If you’re feeling kind of crowded on Colorado’s roads or hiking trails, or it seems that housing costs have crept up to unheard of levels, or you find it’s hard to get good service at businesses short on staff, there’s data to back up the sentiment.
But you have to look further than the decade we just left to understand how Colorado got here and what must be done to keep the economy steady.
While the state’s population is at its highest, Colorado’s economy has adapted since the slowdowns of past decades. The state’s businesses and industries are more diverse. Colorado has focused on attracting companies offering higher-wage jobs or that pay at least 100% of a county’s average wage. And we’re still attracting young people even as aging adults stick around after retirement.
But there are hints that point to an economic disruption in Colorado if we don’t pay attention — from types of desperately needed housing that aren’t being built to missing categories of jobs that can create a more sustainable community, said Elizabeth Garner, Colorado’s state demographer. Just pursuing more housing or high-paying jobs without looking at all the variables isn’t going to cut it.
“Something that we forget about in economic development is that when we create high-wage jobs that also creates low-wage jobs,” said Garner, pointing to a lack of what she calls mid-wage jobs, paying somewhere in the middle to higher five figures. “Maybe (the) big picture question is, are we going to be alright? What’s important is that every variable is connected.”
Garner helped take us through some of the more important demographic trends that connect Colorado’s history — and its future.
Who lives here
The state’s population is expected to reach 5,842,076 people in 2020. That means we’ll have added a 1.5 million people in the past two decades, growing faster than most of the U.S. Nearly 91% of the newcomers settled in the Front Range. About 8% moved to the Western Slope.
What interests economists is who is living here. A small segment of the population already having an impact on the state’s economy is older adults. People age 65 and older have become the fastest growing age group.
Young people have been moving here since the 1970s and are now hitting retirement age. While it’s great to have a solid base of younger adults — “They typically are all working and they also tend to be our next source of creating families,” Garner said — it’s older adults who are expected to become a large contributor to the state’s economy.
“One of the best things about young adults is they become older adults,” she said. “And older adults spend a lot more money than young adults, especially on goods, which are taxed. So, when you buy a home and you furnish that home you’re buying goods that are taxed, and that’s where we get all of our sales tax from.”
The growth of adults age 65 and older is expected to have a long impact on jobs, housing and other sectors in the years to come.
Wanted: health care workers, mid-wage jobs
As the state’s population has grown older, there’s already been an increase in health care jobs, like home health aides, as well as workers who offer rides or meal service. According to the U.S. Bureau of Labor Statistics, the health care and social assistance industry has some of the fastest annual employment growth nationwide, with 3.4 million new jobs expected to be created by 2028.
In Colorado, health care support jobs are expected to be the fastest growing occupation over the next decade, according to the state’s Department of Labor.
These sorts of jobs also fit into the mid-wage category, with annual salaries between $48,100 to $56,472, depending on where one lives in Colorado.
Garner said Colorado doesn’t have a particularly strong mid-wage sector, which might include high-pay blue collar or manufacturing jobs. “But what’s interesting is that if you create mid-wage jobs, you create fewer low-wage jobs because their ability to spend is lower.”
Mid-wage earners don’t eat out every night, but maybe once a week. They spend less, though they still contribute to housing demand and traffic congestion. With the state’s low unemployment rate — a low 2.6% in November — this mid-wage category provides higher-paying options for entry-level workers.
“A lot of those (low-wage jobs) are just simply created because we’ve got these high-wage jobs and sometimes that’s what makes me angry when people will start talking about, ‘Oh we’re gonna do a better job of creating good jobs.’ I’m like, ‘All right, that’s fine. But when you create that high-wage job that has a trajectory and gives you a career path, you’re also creating that waiter or waitress job. And that’s not going to go away, unless you just have robots everywhere.’”
Needed: Smaller, accessible housing
Housing prices in metro Denver have continued to inch upward, though at a slower rate than in recent years. The median sales price in Denver was $490,000 in November, up 7.3% from a year earlier, according to the Colorado Association of Realtors. The number of homes available for sale, however, is down 35.4% during the same period.
The housing market is already tight and is likely to continue as Coloradans age. Older adults who want to downsize end up competing with younger, first-time homeowners for the same house because those entry-level homes tend to be more affordable and smaller.
The other issue is that construction costs have soared, said Richard Wobbekind, executive director of Leeds Business Research Division at the University of Colorado, who oversaw the recent Colorado Business Economic Outlook 2020 report.
“We hear a lot from the construction industry that it’s hard to bring anything in the (Denver) metro area under $400,000 with the permitting and stuff,” Wobbekind said. “And I think that’s where the disconnect is coming from. The housing that’s available is more expensive than the wage levels of the people who can afford it.”
In 2018, the average cost to build a housing unit in Colorado was $240,001, compared with $124,956 in 2000.
The state’s greatest housing boom was in the 1970s with a peak in 1972, when 65,664 permits were issued for single-family homes, apartments and other dwellings. By comparison, 2018 had about two-thirds the number, coming in at 42,627 permits, according to the U.S. Census.
And after the 2008 recession hit, new home construction dropped dramatically, falling to 9,355 in 2009. Building stalled for about seven years, Garner said, but new household creation didn’t stop.
“People kept moving to Colorado, kept having babies. People kept leaving the home and graduating from high school and college in starting a household,” Garner said. “So we got to a point in about 2015, where we had the tightest housing market that we had had in I believe, since, well, 1970.”
Home construction continues to grow but builders should pay attention to what type of construction makes the most sense, Garner said. During the residential boom of the ‘70s and ‘80s, houses tended to be two and three stories, with lots of stairs. And it was well before the Americans with Disabilities Act of 1990.
There’s a need to build more housing that is accessible for all ages — an architectural style called universal design — or to modify existing homes to suit older adults.
Garner, a Colorado native, points to her mother as an example. Her mother still lives in the 4,000-square foot home Garner grew up in. It’s paid for, but selling it and buying a smaller home in the neighborhood is cost-prohibitive. Putting her demographer’s hat on, Garner said this contributes to the shortage.
“But if we think strategically about housing, she is completely wasting a housing resource still living in the house that I grew up in because that really should be accommodating five to six people, not one,” she said. “And putting her into a smaller unit that is right sized for her makes more sense.”