The state labor market in 2023 wasn’t as sluggish as federal data previously estimated, according to revisions released Monday by the state Department of Labor and Employment.
On one hand, the state added more jobs than expected, at a 2.5% annual growth rate, which was slightly above the U.S. rate of 2.3%.
On the other hand, revisions also counted a growing number of unemployed Coloradans that pushed the state’s unemployment rate up a notch to 3.2% for the year because nine of 12 months were revised higher. That ranked the state at 23rd lowest nationwide. The higher jobless rates, however, were tiny fractions of a percentage point — a difference within the allowed error range so it wasn’t considered economically impactful, said Ryan Gedney, senior economist at the Colorado Department of Labor and Employment.
“What this really means is, I think, a lot rosier picture, for lack of a better word, for Colorado’s labor market than certainly what we were seeing last year,” Gedney said during a news conference Monday. “The unemployment rate (rank) may seem high compared to what we’re used to in the state. But there’s a ton of states that just have extremely low unemployment rates. And … when you have a state that has an unemployment rate of like around 2%, I think it certainly puts them in a bind. It’s kind of a balancing act.”
In 2022, the state was still seeing enough job growth to rank in the top 10 states. But that trend reversed in early 2023 as Colorado fell to the bottom 10, one of the first indicators that the numbers were off, said Brian Lewandowski, the executive director of the Business Research Division at the University of Colorado Leeds School of Business.
As last year progressed, the state labor department told local economists that revisions were coming, to the tune of job growth numbers that were expected to be 40,000 higher, compared with what the monthly federal data was showing.
“We were expecting the revisions to be large, but even the December number ended up being about 47,000 jobs” higher, Lewandowski said. “That (federal) sample has been underestimating Colorado employment now for over a year.”
Gedney regularly advises that monthly data is preliminary. It’s handled by the federal government, which surveys a very small sample of 60,000 households nationwide to estimate every state’s unemployment rate and job growth. Gedney’s more interested in a quarterly economic census, which lags about six months. It’s more comprehensive because it collects feedback from the majority of Colorado employers who share their job numbers and wages.
The revisions put Colorado’s job growth last year at 72,700 jobs last year, up from the initially estimated 64,500.
“It’s a real service the state does by telling us that because on paper, it looked like Colorado’s economy was slowing down way faster than the national economy,” Lewandowski said. “We had a pretty low unemployment rate, we were in the top five or top 10 for job-openings rate. And we had the fourth highest labor participation rate. It didn’t feel like Colorado’s economy was slowing down as the data suggested.”
While that 2.5% job growth was for all nonfarm jobs, job growth in the private sector grew a bit slower at 2%, according to state data. That was revised upward from 0.8%.
Job growth has slowed though, noted Cole Anderson, a research analyst with the conservative think tank Common Sense Institute in Greenwood Village. Anderson said in an email that “job revisions boosted private employment dramatically, yet Colorado’s private sector employment growth in 2023-24 is still lagging as compared to previous years.”
The revisions pushed up the state’s annual unemployment rate a tenth of a percentage point higher to 3.2%, but that’s still historically low, Gedney said. It’s the eighth lowest annual rate since record keeping began in 1976. The January rate edged up to 3.4%, which was lower than the U.S. rate of 3.7%.
“Job growth numbers experienced meaningful and significant upward revisions, while labor force, total employment, and unemployment estimates were little changed,” Gedney said in an email. “However, something to watch is how the unemployment rate in Colorado has grown from a low of 2.6 percent in August 2022 to 3.4 percent in January 2024.”