By the time 2020 ended, the U.S. stock market was at an all-time high, Colorado’s housing market experienced double-digit gains, credit scores were on the rise and overall personal income had inched up again, up 0.6% in December from November.
The state’s outlook is relatively positive for 2021. Lost jobs are expected to return. The state’s barometer of economic health, the gross domestic product, not only improved more than 30% between the second and third quarter last year, it fared better than many states coming in at a 0.6% decline compared to before the pandemic. The recovery has been faster than economists had expected.
But the impressive economic indicators in a year infected with coronavirus don’t jibe with the outlook for Bobbie Barr, who lives in Elizabeth and has been out of work since March 2020. The former Uber and Lyft driver quit her gig job for health reasons and has sunk deeper into debt as her unemployment benefits stopped after Christmas.
This is part of a weeklong series marking a year since COVID-19 was first detected in Colorado. The state’s first confirmed cases were announced March 5, 2020.
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In looking at the state’s economic health, it’s tough to figure out where exactly Barr shows up.
“I don’t answer the phone because all (the loan service) wants is to update your information and then they say, ‘What credit card are you using to pay today?’” said Barr, who’s late on rent and her car payments. “I respond with, ‘Yours.’”
Despite heavier job losses than during the Great Recession, this pandemic-induced recession has economists optimistic about the nation’s recovery. But charts and data don’t catch everything.
No matter how glowing some economic indicators are, the recovery is already uneven, based on where people were before the pandemic began.
Those with homes are hanging on to them longer. Those with higher-paying jobs were often able to sit out the pandemic by working from home.
But Barr has a lot of company if you count the 1 million first-time claims for unemployment in Colorado last year. And as of Feb. 13, there were still 118,802 Coloradans collecting unemployment, plus thousands more waiting for their federal benefits to restart.
She is part of a group already priced out of home ownership before the pandemic. Someone who is trying to pay her bills rather than save. Someone who’s less concerned with her assets than her next meal.
“My landlord said you need to file for food stamps,” she said. “Within four days, I had food money. That’s really helped me. I mean, I only eat dollar Michelina’s anyway, but it helps.”
She’s in the purple band of this chart:
Even before the pandemic, wealth and income disparities were evident, especially along racial lines. While home ownership rates among white Americans was 71%, it was much lower for other people of color, including 41% for Black Americans and 45% for Hispanic Americans, according to the National Association of Realtors.
And industries hit hardest by pandemic closures, like tourism and restaurants, tended to pay lower wages and had a heavier representation of women and people of color. As long as coronavirus restrictions continue, those industries must limit customers and will have a slower recovery.
“There’s just some areas of our workforce that in our economy you can’t pull out with different (charts),” said Kristin Strohm, president and CEO of Common Sense Institute, a nonpartisan policy think tank focused on Colorado’s business economy.
Women, especially those who have children, “are still being disproportionately impacted and this is despite the fact that schools are somewhat opening again,” she said. “The most recent data on the labor force participation rate for moms (shows) it’s still 6% below the February 2020 level.”
Meanwhile, the higher-paying jobs — such as those in finance and public administration — experienced relatively little job loss. According to state labor data, the highest-paying jobs in Colorado lost about 1.8% of their workers at the worst part of the pandemic recession.
But the lowest-paying industries lost 25%. In December, job loss in the higher-paying industries was down just 0.4% year over year, said Brian Lewandowski, executive director of Leeds Business Research Division at the University of Colorado.
“We still see the highest-paying industries being less affected, I would almost say unaffected,” Lewandowski said. “The real rebound in the job market is dependent on the vaccine and the masses getting vaccinated.”
Still working and growing
While Colorado lost 342,700 jobs from February through April, about two-thirds returned by October. There were still more ups and downs in the late fall as an increase in coronavirus cases caused new business restrictions and job losses. The state ended the year with 150,900 fewer jobs in December, or a 5.4% decline from the prior year, according to the Secretary of State.
Most people — about 2.9 million workers — remained employed. That’s still lower than in February 2020, before the pandemic hit Colorado. But the state’s labor force grew. The labor force counts anyone who is working, underemployed and unemployed but looking for a job.
So, how did the state’s labor force keep growing?
More people poured in, according to population data from the state and analysis by the Leeds School of Business. There was an increase in residents, from babies to Californians, or at least people moving here from other states. According to the Leeds School of Business economic report, 55,300 more people lived in the state by December compared to 2019.
More people meant more shopping and consumer-goods purchases. While there was a dip in retail sales between March to June 2020 compared the same period 2019, the rest of 2020 fared better than the prior year. The state Department of Revenue’s Office of Research and Analysis recorded even higher retail sales revenues in 2020.
Online retailers like Amazon saw incredible growth during 2020. The company also posted its largest quarterly revenues ever with $125.6 billion in the fourth quarter, up 44% from a year earlier. A top employer in the state, with 16,000 full-time and part-time workers, Amazon has 1,331 job openings in Colorado, from warehouse work to software development, IT and support engineering, said Nikki Wheeler, an Amazon spokeswoman. And it’s still growing in the state.
