‘Twas a brutal week for the U.S. economy, especially for those with money to invest (stop checking your stocks already and distract yourself with this Dirty Dancing/Muppets Show mashup instead).
In Colorado, the economic news seemed a little more upbeat.
The state’s unemployment rate fell to 3.6% in April, the lowest since before the pandemic.
More Coloradans are back to work, with 15,400 returning to jobs in April.
Average hourly earnings grew 10% in the past year to $34.34 while the work week shrunk 12 minutes from last year to 33.3 hours.
This and other Colorado job data was released Friday, but more on that below.
It’s rising gasoline prices that everyone is talking about.
But even as everywhere in the state is above $4 per gallon now, the increase had less impact on Colorado than anywhere else in America, according to an analysis of the 200 largest cities by LawnStarter, a lawn service with its own data and editorial team who put together reports on impacts to the lawn care industry.
“Interestingly, five of the six Colorado cities we ranked also had the five lowest percentage increases over the past year leading up to May 17 — Fort Collins wasn’t far behind at No. 9,” Jason Medina, LawnStarter’s managing editor, said in an email. “That tells us that Coloradans have either been staying home more, not driving as much, or both during this time period.”
Coloradans also pay less taxes on gas than most Americans, he added. The state had the 10th lowest motor-fuel tax per gallon, of about 22 cents. A new 2-cent gas tax to help pay for transportation projects in the state was just delayed by lawmakers by nine months and now starts in April.
“That, of course, doesn’t include other taxes like local taxes and a new gas fee that’s being delayed, though it would add only 2 more cents per gallon. The delay isn’t providing much relief — at least not at the pump,” he said. “However, the state gas tax makes up a big chunk of total taxes and is relatively lower than what many Americans pay.”
Gas prices and inflation
The data tracks closely with the weekly gas price report from AAA. This week, Colorado had the fourth lowest average price for a gallon of regular gas. The states with lower prices were Arkansas, Kansas and Oklahoma, which had the lowest at $4.03.
Colorado’s cost jumped a penny from last week, to $4.137 a gallon and was up from a year ago’s $3.089, according to AAA. Colorado is at the highest per-gallon price in 22 years, which is how long AAA has tracked Colorado data.
Nationwide, gas prices averaged $4.589 a gallon. On the other end, California averaged $6.061.
But being the least-impacted state in an uncertain economy doesn’t change economist Kishore Kulkarni’s outlook: it’s dismal. We’ve been hugely impacted already. Gas is averaging $1 or more per gallon than it was a year ago. In fact, the rising gas prices may have finally gotten everyone to notice inflation, but those who earn less may start seeing recent wage gains canceled at the gas pump.
Blame the Russian war on Ukraine, said Kulkarni, who teaches at Metropolitan State University of Denver. Both countries produce crude oil and all of that production is being impacted, not to mention sanctions and bans on Russian oil.
“We use a lot of gasoline. We use almost one-fifth of the world’s gasoline stock,” Kulkarni said. “And that has really started the whole thing of the recent inflation, the expected inflation in the future, as well as the actual inflation in the U.S. economy. And both are increasing. And because we don’t see an end to (the war) for a while, at least, this is going to get worse.”
The U.S. produces 20% of the world’s oil while also consuming 20%, according to the U.S. Energy Information Administration.
Other inflationary factors were already underway before the war, Kulkarni added. Supply chain disruptions in the pandemic created shortages that caused prices to jump. Unprecedented government pandemic spending, which many Americans received directly in their bank accounts, led to the Fed increasing the money supply. It’s now at $21.8 trillion compared with $15.5 trillion in February 2020.
“We have a perfect storm brewing because of all these different reasons in the U.S. economy, and in a way,” Kulkarni said, “it’s not surprising that we have gotten to 7.9 to 8% inflation, which is the highest in the last 42 years.”
A big problem with financial crises is that they don’t hit all people the same way. Even in the pandemic, many higher-paid workers could work from home, avoid getting sick by staying away from crowds and cut down on gas consumption.
“Financial crises are never equitable. They don’t care about the differences in the economy, the poor suffer a whole lot more than the rich,” Kulkarni said. “And the same thing happens with inflation. Inflation is inequitable because it hurts the poor more than it hurts the rich.”
There’s not an easy solution, but he suggests looking at programs to reduce poverty so people are overall better off to start with — protect the income of the lower-wage workers.
