An uptick in the number of workers in Colorado nudged the state’s unemployment rate up — though barely — to 2.9% in February from 2.8% in January, according to the latest data from the Colorado Department of Labor and Employment.
There were also 6,200 more jobs added as the state’s labor force grew by 10,700 to 3.2 million.
“Our state unemployment rate went up for good reasons, or what I would term as good reasons,” said Ryan Gedney, principal economist for the state’s labor department, during a news conference Friday. “Both labor force and total employment increased last month but labor force gains simply exceeded the total employment gains.”
In other words, the state’s larger labor force — which is a mix of people who work or are unemployed but looking for work — added more people who were unemployed versus employed.
Though at 2.9%, it’s still pretty low and is much lower than the 6% to 11.6% jobless rates the state experienced in the first months of the pandemic in 2020.
“February marked the 10th straight month the state unemployment rate has been below 3%,” Gedney added. “That streak is the longest since 2018.”
But even at such a low rate, that could change because February’s rate is preliminary. Data is revised all the time. New data is expected in upcoming months that could end up changing February’s figure, just as recent revisions changed every single month in Colorado last year.
Here’s a visual:
Why estimates get revised
So, Colorado’s annual unemployment rate in 2022 was actually 3.0%, and not 3.6%, as previously published. The revisions were released earlier this month. The U.S. unemployment rate, by comparison, was 3.6% in 2022.
“In 2022, the annual unemployment rate was revised downwards to an unbelievable 3.0%,” noted Gary Horvath, an economist at CBER.CO in Broomfield. “No wonder people are having trouble finding workers!”
The difference, for the most part, was that the number of individuals in the workforce was estimated too high, which translated into overcounting the employed (off by 2.1% at the most) and the unemployed (off by a high of 23.5% in August).
Data comes from surveys of a limited number of people, plus census population estimates and other sources. When the numerator or denominator changes, that impacts the unemployment rate, which is calculated like this:
Colorado’s unemployment rate was lowered to 2.8% in each of the past four months of 2022, from their preliminary rates between 3.3% and 3.6%. That low rate gets us back into the very-low 2019 territory, which also was revised but not by as much.
Economic data is revised all the time and corrections can be made years later, Gedney said. As new reports come in, the old data is benchmarked on the latest findings. And some of those reports take a long time to be released, such as the Quarterly Census of Employment and Wages, which tracks jobs covered by unemployment insurance. Colorado’s QCEW report for the fourth quarter of 2022 should be out in May, which means more revisions.
“I always caution when I’m getting toward the second half of the year because, remember, our last hard data is September of the prior year in terms of employment,” Gedney said.
But he said he had a feeling the job numbers were overly high last year.
“If you noticed last year, there was really strong growth. And in March to June, when we were over the month, adding 10,000 (individuals to the) labor force, I said, this is too strong. At that point, it was the strongest gains since 1992.”
Recessions make it more challenging to figure out the growth or loss, and that’s what’s been happening since the COVID-19 pandemic, he said. But there are also other factors.
Small surveys, declining responses and why about 800 households in Colorado
The federal agencies that track economic growth, in this case, the U.S. Bureau of Labor Statistics, can’t possibly interview every working adult.
Instead, it relies on a survey of roughly 60,000 American households each month. The surveys are conducted in person or on the phone by “highly trained and experienced Census Bureau employees” as part of its Current Population Survey. It’s not always the same folks who are surveyed each quarter.
That may seem like a tiny sample compared with the nation’s population of 334.5 million people, but the math apparently allows for it. Says the BLS: “This translates into approximately 110,000 individuals each month, a large sample compared to public opinion surveys, which usually cover fewer than 2,000 people.” The BLS also said there is a “90 out of 100” chance that it’s “within about 300,000” of what the number would be had everyone in the U.S. been surveyed.
In Colorado, the number of households surveyed is just a fraction. BLS officials said the number “is too volatile” to share a reliable estimate. Gedney has heard it’s around 800 to 850 local households. While he’s never been called, he knows people who have been surveyed for various census reports. (“I’m always jealous,” he said.)
There’s also the issue of responses to the surveys. That rate has plummeted for some labor surveys. The interview response to the Consumer Population Survey, which provides data for the unemployment rate, hasn’t fallen as much as others. But the response rates used to be in the mid-80% and higher five years ago. In January, it was 71%.
In a “Commissioner’s Corner” notice released Friday, the BLS said the decline accelerated in the pandemic as it became more difficult to reach the workers. People stopped going into the office. So the agency changed the process. Instead of visiting the business in person, BLS field economists used video to collect data, the phone, websites or web scraping tools. They added more sources, like gasoline price data to measure the change in consumer prices.
One thing the monthly jobless rate isn’t based on is how many people filed for unemployment in any given month. As some readers have pointed out, lots of people are still jobless when their unemployment benefits run out. The monthly household survey asks working-age people if they’re working, looking for work or have given up on finding a job. It doesn’t matter if their unemployment benefits have ended.
Nevertheless, the lower unemployment rates didn’t make a difference to the Federal Reserve, which raised interest rates another quarter-point Wednesday.
And, apparently, neither did the failure of Silicon Valley Bank and ongoing banking crisis, the first year-over-year drop in U.S. home sale prices in a decade, and what some consider an “imminent recession.” For the Fed, it’s all about reducing annual inflation to 2%. In February, the U.S. inflation rate was 6%, the same as the West region, which includes Colorado.
“My colleagues and I understand the hardship that high inflation is causing, and we remain strongly committed to bringing inflation back down to our 2% goal. Price stability is the responsibility of the Federal Reserve. Without price stability, the economy does not work for anyone. In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all,” Fed Reserve Chairman Jerome H. Powell said during a news conference.
