Why employers are flocking to Utah County
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We're going to do a little read-along to get things going today. From American Public Media, this is Marketplace. In Los Angeles, I'm Kyle Rizdahl. It is Wednesday today, the 4th of June. Good as always to have you along, everybody.

All right, I'm going to read you a couple of sentences. You are going to tell me where they came from. Deal? Here is the first one. A restaurant owner in Kentucky noted that customers were coming to dinner, but they were skipping the appetizer and dessert. Here's number two. A manufacturer reported they had modified their receipts to display a 7% increase in cost due to tariffs.

Third and last, a Maryland builder stated they have started to see purchase agreement cancellations on new homes as many of their customers worked directly or indirectly for the federal government. If you guessed they all came from the Fed's beige book that was out today, official title, by the way, Summary of Commentary on Current Economic Conditions by Federal Reserve District, well, that would be a correct guess.

But now I got to read you one more sentence from the thing. It goes like this. All districts reported elevated levels of economic and policy uncertainty, which has led to hesitancy and a cautious approach to business and household decisions.

Those are the vibes. There was some hard data out today to the services sector. 70 some odd percent of this economy is slowing. Also, private sector payroll growth came in lower than expected. That was from ADP, which obliges me to mention to you that ADP Research is funding our series, Age of Work, which is coming up a little bit later on in the program. All of that said, and of course, there are still tariffs at large in this economy.

China is President Trump's biggest target, which has made us China's biggest target. And one of the ways Beijing has retaliated against us has been by restricting the export of rare earth metals. And as Marketplace's Brie Beneshaw reports, that is starting to show up in supply chains.

Gatolinium, neodymium, europium, these and other rare earths are used to make magnets and lasers and sensors and motors for electric cars. At the end of the Cold War, the U.S. government had a massive stockpile of $42 billion worth of them and other critical minerals. And

After 1990, with the collapse of the Soviet Union, we sold down the vast majority of the national defense stockpile. Heidi Creebo-Redeker is a senior fellow with the Council on Foreign Relations. From $42 billion worth of minerals in 1990, the stockpile shrank to less than a billion by 2023, she says. Meanwhile, today, private businesses, especially auto parts suppliers, are running down their own, much smaller reserves.

Back in April, we started creating a ticking clock. Gracelyn Baskerin is director of the Critical Minerals Program at the Center for Strategic and International Studies. April is when China, in retaliation for Trump's tariffs, shut down exports of certain rare earth minerals. Seven what we call heavy rare earths.

These are the rare earths like dysprosium, lutetium, terbium, where China's dominance in processing and separating them is almost absolute. It is the only game in town. China currently separates 100%. There's not viable alternate supplies. We will run out.

Some European makers of auto parts have already stopped output and shut down production lines. Car makers in India and Japan have warned of the same. Mercedes-Benz said it was trying to build up its stockpiles. In the U.S., auto suppliers have been aggressively stockpiling for a while, says Alan Baum with automotive market research firm Baum & Associates.

Typically, the larger buyers of these materials have more influence on getting their volume than the smaller ones. Other options include moving car part manufacturing to China, despite tariffs, or just slowing down the push for electric vehicles. The Trump administration has made securing and processing critical minerals like rare earths a centerpiece of foreign policy, pursuing deals with the Democratic Republic of Congo and Saudi Arabia.

But meanwhile at home, the GOP tax bill would end a tax credit for domestic production, even as that production starts to ramp up. In New York, I'm Sabri Beneshour for Marketplace. Wall Street this midweek Wednesday. Traders seemed blasé about everything. We'll have the details when we do the numbers.

so

You ever had a dirty soda? No, but I've heard about that and I want one. Oh, I caught you. Did I catch your attention with the word dirty? ADP chief economist Neela Richardson and I are at a technology company in Provo, Utah. It's a big open space. There are floor-to-ceiling glass windows and an employee soda bar. Oh, grenadine. Okay. And Diet Coke. Coconut. Okay.

With truly dozens of syrup flavorings lined up on the counter? We're going to put a lime in it. And we're going to put some half and half. Oh my God. All right. It's very, very popular here. Nila and I tried it. You can't say it's just a soda. No, it's not just a soda. To each their own, I suppose. Nila, I will tell you, was a better sport than I was. He didn't mean it. No, I actually did.

This is the Provo headquarters of a company called Qualtrics. It does customer surveys and data analytics. And the person who strong-armed us into trying those dirty sodas is Qualtrics' chief people officer, Julia Anas. Candidly, I'm not a cream gal, so I don't do a lot of dirty sodas, but that's like a true experience.

