, 3252, 3253, 3254, 3259, 3271, 3279, 3311, 3313, 3315, 3331, 3332, 3333, 3336, 3339, 3341, 3342, 3343, 3344, 3345, 3346, 3351, 3352, 3353, 3359, 3361, 3362, 3363, 3364, 3365, 3366, 3369, 3391, 3399
Aerospace and defense
Aerospace
NAICS: 336411, 336412, 336413, 336414, 336415, 336419, 927110, 325211, 334511, 335991
Defense: Selected companies
Financial services
NAICS: 521, 522, 523, 525, 5412
Healthcare and Life Sciences
Healthcare
NAICS: 6211, 6212, 6213, 6214, 6215, 6216, 6219, 6221, 6222, 6223, 6231, 6232, 6233, 6239, 6241, 6242, 6243, 6244
Life sciences
NAICS: 325411, 325413, 325414, 541711, 325412, 541711, 541712, 334510, 334516, 334517, 339112, 339113, 339114, 339115, 339116, 621511, 621492, 621512, 325320, 541620, 562112, 562211, 562910, 562920
Software and IT
Core
NAICS: 513210, 516210, 517111, 517112, 517121, 517410, 517810, 518210, 519290, 541511, 541512, 541513, 541519
Support
NAICS: 334111, 334112, 334118, 334210, 334220, 334290, 334310, 334412, 334413, 334416, 334417, 334418, 334419, 455219, 459510