“The situation can turn around,” he said. “Let’s suppose we have a stoppage of war, some kind of peace where the pipeline of Russia starts flowing again. Suppose we have a reduction of gasoline prices because of that. Suppose OPEC countries actually do say ‘Let’s increase the supply of oil to the maximum capacity’ then oil prices will go down and inflation can be blocked. Interest rate increases are going to slow down our demand structure, which is a step which was needed for a while. … But in that scenario, if we go back to the peacetime quickly then we probably turn around. Otherwise, I don’t know when this is going to end.”
>> This week’s stock-plunge trigger: Target’s disappointing first quarter blamed “supply chain disruptions and increased compensation” and rising gas prices as reasons why it still grew at 3.3% but not as much as it had hoped. Its stock fell 25% that day, dragging the whole market down.
McDonald’s changed its attitude toward jobs
McDonald’s has 5,990 job openings in Colorado. That may seem like the chain is starting its summer hiring, but no. They’re constantly hiring. The openings are full-time and part-time for as long as the worker wants to stay, said Sean Connelly, operator-owner of three McDonald’s in Longmont and one in Arvada.
“It’s scaling for growth,” said Connelly, whose parents met at a McDonald’s training class and ended up buying their first McD’s together in Arvada. “That right there (requires) in the range of 20 to 25 employees per restaurant. We really feel we can increase the output with delivery options and with everything else we’ve got going right now, that’s really where we want to go to sustain where we’re at and build the business.”
Fun fact: All of the just over 200 McDonald’s in Colorado are franchises.
Globally, McDonald’s had one its best years last year since 2016 partially thanks to price increases to offset food and labor costs. Connelly said his four stores saw sales and transactions grow during the pandemic.
But his stores and others statewide did feel the Great Resignation as employees up and quit last year. However, they weren’t leaving because they were unhappy over pay and benefits, according to exit interviews the company has done for years.
“Now it’s really, ‘Well, I just wanted to try this or this,’” Connelly said. “It’s harder to attract and keep employees right now with the availability of jobs out there. In 25 years of being in the restaurant and service industry, I’ve never seen it before where employees aren’t necessarily unhappy with their current jobs. But they’re still seeking other employment and what else is out there.”
So, like other companies, the 200-ish McDonald’s restaurants in the Rocky Mountain region added perks that are mostly nonwage benefits. Connelly, though, said he raised the starting wages to $15.50 an hour from just under $13 before the pandemic. Crews at his restaurants average $16.41. Colorado’s minimum wage is $12.56.
This year, he hired a “People Experience Lead” to help existing staff understand all the benefits available, like college tuition assistance, and also to create a career path.
“As individual owner/operators and McDonald’s as a whole, we’ve done great things to combat that. Most are nonpay factors, so extremely flexible scheduling, we’ve got tuition assistance, there is now a nationwide employee food discount for food, instead of just within the organization you work for,” he said. “Really, this changing culture in restaurants makes it a more enjoyable place to work … and not just a job.”
The result? At two of his restaurants, he has about 10 more employees than he did last year. But with flexible schedules, there are 300 fewer hours scheduled. Still, he said it’s worth allowing flexible schedules if he can get employees to stay longer.
“That’s people finding that work-life balance that works better for them. So the employment shortage and availability I think go hand in hand,” Connelly said. “That’s really where we’re striving to (promote) that we’ve got full time, we’ve got part time. We are extremely flexible with hours. We work around school and we can work with almost anything, as long as it’s within reason, to help both the employee and the business.”
>> McDonald’s openings: jobs.mchire.com
Colorado jobs report
Colorado’s job economy remained strong in April as more Coloradans went back to work, wages rose and there are two job openings for every unemployed Coloradan, according to the state Department of Labor and Employment and Bureau of Labor Statistics.
Some added details behind the highlights:
- The state’s 3.6% unemployment rate for April was a tad lower than March’s 3.7%. It’s now the same as the U.S. Since early last year, Colorado’s rate was often higher than the nation’s. The same five counties had the highest unemployment rates with Huerfano at 6.1%, followed by Pueblo at 5.1%, Fremont at 4.8%, Las Animas at 4.7% and Rio Grande at 4.5%.
- Colorado employers have recovered 107.7% of the jobs lost in the early months of the pandemic. In other words, we’ve gained jobs and there are now 2,848,600 jobs in Colorado. In April, the leisure and hotel industry gained the most jobs while manufacturing lost jobs. Nationwide, the job recovery rate is at 95%.
