Everything’s coming up in favor of business this week. Or is it?
The state had a record number of new businesses filing to start up last year. Fourth quarter, in fact, had the highest number of new entity filings in more than a decade, according to Colorado Secretary of State data. They increased 37.2% in the fourth quarter from a year ago, coming in at 48,806. Prior to 2021, filings were typically in the high 20,000s or low 30,000s each quarter.
The uptick could be credited to reduced fees since July but the ongoing economic slowdown points to other possible factors, Secretary of State Jena Griswold said in a news conference this week.
“When people turn to entrepreneurship, that may mean that their wages they’re getting from their jobs are not sufficient,” Griswold said. “They could be second jobs, or third jobs. … The big picture is that America’s economy needs to work for Americans. When we see increased numbers of businesses, that’s a great thing. But ultimately (if) everyday life is really expensive, then that means that the American economy is not working and not for the middle class.”
There seems to be an ongoing disconnect between workers and employers, job openings and unemployment, new businesses starting up while others are dissolving.
Another record set was how many companies dissolved in the fourth quarter, up 17% from a year ago. Meanwhile, those late on submitting required business forms grew 9.7% in the fourth quarter from a year ago.
Brian Lewandowski, an economist at the University of Colorado who worked on the Secretary of State’s report, said the large boost in new business filings could just be people saving a spot as they work on a business plan. People may just be late on getting their paperwork in. The more businesses that start up, the more that might fail. He looks at U.S. census data for business formations, which showed Colorado had a slower growth. But the trend is that new business formation is growing.
“It’s not 48,000. It’s a lower number, but it shows directionally that it’s still growing,” he said. “And statistically for us, it’s an indication of future employment growth.”
He also looks at bankruptcy data. The number of businesses that filed for bankruptcy in Colorado continued its downward trend last year that began in 2010. He thought there would be a rush of bankruptcies in the pandemic but that was not the case, as seen in this chart showing that business bankruptcies in Colorado peaked at 32,529 in 2010. Last year, the number was 5,092, the lowest since at least 2006.
There was a slight increase in the third quarter last year but the numbers headed back down in the fourth quarter. That’s unlike the Great Recession when there was a huge spike in bankruptcies, Lewandowski said.
“Maybe we can afford that third quarter (when) we saw an uptick,” he said. “I think that’s the promising signal that there have been very few forced closures of businesses.”
➔ Get the report. See the fourth-quarter report or get an interactive look at new business filings, dissolutions and delinquencies by month on the the Secretary of State’s business index page. >> 4Q report, interactive chart
➔ Job report surprise — U.S. employers added 517,000 workers in January, which was described as “unexpectedly strong” and “crushing estimates” Friday when the new jobs report dropped. The nation’s unemployment also fell to 3.4%, which is the lowest since May 1969, Bloomberg News reported. The Bureau of Labor Statistics credited job growth in leisure and hospitality, health care, and professional and business services. U.S. average hourly earnings increased 4.4% to $28.26 an hour in January.
Attention: Rural startups and investment
Colorado’s official venture capital program contributed another $11.2 million to the Greater Colorado Venture Fund, which is managed by brothers Jamie and Cory Finney at Kokopelli Capital and their partner Marc Nager on the Western Slope.
The state’s Venture Capital Authority, which is required to invest in companies located in rural and distressed areas statewide, invested $9.1 million in Greater Colorado’s first round in 2018. That round went on to make 29 investments totaling $17.5 million in Western Slope startups.
Now, with Fund II, there’s $25 million to help overlooked rural businesses. Cory Finney said in a statement the fund plans to invest an average of $500,000 each in 25 to 30 companies.
“Rural Colorado has a long history of punching above its weight when it comes to entrepreneurial success stories,” he said. “Companies like Mercury Payment Systems, Osprey, Big B’s, Smartwool have shown that meaningful businesses are being built in rural Colorado and are providing long-term benefits to their local communities and beyond.”
Interested rural Colorado-based entrepreneurs in technology, energy, aerospace, ag tech or consumer packaged goods industries can contact Greater Colorado at greatercolorado.vc/contact.
➔ ICYMI: The state’s Venture Capital Authority invested $5 million into the New Community Transformation Fund-Denver in October. It was the first time VCA had invested in a Black-owned and woman-led organization. NCTF seeks out startups in under-resourced communities in information technology, advanced manufacturing and other key industries. >> Read
➔ 56 Colorado companies get $5,000 grants — You don’t have to be a startup to get this grant. The Small Business Accelerated Growth Program just awarded 56 small businesses in Colorado $5,000 each. The recipients had attended Access to Capital training programs made available as part of Senate Bill 241. Another $1.07 million is available for future graduates of the training program. >> More info
Most vote for no new laws
Oohhh, so close to a majority. After two weeks, 48.2% of readers who participated in the latest reader poll said we don’t need any more new laws. This is higher than last week’s 37.1% turnout. There were 112 who voted.
