Colorado’s unemployment rate is back down to 3.7%, which is where the state was halfway between the Great Recession and the first cases of COVID-19.
This implies that people are going back to traditional jobs, perhaps lured by higher wages or employers’ increasing flexibility to allow work-from-home options. But, keep in mind, these numbers don’t count people who’ve given up on finding a job. But more on that below.
First, let’s discuss this week’s inflation news. As gasoline prices sped past $4 a gallon last month, inflation hit its highest 12-month increase in 40 years.
In Colorado, residents felt a little more pain than the rest of the nation as consumer prices in the Denver-area rose 9.1% in March, compared to a year ago. The U.S. rate was 8.5%.
Denver (and the U.S) has been on an incredible tear since January 2021 in terms of rising inflation. Just look at this chart and how the more recent right half just goes up, up, up:
But March is over and gas prices have steadied — even declined somewhat. Economists and federal officials are more concerned about the future. Brian Lewandowski, who tracks the state’s economy at the University of Colorado, Boulder, isn’t certain we’re at the top yet.
“Price growth is remaining stubbornly high,” Lewandowski, executive director of the Business Research Division at CU’s Leeds School of Business, said in an email. “The Fed has indicated they will continue to take aggressive steps to combat inflation. We are facing two notable risks — consumers’ expectation of higher prices leading to a near-term surge in demand but softer demand in the near future, and the Fed’s response (while arguably necessary) to inflation cooling the economy too much.”
He’s talking about how the Federal Reserve increased interest rates a quarter of a percentage point last month to tame demand and, hopefully, keep rising prices at bay. They’ve hinted there could be more interest rate hikes this year.
So how does that translate to Coloradans?
Try $4,467 in extra spending.
That’s how much more the average Colorado household has spent in total since 2020 because of inflation, according to calculations by the Common Sense Institute, a conservative-leaning economic think tank in Greenwood Village. More than half of that amount is due to higher transportation costs, which includes buying or maintaining cars.
According to the Consumer Price Index for Denver, Aurora and Lakewood, the price of used cars, gasoline and energy were the top areas for inflation. But double-digit inflation rate growth hit many sectors. Here’s a chart showing the inflation rates for food, housing and more in March compared to a year ago:
Even as average wages in Colorado have increased since the pandemic began, they haven’t kept up with inflation, said Steven L. Byers, a senior economist at CSI. Nationally, wages are up 5.6%, or just two-thirds the rate of inflation.
“Wages do not keep up with inflation, which will hurt household budgets even more, lowering consumption still further,” Byers said in an email. (Scroll below to see that the state’s average hourly wage rate is up 8% from a year ago.)
Loren Furman, president of the Colorado Chamber of Commerce, said most members have raised wages, but addressing workforce issues is a priority. On Thursday, the organization hosted a meeting to address the labor shortage in the manufacturing industry and discussed apprenticeships and training a pipeline of potential young workers.
Inflation is still a concern, Furman added. But it’s just one of many things companies are dealing with.
“It’s all compounded,” she said. “When you have to raise wages, or you have to raise benefits, it’s a cost on employers. And now you have inflation, you have increased cost of gas, everything is compounded. And so you may have employers that are going to say, ‘Look, it might be cheaper for me to do without five employees and instead I’m going to have three. There are a lot of decisions these businesses are going to have to make to survive.”
→ WHAT’S YOUR INFLATION STORY? Diane B. from Grand Junction shared in February that her home insurance had jumped $150 a year. Mickey Mann from Denver said it’s Silk Almond Milk, which cost her $8.67 for six quarts on Amazon before the pandemic. It jumped to $18 in March. Tell me, how has inflation hit your wallet? Share your tale and be included in a future story. >> SHARE
Lowest jobless rate since Feb. 2020
Desperate employers, higher wages and waning COVID cases can be credited with Colorado’s 3.7% March unemployment rate, the lowest since February 2020 and just before COVID-19 disrupted business operations. Of course, you could say the same about February’s rate, which at 4% was the lowest in the same scenario. And then there’s January’s rate, which at 4.2% is tied with December’s rate, also the lowest since the pre-COVID era.
But here’s something to put this in more perspective:
There were 118,200 unemployed Coloradans last month. In February 2020 when the state’s jobless rate was 2.8%, there were 86,000. This data, from the BLS’ Current Population Survey, includes unemployed folks who no longer receive benefits.
“The recovery of the state’s unemployment rate during the pandemic recession has been substantially faster than the past two recessions,” said Ryan Gedney, a senior economist at the Colorado Department of Labor and Employment, during a Friday news conference. “During this recession, it took Colorado only 22 months for the unemployment rate to move from its peak rate, which was 11.8% in May 2020, to 3.7%. In comparison, the time span between the peak rate and 3.7% during the Great Recession was 57 months, and it was 44 months during the early 2000s recession.”
