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Home > Social Issues
The State of Colorado Employment
by Bob Powell, 9/03/05
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As of June 2005 the Colorado job backlog was between 140,000 to 228,000 jobs. 

As of Dec 2005, Colorado remains 4300 jobs short of the number of jobs in Dec 2000; adding jobs required to keep up with population growth Colorado is 170,473 jobs short. Adding those officially unemployed, 233,263 jobs are needed.

Click here for the full report in pdf format (8 pages, 10 point type, 157K) and with larger print here (11 pages, 12 point type, 161K).  A separate document (17K) examines the data for El Paso County. Other data for Colorado cities from the Milken Institute is shown in this document (6K). Responding to a request, I added a section on the job backlog in Colorado Springs.

Included on this page are the introduction and summary of this report.

See the "Key point summary" at the bottom of this page and in the report for an overview of what's covered.

One can examine "unemployment" vs "economic growth" in Metropolitan Statistical Areas (MSAs). And then one can examine the "change in unemployment" vs "economic growth". While unemployment may go down in higher growth rate regions, it requires an unsustainable growth rate: ~5%/yr or greater rate of growth for 1% less unemployment.

But the "change in unemployment" is often flat or even increases in some cases. Why would this be? Because people move from "where the jobs aren't" to "where the jobs are".

Jump to "Graphs showing "Change in Unemployment" vs "Regional Growth" to see that higher rates of economic growth do not result in a reduced "change in unemployment.

Find companion articles and charts here (178K).

Updated U.S. Data:

A graphic illustration that there is vast unemployment, understated even by the graphs below: 25 thousand apply for 325 jobs at a new Wal-Mart (another link to this article or google: "325 jobs" Wal-Mart).

US Employment not keeping up with population growth. 4.466M backlog

Showing US unemployment is much greater than the "official" U-3 statistic

The State of Colorado Employment


Phillip McCready and I visited Brian Vogt, Director of Colorado OED, on 7/25/05 and talked with him about employment in Colorado. We exchanged views of the Colorado employment situation.

I understood Mr. Vogt's perspective to be that we're OK because current data shows we are improving and jobs are being created in new areas. He perceives that the news media overemphasize the negative and the actual job situation is much more positive than it appears.

My impression is that there's primarily an overemphasis on minimal positives and cheerleading on the part of the press, official government sources, and economists who might be expected to be neutral.

So unfortunately, the real extent of the employment problem in CO (and the nation) goes largely unrecognized.

Prompted by this discussion and recent articles in the Denver Post, curiosity got the better of me (again) and I decided to look at the data. Given differing views, what does the data show?

The Colorado Job Deficit

Comparing CO vs US Job Performance

Comparing CO vs US Job Growth Rates

I found that the Colorado economy is significantly lagging when it comes to employment. While I've not done an exhaustive search, I don't believe one would know from the sources above that there's a 140,000 to 228,000 job deficit in Colorado: 25,000 jobs to get back to the early 2001 peak and 115,000 to 203,000 jobs (depending on how the estimate is done) to create the jobs needed for those entering the workforce over the past 4½ years.

A realistic picture of the jobs situation is important because, lacking that, there's a lessened perception of the need for action to change public policy and to increase our ability to actually profit from innovation.

[See Summary below. The body of the report is in the pdf files.]

Graphs showing unemployment vs Regional Growth

Here are two graphs showing that it's a myth that more rapid regional growth results in a decrease in unemployment:

Change in Unemployment 1999 to 2000 vs Growth from 1999 to 2000

Change in Unemployment 2000 to 2001vs Growth from 1999 to 2000

Find more graphs at the end of this file (pdf, 178K). While some charts appear to show a reduction in unemployment, there's so much scatter that there's no clear trend.

Data Sources:
Personal income and population summary estimates (CA1-3) from the Bureau of Economic Analysis and Unemployment data from the Bureau of Labor Statistics.


Tucker Hart Adams' statement, "We're not outperforming the nation to the extent we did in the 1990s, but at least we're not under performing," is partially correct: current job growth is 28% greater in Colorado.