Trust me, there is a whole soda culture here. But we've come to Utah County for a series, The Age of Work. This place has one of the youngest labor forces in the country. The median age here is 25 and a half. Nationally, it's almost 39.

And that matters because the number of older Americans, that's people 65 and up, is expected to double over the next several decades, which means one of the driving forces of the U.S. economy for a century, prime age workers, is shrinking.

Here in Utah, though, the demographics are different. Tons of dirty soda shops around town, not a whole lot of bars. And yes, there are cultural reasons for that. A majority of Utah County residents identify as members of the LDS church. And Mormons do tend to have a lot of kids. But if we can understand what's going on here, it can help us understand what might be replicable elsewhere. How long you been here? I've been here four and a half years.

Did you come to Provo for this job? I did. Bay Area is where I've spent most of my career. I'm a California native, so born and raised there, but did relocate here to Utah for Qualtrics. That story is one you hear a lot. People moving to northern Utah for jobs in the tech industry. Silicon Slopes. Silicon Slopes, I am. Okay, yes, yes.

Silicon Slopes is how this area has been branded. Established companies like Adobe and Microsoft and Oracle have opened big offices here. And there is an active startup scene, too. Sure, you might have even gotten that feel. There's a lot of tech here up the main corridor. Remember that culture of entrepreneurship we talked about yesterday that is so prevalent in Utah County? Today, we're going to talk about how that culture has attracted commerce. ♪

Qualtrics is a homegrown Utah company started by a BYU professor and his kids, BYU students, back in 2002. It's got 4,500 plus employees now, offices all over the world, including dual headquarters, one in Seattle and one here in Provo. They do recruit from the local universities. But then there's folks that we've also relocated here to experience Utah's

It's beauty and obviously the opportunities it can create for families. I was going to ask you about that. Is Provo a very competitive hiring environment? Are you competing with other companies for the same talent? We definitely compete with the same talent.

in all the markets, particularly Provo, we have a broader competition, again, because of how we look to relocate folks. We're competing with very different companies that might not have a presence in Utah at all. And that provides a slightly different challenge for us as we think about positioning ourselves in market competitively from all of our total rewards perspective.

This is a 23-year-old company that grew really, really quickly. A couple of years ago, like a lot of tech companies at the time, Qualtrics laid off close to 20% of its workforce. Now, though, they're hiring again. This is a global company, headquarters here in Seattle, right? Yes, that's correct. But how important are the demographics of Provo to what it is that you're trying to do here?

Right? It's really young here. It's really dynamic, really entrepreneurial. How much does that matter to you? Yeah. I think it's really important. I think it's a way that we're bringing in a lot of and fostering new ideas into the company. This is our biggest office globally, for sure. And we have just north of 50% of our employees in the U.S. But we have established big hubs in Mexico City, in Krakow, where we have hundreds of people.

Companies like this one compete in a global market for labor. But Utah's technology sector, those silicon slopes, isn't just a story about local startups bringing workers here. It's the story of a labor force that's drawing companies here. And the question we're trying to answer is what lesson that holds for the national economy. But first, let's do the numbers.

Dow Industrial is off 91 points today, 0.2%, 42,427. The Nasdaq increased 61 points, about 0.3%, 19,460. S&P 500 was flat 59 and 70 there.

Wells Fargo ticked down four-tenths of one percent. That's after news that the big bank was freed of a $1.95 trillion asset cap imposed by regulators. That cap was punishment after Wells Fargo's fake account scandal, if you remember that. Also, a number of other problems dating back to 2016. Companies that saw the biggest losses or gains in the markets today...

On Semiconductor was one of them, jumped 6.1%. Homebuilder D.R. Horton added 4.4%. On the flip side, CrowdStrike Holdings down 5.8% today. Dollar Tree down 8.4%. Bonds Rose yield on the 10-year T-note down 4.35% on the 10-year. You're listening to Marketplace.

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This is Marketplace. I'm Kai Risdahl. Here we go again. A couple of miles south of Qualtrics in an office building next to a mall. Of course we will. Yes.

We went through a lengthy visitor sign-in process so that we could talk to a guy named Ryan Brady. I am the operations director for Foundever, and what we do here is we are a white-label BPO. I'm sorry, yeah. A white-label BPO is a business process outsourcer, which means that we handle the customer contacts for other businesses.