- The Greeley region hasn’t recovered jobs lost in the early months of the pandemic. It’s the only one of the state’s eight regions. The slower recovery has been attributed to declines in the oil and gas industry. Here are the recovery rates by metro region:
- Grand Junction, recovered 126% of jobs lost
- Colorado Springs, recovered 118%
- Denver, recovered 109%
- Boulder, recovered 108%
- Non-metro Colorado (the 47 other counties), recovered 108%
- Pueblo, recovered 105%
- Fort Collins, recovered 103%
- Greeley, recovered 56%
- More people have joined or rejoined the workforce, pushing the participation rate to 69.1%, the highest since March 2020. Participation counts people who are working or unemployed but looking for work.
- The number of unemployed Coloradans dropped by 1,800 in April to 116,700 (this number counts more than just folks who are receiving an unemployment benefit from the state), according to the BLS Current Population Survey. When the state’s unemployment rate hit a low 2.8% in February 2020, there were 86,000 unemployed Coloradans.
The workweek has been shrinking in Colorado. In the latest labor data, the average workweek fell to 33.3 hours, or about 12 minutes less than a year ago. Between 2007 to 2014, the average workweek was around 34.5 hours and from 2015 to 2021, it averaged 33.75 hours.
How to interpret that really depends on the industry, said Ryan Gedney, a senior economist with the state Department of Labor and Employment. But pull out leisure and hospitality, which includes accommodation and food services, and the average workweek has gone up and down, and back again. In 2007, average workweeks were just under 25 hours, but climbed to 27 at the height of the Great Recession. It fell to 24.7 hours in 2020 but jumped to 25.7 last year.
“That kind of makes sense given the labor demand and labor supply issues in hospitality where people who were still with the business would work more hours because (hiring or churn) was more difficult,” Gedney said.
The industry with the biggest job growth in April was leisure and hospitality, followed by the arts and entertainment industries.
So, it was a pretty strong April, which had Gedney addressing recession chatter hinting at one hitting as early as next year. Anything could happen, he said, even in an economy where there’s job growth, lots of job openings and more people participating in the labor force.
“I would say our industry has a not-great reputation in terms of nailing down when a recession will happen,” he said. “But there’s certainly some headwinds.”
Other working bits
→ Not just McD’s: Walmart’s store manager training program College2Career graduated its first two managers who start at $65,000 a year. But the retailer is expecting a shortage of managers even though the job can pay more than $200,000, reports The Wall Street Journal. >> Read story
→ Colorado’s teacher pay among the lowest in the nation: “Everybody has a second job,” says one elementary school teacher in Aspen who waitresses part time. >> Read story
→ ICYMI: Harder than ever for Colorado’s mountain resorts to find workers. Vail Resorts and other companies cut back their summer offerings as the labor crisis persists. >> Read story
→ New Colorado laws that will impact your wallet — in a good way. Sun reporter Jesse Paul summed up five laws passed by the state legislature this session, including one that could cut down residential homeowner property taxes, delay new gas fees and offer a break for businesses. >> Read story
→ Colorado Springs adds free shuttle service downtown: To encourage visitors to explore downtown Colorado Springs, the Mountain Metropolitan Transit service starts free shuttle service on Sunday. There’s 13 stops along Tejon Street with pickup every 7 to 10 minutes. Ultimately, there are 23 total stops planned, according to officials. >> Details at mmtransit.com
→ The Starbucks 5: Three more Starbucks stores in Colorado voted to unionize this week, according to Starbucks Workers United. The Colorado Springs store at Brookside Nevada voted unanimously 13-0 to unionize, while Denver stores on Holly and Leetsdale voted 9-1 in favor of unionizing. They join a store in Superior, which was the first in Colorado, and the Starbucks at 16th St. and Tremont store.
What’s your inflation story? Take the What’s Working inflation poll at https://cosun.co/ww-inflation
Thanks for getting through another week with me. If you’re reading this online, you can get it delivered to your inbox every Saturday morning by signing up at coloradosun.com/getww. Reach out via email if you have a comment, suggestion or can share a real-life story on what it’s like to look for work or hire someone and your story may end up in an upcoming column. See you next week! ~ tamara
This story was updated on May 23, 2022 to note that the Colorado gas-fee relief was extended to nine months so the fee doesn’t start until April 2023.