Don’t make too much out of the unemployment rate, advised Horvath, who has been tracking Colorado’s economy for decades.
“In my opinion, the unemployment rate is one of the most overrated data pieces because there’s so much that can go wrong with it,” he said.
Colorado’s February jobs report
Economists rely on all sorts of data beyond the unemployment rate to get a sense of where the local economy is headed. In the latest Colorado employment report, many industries saw a slight increase in jobs, with the government seeing the largest, at 1,800. Gedney attributed the gain to hiring in local government.
But other industries with less growth, including construction and transportation, were probably hit by weather.
“It was very, very cold and it’s very unseasonably snowy and that does have an impact on those employment numbers as well,” Gedney said.
Horvath said it is important to look at what industries are going up and down in the number of jobs, like in January, when all but a few industries had flat or negative change.
“That says to me that there is something changing,” Horvath said. “Year over year, for the same month, the numbers are tapering down. That means we’re slowing and the reason we’re slowing is because we’re running out of COVID jobs to recover and because there are headwinds in the economy.”
➔ Pueblo led the state for highest metro-area unemployment rates in February, at 4.6%. Here are the not-seasonally adjusted rates:
- Boulder, 2.7%
- Colorado Springs, 3.4%
- Denver, 3.2%
- Fort Collins, 2.9%
- Grand Junction, 3.8%
- Greeley, 3.4%
➔ Wages are up: Average hourly earnings for private workers in Colorado increased 5.7% in a year to $35.68. That’s well above the national average of $33.09. But adjusted for inflation, the change in hourly earnings is down 1.1%.
According to the latest What’s Working reader poll, most participants have not only filed their taxes, they expect a refund. It’s a small majority, though, at 52.8% filed and 53.8% with a refund on the way. Here are the results:
As seen in the 173 responses to the second question, “What are you expecting,” nearly one quarter expect a big bill, which was one of the set choices. A scant 4% will file an extension. But nearly a quarter typed in their own answer:
“Who knows? Either way, the tax accountant will send a big bill,” wrote Meg Dunn from Fort Collins.
Amy Giffin, an accountant from Lakewood, who had some big life changes in the past year, added, “I have zero idea anymore about taxes, which, as an accountant and someone who always knew, is very frustrating.”
Readers also shared best tax tips; many were along the common lines of file early, don’t overpay taxes during the year, and don’t lie.
As Laura from Arvada put it: “File early so that a majority of your year can be spent NOT thinking about taxes.”
A few others:
- “Avoid ‘‘rapid refund’’ as it is a costly loan,” Rick in Parker wrote. Note: These are also called “refund advance loans.” Some commercial tax preparation services provide the anticipated refund up front so there’s no waiting. But there’s usually a fee. >> More from Consumer Financial Protection Bureau
- “Donate to a Colorado Enterprise Zone charity for a 25% tax credit,” suggested Charles J. in Fort Morgan. >> More HERE
- “Free Tax USA software (at freetaxusa.com) works great, costs less than TurboTax,” said Rebecca Morris from Broomfield. (Note: The New York Times’ Wirecutter crew reviewed several online tax filing software but eliminated FreeTaxUSA “due to its bare-bones interface and jargony help documentation. But here’s a review of FreeTaxUSA by Business Insider.) >> NY Times, Insider
Thanks to everyone who participated in the What’s Working reader poll.
Take the next poll
The economy has big news daily, but what sort of toll is it having on your future? Take this week’s poll at cosun.co/ww-economy2023
Unemployment wait back to “normal”
The backlog of unemployed claims waiting to be vetted by the state’s labor department is nearly back to “normal,” which means it’s taking four to six weeks to process claims, said Phillip Spesshardt, the state’s director of the Division of Unemployment Insurance.
“At the beginning of this week, the bulk of our claims to be processed were actually within the one to four week range, with a smaller number between five to six weeks,” he said.
However, some may still be waiting. Those folks were likely impacted by identity fraud in the pandemic, he added. Last year, as the department assessed new claims and tackled thousands that were paid — but not vetted — during the pandemic, some of the newly unemployed workers found themselves waiting more than 16 weeks for their first unemployment check.
Other working bits
➔ Up to $7,500 to build an apprenticeship program. Employers or organizations interested in setting up their own apprenticeship program may be eligible for a state grant through Apprenticeship Colorado. Applications go live April 7. >> More details
➔ Launch tips for women and nonbinary entrepreneurs. The Ladies Who Launch organization is hosting a Denver event at 6 p.m. March 29 to discuss the always-elusive startup need: finding capital. CEOs from Havenly and NextDoor are on the agenda. >> Register
➔ Boring job? Ask Colorado’s new AI tool for help. The state’s labor department is behind the new Colorado Career Trail Guide, which provides “highly customized recommendations” based on work history, skills and personal priorities. The tool is a partnership with Rhode Island-based Research Improving People’s Lives (RIPL) that uses machine learning, artificial intelligence, cloud computing to help match people to jobs. >> careertrailguide.co
Miss a column? Catch up:
- What’s Working: Tipping for fast food, to-go pick ups, pot and … wedding gowns?
- What’s Working: How a Denver nonprofit is expanding the benefits of work
- What’s Working: Colorado is more transparent about wages than any other state
- What’s Working: Denver inflation falls to 6.4%, which means we still have high inflation
- What’s Working: When Colorado’s tight labor market met the state’s housing affordability issue
What’s Working is a Colorado Sun column about surviving in today’s economy. Email firstname.lastname@example.org 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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