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Colorado Recovery Watch

National and state unemployment rates in July changed minimally. Colorado was one of 13 states that saw no change in the unemployment rate, and while a majority of states saw their rates increase, the increases were statistically significant in only 10 states. Moreover, jobs continue to grow across Colorado, though not at a desirable pace. A slow recovery has left many Coloradans relying on public assistance programs for health care and help buying food. Moving through the summer, the state can expect similar challenges mixed with some opportunities ahead.

Unemployment
Colorado saw no change in its unemployment rate from June to July, remaining at 8.5 percent. The national unemployment rate decreased marginally from 9.2 percent to 9.1 percent. (Figure 1). Colorado’s unemployment rate remains lower than the national average, yet it ranks 29th worst among states. Though Colorado’s unemployment rate forecast has improved, decreasing to 8.5 percent for 2011, 8 percent for 2012, and 7.3 percent for 2013, high unemployment will likely persist in the state economy for some time.1

Current unemployment compared to past recessions
The highest the unemployment rate reached during the past two recessions was 6.3 percent before declining again. The current downturn has been far worse as Colorado’s unemployment rate has been two full percentage points higher than that level for more than two years. (Figure 2) Moreover, the state’s unemployment rate has not been lower than the current 8.5 percent since April 2009. Though all of the recessions in the past 30 years affected Colorado’s unemployment rate, the 2007-09 recession has had an unusual residual effect on Coloradans.

 

Unemployment rate and the labor force
Because the unemployment rate is based on the size of the labor force, it is important to understand the effect one has on the other. The labor force excludes anyone not actively searching for work. The labor foce today is significantly smaller than it was at the start of the recession. There are about 66,000 fewer active workers in the labor force today than when the labor force peaked in Novermber 2008. (Figure 3) Tying the recent declines in the labor force to the flat 8.5 percent unemployment rate shows a lack of available jobs as well as a number of discouraged workers. If the 7,600 workers who left the labor force in July were counted in the number of unemployed, the unemployment rate would be even higher.

 

Employment
In July, Colorado was down 108,900 jobs since the start of the recession in December 2007, a rate that ranks 27th worst in the nation. 3 Coloradans continue to feel the effect of the job shortage. A marginal increase in jobs is indicative of a slow recovery. (Figure 4) July experienced a net increase of 3,200 jobs in the state, a majority in the manufacturing, and hospitality and leisure services sectors. Meanwhile, the trade, transporation and utilities, government, construction and financial industries saw the largest loss in jobs in the past month. With the exception of government, those sectors have been continually hit hard throughout the recession.

 

Job shortfall
The job shortfall measures the difference between actual employment and what employment would have been if jobs had continued apace with working-age population growth instead of plummeting during the downturn — in short, how far the state has been “set back” by the recession in jobs.

Colorado’s jobs shortfall, or the difference between the number of jobs Colorado has and the number it needs to regain its pre-recession employment rate, is 252,799. That includes the 108,900 jobs Colorado lost plus the 143,900 jobs it needs to keep up with the 6.1 percent population growth Colorado has experienced in the 42 months since the recession began.4 (Figures 5-6)

As the jobs deficit shows, Colorado has not recovered from the Great Recession. As state and federal elected officials make policy choices to deal with budget shortfalls, they should avoid decisions that threaten to throw a very tentative recovery into reverse. Putting workers back to work needs to be the primary goal.

 

 

Medicaid and CHP+
July continued the trend of consistent and substantial caseload growth in Medicaid and Child Health Plan Plus (CHP+). (Figure 7) Those programs provide medical assistance to low-income residents and children, respectively. The programs enrolled an additional 2,700 Coloradans in July, bringing the total enrollment level to 657,380.5 The combined caseload growth for Medicaid and CHP+ is more than six times faster than the state’s population growth in the current fiscal year. That Coloradans increasingly depend on those programs for medical care during the recovery is testament to their importance to the state’s vitality.

 

Food assistance
Food assistance remains another public service Coloradans increasingly use to manage the effects of the recession. According to the most recent count in May, 460,292 Coloradans received help buying food from the U.S. Department of Agriculture’s Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps. (Figure 8) That is an increase of 5,482 people from April, which saw a temporarily small bump in enrollment from March.6 The increase in usage during the recession and into the recovery is more than 85 percent, an increase that signals a large number Coloradans continue to experience economic hardship.

 

Slow recovery continues
Increases in public assistance program enrollment, coupled with a flat unemployment rate of 8.5 percent and minimal job growth, shows the road to recovery remains a long one. As Coloradans continue to search for economic security, leaders must remain cautious about threatening necessary services and continue to create opportunities for employment.

Contact: Ben Felson
CC/Rice Fellow
303-573-5669, ext. 316

Released Aug. 19, 2011

End notes
1 “Focus Colorado: Economic and Revenue Forecast,” Colorado Legislative Council Staff: Economics Section, June 20, 2011.

2 Colorado Legislative Council Staff for the chart design.

3 Economic Policy Institute analysis of U.S. Bureau of Labor Statistics Current Employment Survey data.

4 Economic Policy Institute analysis of U.S. Bureau of Labor Statistics Current Employment Survey data.

5 Analysis of “Premiums, Expenditures and Caseload Reports,” Colorado Department of Health Care Policy Financing .

6 Analysis of U.S. Department of Agriculture SNAP program data, provided by: “Latest Available Month - State Level Participation,” USDA Food and Nutrition Service.

 

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