Translation, Foundever is a call center company. Kind of contact center is the preferred term now. So it used to be call center. That used to be the idea that we would do is just calls. But now it's in this site. I have five different types of contacts that we do. So there's text, chat, email, back office. And now we can get a hold of us in all kinds of ways. Gotcha. OK, lead on. All right.

You've probably talked to somebody in this building. These are the people you wind up chatting with when you reach out to your credit card company or something. Ryan walked us into a kind of a bland office space, honestly. Rows of computers, headsets attached, nobody working at this early in the morning hour.

This is one of our accounts. It is a medical supply company. They specifically do diabetes care, a device that attaches inside of the arm, and we handle their technical support for it. So everyone's grouped by which account that they work for. There's not... Correct.

Foundever is actually headquartered in Luxembourg with offices all over the world. About 450 of the company's 100,000 plus employees work in this building. They've got another 1,500 or so tied to this site working hybrid or remote. So let's talk about that recruiting challenge here for a second and tell me why you're here in this area. So the biggest reason is because

We have had a lot of success with the particular demographic or the group of people that's here. So Orem is the youngest of all the places that we have a center. It's the youngest demographic. What we found, and especially because of where we're located, and let's, you know what, actually let's head down this way. Our location, if you go down about a mile that way. Yeah, so we're looking out this huge picture window here. Great view, by the way. Oh, thank you. It is...

UVU, which is Utah Valley University, which is the largest state-run university in Utah. So it has the largest enrollment. How many students do you know off the top of your head? Right around 40,000. Okay. That's a lot of people. Yeah. So that one is about a mile that way. And about a mile and a half that way is Brigham Young University or BYU, which has about 36,000 in enrollments.

And I see there's a bus that could take you from these universities. Literally, right? Right down the main road here, whatever that is. This is University Avenue, actually, because it connects the two different universities. So is recruiting hard for you, or is it, you know, when you throw those feelers out there and you post a job, do they come running?

I don't want to say it's easy, but I wouldn't classify it as hard. What it does is I have enough interest and I have enough availability that when I do cast that net out, I can be picky. What about keeping workers? How hard is it to retain the workers once you recruit them? So our industry is notorious for having quite a bit of turnover. But we have the lowest turnover in our company in North America.

So my site has the lowest turnover. Really? So this site between two universities where you're recruiting college students has the lowest turnover. Has the lowest turnover. And where we found success in doing that is that we target the new students as they come in. How much are they making as a college freshman coming to work for you? It depends on the account. We range anywhere from $18,000 to $25,000.

Minimum wage here is $7.25 an hour. And Foundever is certainly not the only contact center in town. According to the U.S. Census Bureau, customer service representative is the most common job in Utah County. There are a couple reasons why Utah is a good place for a contact center. At the time, it was call centers. But it was an accent-neutral place.

Good, if you're serving people by phone. Also, there's that thing we talked about yesterday, where a good chunk of college students have gone on church missions around the world. And the last time we pulled it, it's more than 60% of the population speaks a second language. That is very huge. And it's because of that. What's your competition around here for the students' time, for their commitment? Funny enough, here my competition is probably...

It's probably either like a retail job or something that's just, you know, kind of a basic job around here. Or as weird as it is, people starting their own business. Really? No, keep going with that, right? Because entrepreneurship is really big here. It is a huge thing here. And it seems to be something that I lose people for more often than I would like to is that they get an idea, they get a good idea, and that is something they want to go do and start. Yeah.

Remember that Qualtrics, the company with the soda bar where we started today, was founded by Utah County entrepreneurs. Entrepreneurship is in the culture here.

That creates a lot of new businesses, it attracts a lot of established companies, and it increases the competition for labor. It is a different type of thing that I have to deal with here than I think I've ever had to deal with before. And generally in the younger demographic, they have that. And that's very specific. I mean, we've been hearing that now basically everywhere we've talked to people here is the entrepreneurship and people wanting to do their own thing. Yep. Part of it is that they really try to support businesses. It is a good business-friendly place. It's an easy place to support. You mean the government and

The government, the community. And just the overall feeling of the community. Yes, Utah County is unique. But the idea of a community where young people want to be, where they feel like they've got the resources and the social capital to start new businesses, that doesn't have to be just a Utah thing. So on the program tomorrow... What are you doing here? Making money. Growth opportunities and obstacles.

That GOP tax cut bill is still wending its way through the halls of power. It is controversial.

For a whole lot of reasons, one very big one of which is that it's going to be really expensive. The nonpartisan, let me say that again, the nonpartisan Congressional Budget Office was out with a new estimate today. If signed into law as is, this bill would add $2.42 trillion to the federal debt.