Another key economic indicator: Colorado’s labor force is still growing. Among adults age 16 and older in Colorado, 68.9% work or are looking for work. That’s a higher participation rate than February 2020. With an abundance of job openings — the state’s job board had more than 117,000 openings posted on Friday — Gedney believes Colorado’s unemployment rate will continue to fall this year and maybe even get back into 2% territory.
“All things being equal, and not (having) another shock to the economy, I think it’s possible within a year we’re talking about those rates being what they were pre pandemic,” he said. “Just seeing how fast they dropped over the past year. This time a year ago, we were saying the unemployment rate had (recovered) to 6.1%.”
More from the monthly employment report
- Colorado’s labor force grew by 12,300 in March, ending at 3,211,700 — “a historically high level,” Gedney said.
- The state has added 389,400 jobs since shedding nearly that amount in the early days of the pandemic. That translates to a 104% job recovery rate.
- The five counties with the highest unemployment rates were the same ones for three months running: Huerfano, at 6.6%; Pueblo, at 5.7%; Fremont, at 5.2%; Las Animas, at 5.0%; and Rio Grande, at 5.0%.
- Colorado’s average hourly earnings grew 8% in a year and is now at $33.85, or $2.12 more than the national hourly average of $31.73.
Coming soon: $600 million for empty UI trust fund.
Gov. Jared Polis put the idea out in November that Colorado should use federal pandemic funds to bolster the state’s depleted unemployment insurance trust fund. State legislators have been working with local business leaders since January to propose a bill to make it happen.
That could be as soon as next week, we hear. But it’s not just about using $600 million to replenish the trust fund, which paid out more than $1.1 billion in benefits before relying on a federal loan that has swelled another $1 billion. The proposal will include reform to existing unemployment rules, by providing benefits to some immigrant workers who were excluded from unemployment. There’s a plan to fix the issue that penalized workers who returned to work at reduced hours, and then lost all jobless benefits.
“The things that are on the list of policy reforms are specifically targeted to not be costly,” said Kathy White, executive director of the liberal-leaning Colorado Fiscal Institute. “We’re putting money into the trust fund, not taking money out, but just as a way of preparing for the next downturn to make sure that the UI system works for particularly the lowest wage workers because that’s where we saw the greatest gaps.”
Check back next week for the full story on ColoradoSun.com.
→ As of April 14, Colorado owed $1,013,089,860.58 on its federal loan it used to pay out-of-work Colordans in the pandemic, according to the U.S. Department of the Treasury. The interest rate is 1.59%.
→ ID.me under investigation — For the thousands of Coloradans frustrated with ID.me, the identity verification service required to qualify for unemployment benefits, Congressional lawmakers are asking “questions about the accuracy of the facial recognition service and reports of long delays in using the service to access pandemic assistance,” reports the Washington Post.>> STORY
Other working bits
After last week’s column on side gigs for retired or older workers, this just in from Airbnb: Last year, its older-adult hosts in Colorado earned $100 million by letting strangers stay in their homes instead of a hotel as part of the personal vacation-rental network. A company spokeswoman said Airbnb defines “older adults” as folks ages 60 and older.
That’s a fraction of the company’s $6 billion in revenues last year (and $352 million in net losses). But if you’ve got a home to offer up to the vacation network, that could help with the rising costs and limited income of retirement.
Airbnb goes on to say that the typical income for its older-adult hosts in Colorado was nearly $15,000 and 23% of the company’s hosts in the state are retired. Companywide, it’s 15% and they’ve earned more than $2 billion in the past year, according to Airbnb.
- Another local Starbucks wants to unionize. The store at 250 Columbine St. in Denver petitioned the National Labor Relations Board for a union representation election and lists 23 employees in the unit. About a half-dozen Starbucks stores in the state have joined the unionizing efforts. In other news, Starbucks CEO Howard Schultz told store leaders this week that he’s reviewing worker benefits, which won’t be available to employees who have voted to unionize. >> STORY.
- Calling all new restaurants — After the pain the pandemic wreaked on the restaurant industry, Denver officials are launching an accelerator for “experienced restaurant industry professionals who dream of opening their own establishment.” Part training and part mentorship, the Denver Restaurant-UP program has 10 spots and offers the chance to get a $30,000 grant to get a new restaurant concept going in Denver. Eat Denver, Denver Economic Development & Opportunity and the Denver Small Business Development center are supporting the program. >> DETAILS
I really never know what I’m going to write about for this column until Friday, but more people each week appear to be reading this, so I carry on. Reach out if you’ve got Colorado economic news, jobs or business stories to share by emailing me at email@example.com. Cheers! ~tamara
CORRECTION: This story was updated at 8:53 a.m. on April 16, 2022 to correct the spelling of Loren Furman.