“In terms of expansion, our project in Colorado Springs is on track and we are looking forward to opening that facility later this year.” Wheeler said.
Thousands of people also decided to start a business. New business filings were up 22.1% in the fourth quarter 2020 compared with the year before, though dissolutions rose 8.1% in the same period, according to the Colorado Secretary of State.
Recovery is expected to be quicker than past recessions because unlike during the Great Recession, which had a greater impact on finance and real estate than leisure and hospitality, economists are counting on a literal cure: the mass distribution of the coronavirus vaccine. More than 1 million Coloradans have so far received at least the first dose. Gov. Jared Polis said last week that the rest of the population could get access to the vaccine as soon as late April or early May.
Anticipating the wider distribution of vaccines, CU economists “still think that it’s still reasonable for the state to add 40,000 jobs in 2021,” Lewandowski said.
But, he added, things could get worse for the sector of society that was already finding it difficult to keep up with payments before the pandemic. Inflation in the Denver metro area has already outpaced the nation’s for the past eight years, mostly due to the higher cost of shelter.
“Prices are going up faster here than they are nationally. And those prices have also been going up at a faster rate than wages for most of those years,” he said. “This is a scenario where not everyone is better off.”
The uneven recovery also will be more evident for some industries, like travel and tourism.
Marie Murillo-Giger, who was furloughed from a travel company in March, landed a new job in the travel industry earlier this month. She feels lucky, considering “that business travel is not expected to return until like 2023,” she said.
She credits her long-time contacts for helping her find a job in an industry that thrives on crowds and movement, which the world cut back on last year. It won’t be easy for others in the business to return, or even find a decent job.
“When people say, ‘Just get a job, why are you on unemployment for this long?’ Or for the governor to say, ‘We need to get people working again,’ I mean, people are trying and it’s very difficult,” said Murillo-Giger, who lives in Strasburg.
When the labor force returns to full strength, Colorado employers will face higher unemployment insurance premiums. Employers — not the state — fund future unemployment benefits through payroll taxes. The insurance premiums are paid into the state Unemployment Insurance Trust Fund, which had $1.1 billion a year ago. The fund was depleted in August and the state had to borrow money from the federal government to pay unemployed workers.
The federal loan, so far at $852 million, is interest free for now, but must be paid back — and it took years for employers to pay back similar federal loans borrowed during the Great Recession. Back then, some businesses saw payroll taxes increase by triple digits before the business community worked with the state to put all the federal debt in a bond. Employers paid a surcharge of 20% to 25% until the bonds were paid off in May 2017, according to the 2019 budget report from the state Department of Labor.
“We’re one of only 19 states to have taken loans. That’s not the Colorado that you and I know,” said Strohm, with the Common Sense Institute.
“What’s going to happen over the next three years to business taxes to fund the UI Trust Fund? It’s gonna have to increase by an annual average of 22% per year,” she said. “It’s projected to be over a billion dollars in debt by July 1. That’s compared to the $1.1 billion reserve in the fund at the start of the pandemic. So in that short time period, we’re totally upside down.”
Uncounted in most job data — including the UI trust fund — are those on Pandemic Unemployment Assistance, a benefit paid entirely by the federal government. Before the pandemic, hundreds of thousands of people in Colorado made a living as contractors, freelancers and gig workers. In April, the Colorado Department of Labor and Employment had estimated that there could be 370,000 gig workers.
Barr, who had been an Uber driver for five years, doesn’t want to go back to gig work. She’d rather hang out with her horses, Raven and Prissy, and complete her dream to become an equine massage therapist. She tries not to stress about her finances. But because of late fees, she said she now owes $10,000 on a car that’s worth $6,000.
Last week, she was able to reopen her unemployment claim and received three out of eight weeks of pay from the federal relief bill that passed in late December. Her unemployment account still has problems.
“If I make a car payment and a credit card payment, that’s all I have,” she said. “I’m afraid to spend it because I don’t know what’s going to happen.”
At least her landlord is flexible. She owes him $6,000 in rent. He’s not pushing her for it yet. He’s able to work from home and doesn’t seem too affected financially, she said.
“Actually, it’s affecting his ex-wife,” she joked.
The incredible Colorado housing market
For a moment last March, Denver Realtor Matthew Leprino expected the worst for Colorado’s housing market.
That moment didn’t last.
The sizzling market that pushed prices higher before the pandemic because of low inventory remained white hot thanks to low-interest rates and even less inventory.
“The Denver metro area, with the exception of about five minutes last March, has been completely untouched by the pandemic. Untouched,” Leprino said. “We have had absolutely no shortage of demand. In fact, it’s increased, simply by choosing to purchase different types of property. But we have been completely untouched.”