And it disproportionately benefits the super rich, leaving the rest of us to foot the bill. Of course, as Stacey Vanek-Smith reports, whether the rich ought to pay more is nothing new in our national conversation.

Tax the rich. This has been an American battle cry since before income taxes even existed in the U.S. And actually before the U.S. itself existed. You know, the Boston Tea Party was not about taxation without representation as much as it was about

Douglas holds Aiken is an economist who heads the American Action Forum. He says American companies were mad about paying taxes on tea. Taxes British companies did not have to pay. We hate perceived unfairness in the tax code. It's been like that since the beginning. In fact, Aiken says the country's founders were wary of a government getting too powerful and too wealthy through taxes. You know, we had to amend the Constitution to get an income tax.

The first income tax was put in place during the Civil War, when the country was desperate for money. And that was all about taxing the rich, only the wealthiest 5% paid. And not long after the war ended, income taxes ended too. And all was quiet on the income tax front.

Until... Are you a businessman? Well, your profits are going to be cut down to a reasonably low level by taxation. In a fireside chat in 1942, President Franklin Delano Roosevelt proposed a big income tax to raise money for World War II. Taxing the rich was the central pillar. I do not think that any American citizen should have a net income...

That's about half a million in today's dollars. Any income above that was taxed at 60 percent. The super-rich were taxed at a rate of 94 percent. But FDR was not just taxing the wealthy. Most workers paid FDR's income tax. To try to make these new taxes less taxable,

FDR launched a big PR campaign, even commissioning Irving Berlin to write a song about the thrill of paying taxes. The war ended.

Income taxes did not. But they did soften a bit. By 2017, top earners, people making more than $400,000, paid around 40% in income taxes. Trump's 2017 tax cut brought that down to around 37%. Jessica Riedel is an economist at the Manhattan Institute. Our tax code is substantially more progressive than Europe. Progressive?

Progressive meaning the wealthier you are, the higher your tax rate. The U.S. middle class, those earning roughly $50,000 to $150,000, pay around a 25% income tax. There's a myth that the rich don't pay taxes, the middle class pays everything. That's really not true. The difference in America is we tax the middle and lower earners at a drastically lower rate than Europe.

But tax percentages can be a little abstract. The actual dollar amounts hit a little bit different. If the 2017 tax cuts expired, middle-class households, on average, would see their taxes go up by about $1,000. The top 1% would see a tax increase of about $70,000. That is, if they actually pay those taxes, says Douglas Holtz-Akin. So if you put the tax rate very, very high—

The incentive to do a tax-sheltered activity becomes greater. As soon as the U.S. put an income tax in place, an entire industry was born to help people avoid paying it. Tax lawyers, tax shelters, fancy accountants. And now the IRS is going to have fewer resources to push back against tax evasion.

Congress's proposed budget would cut IRS funding for enforcement by about a third. At the same time, Jessica Riedel points out, the federal government also has plans to cut about a third of the IRS staff. That is going to increase tax evasion by hundreds of billions of dollars. You can't cut deficits while laying off all the workers who collect the taxes.

The new tax bill is expected to increase the deficit by around $4 trillion. Though Riedel thinks, in reality, it will be much more. In New York, I'm Stacey Banik-Smith for Marketplace.

This final note on the way out today, another item involving Provo, Utah, as it happens. A notice went out from the Bureau of Labor Statistics this afternoon of which this is the relevant sentence. BLS is reducing sample in areas across the country. Reducing sample there means collecting less data, specifically data on consumer inflation.

The notice from the Department of Labor goes on. In April, BLS suspended CPI data collection entirely in Lincoln, Nebraska and Provo, Utah. In June, BLS suspended collection entirely in Buffalo, New York. We've talked about this on this program a lot since Election Day. Concerns about the continued accuracy and reliability of government economic statistics.

To be clear, there is no sign right now that data is being manipulated. But without actual data, the people at BLS are having to basically guess on some elements of the inflation calculation. Statistically informed guessing, yes, but still guessing. The BLS says it had to make those cuts in collection because it doesn't have the resources, read budget, to do the work.

Our media production team includes Brian Allison, Jake Cherry, Jessen Duller, Drew Jostad, Gary O'Keefe, Charlton Thorpe, Juan Carlos Torado, and Becca Weinman. Jeff Peters is the manager of media production. And I'm Kyle Risdell. We will see you tomorrow, everybody. This is APM.

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