On the other hand, those backing retirement-related laws (last week’s rate was 22% versus this week’s 16.1%) or laws that would boost worker salaries (19.4% last week compared with 13.4% this week) shrunk as more people opted for the opportunity to write in their two cents.
A few select comments, edited for clarity:
- “Workers should be paid for their commute.”
- “Would like to see protections for remote workers.”
- A law against “Mandating in-office work.”
- “Equal Pay for Equal Work (the wage transparency law) helped with my job search in 2020 and (knowing) that I was grossly underpaid.”
- “Wage transparency is a sham because it presumes broad equivalency among jobs. … Simply put, there is too much nuance in job differences to create a fair and effective oversight mechanism without creating lots of new obligations and reporting rules.”
- “I would like to see state legislators post their state pay and net wealth when they are elected into office. It should be done annually and posted each year on a consolidated website showing their progression of their wealth and sources.” (Here are legislator and elected official wages)
- “Abolish FAMLI (the paid-leave law) program or revamp significantly”
- “The FAMLI Act … gives me so much peace of mind when considering when to grow my family or strike out on my own as a solo business owner.”
Obviously, there are lots of opinions out there. Check out the latest labor bills. >> List of proposed labor laws
➔ Speaking of wage transparency … The update to the wage transparency law, reported last week, is official. Introduced Tuesday, Senate Bill 105 tries to address the confusion employers have about promoting existing workers and whether those new roles need to be advertised internally and externally (short answer: Yes, if it’s a job opening but no if it’s “career progression” and part of that type of job).
Take this week’s poll:
Other working bits
➔ Fraudster gets 8 years for unemployment fraud. A guilty plea came after an investigation by the Colorado Unemployment Fraud Task Force, created by the AG’s office in 2021 to look into mass amounts of pandemic unemployment fraud. Dawn Marie Jones, 55, pleaded guilty to fraudulently obtaining $35,761 in jobless benefits between May 2020 and September 2021. According to the indictment, Jones was incarcerated during the period she claimed she was entitled to benefits. Jones was sentenced to eight years in prison and must pay back the money. Her case was one of 64 referred by the task force to prosecutors that covered 105 fraudulent claims and $1.1 million in assessed losses for the state. >> Details
➔ Unemployment benefits still facing delays through March. Since summer, this column has written about the monthslong wait (16 weeks, as of December!) for newly unemployed workers to start receiving benefits. The state Department of Labor and Employment said the delays were due to getting through the backlog of pandemic jobless claims and it won’t be until the end of March until things get back to normal, or a four- to six-week wait. That March end date remains the same and Colorado is now the slowest in the nation at paying unemployment benefits, according to a 9News report this week.
➔ Fight business fraud faster. Before Senate Bill 34 passed last year, Colorado businesses had a tough time fending off identity thieves that used fraudulent filings to hijack their companies. The Secretary of State’s Office couldn’t correct fraud unless it received a court order, which put the onus on the small business to go to court. Now, with new law in place, SOS can forward complaints to the Attorney General’s office. A new tool launched this week to get it all started: a complaint form. Still, it won’t be a super speedy process. The FAQ says it can take 120 days or longer to get a response from the AG if the complaint is deemed legitimate. >> File a complaint
Don’t miss: Sun economy stories
➔ Some Colorado towns are preparing to sue to make the post office prioritize mail over last-mile deliveries for Amazon, Nancy Lofholm reports. >> Read
➔ OSHA fines Amazon after worker safety issues were identified at its Aurora warehouse and others nationwide, Joshua Perry reports. >> Read
➔ Vail Resorts sees uptick in skier traffic over last year’s record showing — but not in Colorado, by Jason Blevins. >> Read
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Thanks for sticking with me for this week’s report. As always, share your 2 cents on how the economy is keeping you down or helping you up at cosun.co/heyww. ~ tamara
Miss a column? Catch up:
- What’s Working: Get ready for Colorado’s wage-transparency law, part 2
- What’s Working: Colorado’s unemployment rate dropped, but so did the number of people in the workforce
- What’s Working: How Colorado’s high egg and energy prices mesh with its slowing inflation
- What’s Working: Colorado business leaders are pessimistic about 2023. Should they be?
- What’s Working: Prepare for some new costs of being employed in 2023 in Colorado
What’s Working is a Colorado Sun column about surviving in today’s economy. Email tamara@coloradosun.com with stories, tips or questions. Read the archive, ask a question at cosun.co/heyww and don’t miss the next one by signing up at coloradosun.com/getww.
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