It’s a phenomena that’s occurred in many states during the pandemic. Low interest rates attract prospective home buyers. Lack of inventory increases prices. And the pandemic? Apartment residents and urban dwellers who could afford to move hunted for single-family homes with backyards. In December, the median sales price in Denver jumped 17.9% from a year earlier, while the inventory of homes for sale shrunk 66.3%.
Statewide, the median sales price of a home rose 8.7% while the number of listings shrank. Houses sold five days faster than in 2019.
Recently, Leprino’s office put a nothing-fancy, well-priced home in Lakewood on the market for about $450,000. It got 90 showings in 24 hours.
“I think, even if unemployment got worse, if the economy began a recession, or God forbid, the pandemic reared its ugly head again, I believe our market is quite solid based purely on the demand,” he said. “Single-family homes are absolutely, totally and completely, in an unprecedented way on fire. There is such a profound demand for them.”
By contrast, people who can’t afford rent are avoiding eviction, thanks to a national moratorium and tapping into a rent assistance program organized by the Department of Local Affairs. As of Feb. 23, the state had paid $47 million in rent money to help about 21,000 applicants. Requests for another $75 million are pending from about 21,000 households statewide.
All of that has helped keep the rental community stable but those crutches cannot continue, said Drew Hamrick, general counsel for the Colorado Apartment Association.
“If you’d asked me last April if the government can tell 70% of the workers that they can’t go to work and the economy could sustain that, I would have been surprised,” he said. “But it does have to end. We’ve got to get to the point now with positive virus numbers, getting people back to work and trying to get our economy back to normality.”
Credit, debt and finances
Michael Smith knows about the pandemic economy.
When he lost his bartending job last March, he tried to find another one. Bars weren’t hiring. He applied elsewhere and said he faced the reality that employers didn’t want to hire and train a 55-year-old who would probably leave when the pandemic was over.
Through a mix of state and federal unemployment benefits, his wife’s job as a cashier at King Soopers and credit cards, the couple survived until the end of December, when his unemployment benefits stopped. Smith said he could barely make rent.
His landlords at Terra Vista at the Park in Littleton let the late rent payments slide a couple of months. His credit union let him consolidate a loan and gave him a three-month deferment on payments. But then his Jeep’s engine died.
“I can’t get emissions done so I can’t get tags, which is always another problem,” Smith said. “And so for me to go looking for a job but what am I going to do? Uber to work every day? And then like I said, my credit rating just keeps dropping and dropping and dropping. It’s just like a snowball effect that keeps rolling and rolling and nothing is stopping the snowball.”
Smith’s pre-pandemic life seems unattainable. He said there were no Christmas presents for his extended family. No special night out for his wife’s birthday (“We had dinner here, nothing frivolous,” he said). Buying a house is no longer in his future, he said.
“My wife, Lisa, and I, our apartment is up in October. We were looking at possibly trying to buy a house. Well, I don’t think I would rent to me with a 580 credit rating. It just got me trying to understand, how are we going to spur this economy back? How are people going to be comfortable going back out spending money again when they don’t have it? I guarantee you I am not the only person that has amassed credit card debt.”
And yet, CNBC reports that credit scores reached a record high in 2020. American’s average FICO Score hit 710, up seven points from 2019 and up 21 since 2010. Colorado’s average credit score increased to 725, from 718.
Many financial institutions did step up to help their customers. Smith said he called up Discover saying his payment would be late “They said, ‘Not a problem,” he said. His credit union also deferred his payments.
That’s something some banks have done during natural disasters and the Great Recession, said Mitch Rosenbaum, senior vice president of marketing and digital services at the Credit Union of Colorado. The credit union, which has 17 branches around the state, had a pandemic page in place by late March to let struggling customers know help was available. That included the “skip-a-payment” program, emergency loan relief and overdraft fee forgiveness.
But a year later, “We’re starting to see the long-term effects. Folks who had emergency funds and who were prepared are now really hitting the limits,” Rosenbaum said, though “overall we projected more members needing the programs.” He said the federal stimulus payments and state and federal relief, such as the Paycheck Protection Program, offset some hardship.
But the bank has had to adjust its own expectations. Its margins are thinner, though that’s primarily due to low interest rates rather than loan deferrals. The company increased its budget to allow for loan defaults though they’re seeing fewer than expected, Rosenbaum said.
For a group of customers whose financial hardship is greater than others, the pandemic programs are a temporary fix.
“It is really kind of kicking the can down the road,” he said. “It does delay us getting the funds back for us to then be able to offer them to other members. However, that’s really our mission. You know, our tagline is ‘Here to help’ and we’ve definitely built our business models around giving ourselves the flexibility to help members in their times of need.”
But he realizes that a lot of people are still hurting and they’re not showing up in the rosy economic data.
“The people that have lost their jobs, and particularly Colorado with its tourism industry, it doesn’t matter if housing prices are going up and the stock market’s performing well,” he said. “That doesn’t help them.”
This story was corrected on March 4, 2021 to reflect that Mitch Rosenbaum is with the Credit Union of Colorado, not the Colorado Credit Union.