A Comparative Look at Utah and Colorado: Standard of Living

29 June 2016 Published in New Publications

In Part I of the Working Families Benchmarking Project, we evaluated economic opportunity in Utah, using neighbor state Colorado as a benchmark. In Part II we examine standard of living. Ultimately, it is by standard of living that we judge the success of our economy. We measure standard of living for average and below-average families by looking at such measures as wages, poverty, and the affordability of major household expenditures such as housing, transportation, and energy. Our most significant findings are as follows:

utah coloradochild povertyUtah ranks ahead of Colorado in:

  • Lower overall poverty and child poverty rates (thanks largely to our higher rate of two-parent and two-earner households)
  • Higher Kids Count ranking for child well-being (due to advantages such as our strong families and our success at avoiding geographic concentrations of poverty) 
  • #1 in the nation for lowest share of children in single-parent households
  • Lower housing costs and higher homeownership rate

Colorado outpaces Utah in:

  • Higher wages (by 13.5% at the median), including higher minimum wage and larger Earned Income Tax Credit (EITC)
  • Lower Hispanic poverty rates
  • Less poverty among single-parent families
  • Lower energy costs
  • Stronger state health system performance

working families benchmark utah colorado part 2

Even after adjusting for differences in cost of living, Colorado workers’ median hourly wage beats Utah by 9%. This is consistent with Colorado’s 12% advantage in worker productivity and 7.2 percentage point lead in the share of adults with bachelor’s degrees, both of which are detailed in Part I of this report. However, Utah has been able to roughly match Colorado in household income in recent years by running faster to keep up, as exemplified by our longer work hours and higher labor force participation rate, consistent with our state’s strong work ethic. 

utah colorado hourly wage adjusted for cost of livingutah colorado workers below poverty

 

 

 

 

 

 

 

 

 

 

 

 

The high Hispanic poverty rates in Utah indicate that a substantial gap has opened up between our majority and minority communities due to differences in family structures, educational attainment, and wages. The findings in Part I and Part II of this report raise significant questions regarding Utah’s choices in the years ahead.

utah colorado hispanic poverty

Education Investment to Raise Productivity and Wages

girls at laptop smallColorado invests a third more than Utah on a per-pupil basis in K-12 education and sends six times as many of its kids to full-day kindergarten and nearly three times as many to public pre-school. Our neighbor to the east also has a far higher rate of adults with bachelor’s degrees. Is it a coincidence that their average worker is 12% more productive and earns 13.5% higher wages? Utah has set an ambitious goal of increasing the share of our workforce with a post-secondary degree or certification to 66% by 2020. The state’s business leaders say that getting there will cost more than we can possibly invest without a significant increase in taxes, which they support. Many of Utah’s political leaders believe that such a tax increase will “kill the goose that laid the golden egg” by driving away the businesses that would have otherwise located or expanded here. However, Colorado’s success implies that the additional upfront investment may be key to Utah’s long term competitiveness.

Many Utah leaders believe that gaining control of Utah’s federal lands is the solution to the state’s public revenue shortage. Indeed, Colorado does have 21% more non-federal land per capita than Utah. On the other hand, both Utah and Colorado rank in the top half of states for per-capita non-federal land, and Utah already has 24% more non-federal land per capita than the national average – 6.5 acres vs. 5.2.

Whatever the policy measures that we pursue, there can be little questions about the urgency of action. In 2015, a Utah Foundation study found Utah at a multi-decade low for our overall level of public revenues, counting all local and state taxes and fees as a share of state personal income. This finding came at the end of a decade of tax cutting, most notably the reduction in the state’s top income tax rate from 7% to 5% that was passed under Governor Huntsman in 2007. While everyone enjoys paying lower taxes and having more money in our pockets today, these findings raise important questions about whether the current generation of Utahns is doing its part, as earlier generations did, to invest in our children and lay the foundations for future growth and prosperity.

Boosting the Incomes of Lower-Skilled Workers to Reduce Poverty and Disparities

Latina mom and daughter smallWhile Utah outperforms Colorado on poverty and child poverty overall, we fall behind when it comes to single-parent households, with a poverty rate of 31% vs. 26% for Colorado. (And about a third of single-parent households in Utah are Latino.) This appears to be due to our lower-than-average wage levels – including a lower-than-average minimum wage – even after accounting for our lower cost of living.

Of Utah’s children living in intergenerational poverty, 61% reside in single-parent households. The state has sought to identify ways to break the cycle of intergenerational poverty, a goal that will be much harder to achieve as long as our wages remain so low, especially at the bottom of the income scale.

The data also reveal a major disparity between the state’s rapidly growing Latino minority and the white majority. While the white majority enjoys poverty rates much lower than the national norm, that is not the case for Utah’s Hispanic minority, whose poverty rates are about the same as for Hispanics nationwide. This indicates that what has long worked for Utah is not working for this growing segment of our population that represents one-sixth of our future workforce.

By contrast, Colorado has been able to reduce its Latino poverty rates 3-5 points below the national averages even as its Latino population has grown to 21% of the state population (vs. 14% in Utah). Colorado’s success in this regard appears to be related to two policy initiatives aimed at boosting families at the bottom of the economy:

  • Colorado’s minimum wage is 15% higher than Utah’s. That adds up to a difference of over $2,000 annually for a full-time, year-round worker.
  • This year, Colorado is also implementing a state Earned Income Tax Credit, set at 10% of the value of the federal EITC, adding up to $627 in take-home pay for hundreds of thousands of lower-income working families.

differing perspectives minimum wage versus EITC

Utah’s Secret Weapons: Strong Families and the Beehive Work Ethic

beehive work ethicThe secret to Utah’s success has always been our strong families and the “Beehive work ethic” that is the very symbol of our state. We enjoy the nation’s highest rate of married-couple households and the highest share of children growing up in two-adult households. Utah also has a high labor force participation rate and a longer-than-average workweek (12th longest in 2015 at 34.8 hours, vs 32nd longest for Colorado at 34 hours), more than offsetting the state’s low hourly wages for most households, with the notable exception of lower-income minority and single-parent households.

But even as we celebrate our greatest strengths, we should be mindful of how our families could be even stronger if Utah workers had the skill levels of Colorado workers and were therefore able to earn more while also having more time for their families and children. While it is certainly laudable that we are ready, willing, and able to work harder to keep up with high-wage states like Colorado, imagine how much better off we would be if we had the option to work smarter as well.

For more detailed information, see the complete printer-friendly report:

benchmarking utah colorado cover 2 pdfWorking Families Benchmarking Project Part Two: Standard of Living

Also see Working Families Benchmarking Project Part One: Economic Opportunity.

 

 

 


For 30 years now, Voices for Utah Children has called on our state, federal and local leaders to put children’s needs first. But the work is not done. The children of 30 years ago now have children of their own. Too many of these children are growing up in poverty, without access to healthcare or quality educational opportunities.

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