However, it's mostly incorrect. There's a lot further to go to even reach the 2001 peak, whereas nationally the 2001 peak has been exceeded. Colorado has yet to make up for 25,000 lost jobs or create another 115,000 to 203,000 jobs for those who have come into the workforce since the 2001 peak. That's a shortfall of between 140,000 to 228,000 jobs. Nationally, there's a backlog of 6 million jobs. The Colorado job loss was 2.2 times more severe than for the nation.

The problem is even greater than these numbers would suggest, because many of the lost jobs have been high-level and high-paying, high-skill IT and dotcom jobs ... and Colorado is still losing them. So the solution isn't simply for people to get more training; there are lots of highly-skilled people. A Colorado Springs Business Journal article quotes a local recruiter ("Quantum lays off engineers," 8/19/05).

Kathleen Connor, an executive recruiter based in the Springs, said the layoffs reflect a tough market for mid- to senior-level professionals and new college graduates.  High-tech positions and mid to upper level management positions are not open, she said.

"No matter how good the economy is getting, it's a difficult professional job market," Connor said.  "I still have a lot of Ph.Ds in my database who don't have jobs."  ...

What's real in today's job market is that large corporations are not in the "hiring mode," she said.  "And we are not creating top-level jobs in this community."

Economic development is vital if Colorado is to recover from the economic downturn. But "economic development" should not take the form of tax wars between regions. It must be economic development based on increased innovation and the ability to actually profit from innovation, which is no easy task.

One initiative is that of the Manufacturing Task Force in Colorado Springs, which has been exploring for over 2 years what can be done to restore and grow the Colorado Springs manufacturing base by increased manufacturing excellence, innovation, knowledge distribution, and area marketing. Another example is the work of the Magellan Center in Longmont that is focused on promoting innovation and entrepreneurial activity.

The U.S. must also address its trade policy that is creating an exponentially-increasing trade deficit and undermining the purchasing power of economy, as well as our economic and military security. We must develop a sane, balanced trade policy to bring the trade deficit under control. As a first step, it's not protectionist to put an end to "reverse protectionist" policies that actually subsidize the offshoring of jobs.

The story from government, EDCs and the press is more positive than warranted for the true state of the job market to be conveyed to companies considering relocation. Excessive cheerleading is unhelpful.

Key point summary:

  • Colorado is 25,000 jobs short of the 2001 peak.
  • Considering those who would have come into the workforce since the 2001 peak, the Colorado job backlog is between 140,000 and 228,000 jobs.
  • Colorado Springs jobs have approximately recovered to the level of the 2001 peak.
  • Considering those who have come into the workforce since the 2001 peak, the Colorado Springs job backlog is between 9,000 and 18,000 jobs.
  • Economic development activity should highlight, rather than underplay, the job backlog in Colorado as a factor to attract companies to Colorado.
  • Nationally, the job backlog is ~6 million jobs.
    The Colorado job growth rate in the 1990s was 71% greater than the current job growth rate.
  • The employment drop from early 2001 to mid-2003 in Colorado was ~4.4% vs. a 2.2% drop for the nation.
  • The Colorado job growth rate is 28% greater than for the nation.
  • "Official" unemployment is a vast understatement of real unemployment. "Effective" unemployment is of order 9 - 12%. Counting others, the slack in the labor force is over 20%. Whether 1 in 10 or 2 in 10, that's a lot of slack.
  • Unemployment and underemployment are national problems that cannot be solved at a regional level because over the long run they are determined by Federal Reserve policies.
  • "Reverse-protectionist" trade policies and offshoring are undermining economic and military security. A shift to "balanced trade" is required to bring the U.S. exponentially-increasing trade deficit under control.
  • "Economic development" based on "business-friendly" tax competition between regions leads to infrastructure backlogs over the long run.
  • Economic development must be based on increased innovation and the ability to profit from innovation (e.g., by keeping manufacturing in the U.S.).
  • Because of where the economy is in the "long wave" with a global glut of supply, tax policy should be geared to increasing demand, not increasing investment. The origin of the "long wave" from a system dynamics perspective is described in the paper by John Sterman of MIT on the Long Wave Decline and the Politics of Depression (21.1Mb).


Another report, with Dr. Phil McCready, Innovation Economics, presented by Dr. McCready to the Colorado Workforce Development Council on June 15, 2005:
The State We’re In: Diminishing opportunities for workers in Colorado’s information industries


URL: http://www.exponentialimprovement.com/cms/coemploy.shtml

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