Labor Day highlights challenges Colorado workers still face in the wake of the Great Recession
Despite signs of a recovery taking hold in Colorado, a closer look at economic data shows workers have little to celebrate this Labor Day. Colorado’s unemployment rate has inched down from its peak of 9.3 percent in February 2011, but it remains high at 8.5 percent. The unemployment rate has not dropped below that level since April 2009 and is predicted to remain high throughout 2012. Moreover, an alarmingly high number of Coloradans have been unemployed for more than six month or are working less than they would like because of the sluggish economy. While Colorado has seen some job growth, posting a gain of 16,200 jobs during the past six months, the state is far from creating the number of jobs necessary to reverse those troubling labor force trends.
Jobs shortfall
Colorado's jobs shortfall, or the difference between the jobs Colorado has and the number it needs to regain its pre-recession employment rate, is 252,799. (Figure 1) That includes the 108,900 jobs Colorado lost plus the 143,900 jobs it needs to keep up with the 6.1 percent growth in population the state has experienced in the 42 months since the recession began.1
Underemployment
Though the unemployment rate is the most commonly used measure of joblessness, it obscures the larger context of the working population. Another tool for measuring labor underutilization, the underemployment rate, includes “marginally attached workers.” That measurement includes two groups:
- People who want and are available for work, and had looked for work in the past 12 months, but not the last four weeks;
- Involuntary part time workers, who want and are available for full-time work but must settle for a part-time schedule because a full-time position is not available.
May 2011 data show Colorado’s underemployment rate at 15.4 percent, almost twice as high as the unemployment rate that month of 8.7 percent. Though the underemployment rate will usually be higher than the unemployment rate, the difference between the two was largest in 2009 and 2010, demonstrating the larger challenges Colorado workers face in the current recovery.
Demographic disparities
Looking at underemployment alongside unemployment helps highlight how racial and ethnic disparities in employment have persisted and deepened since the onset of the recession. Today, Coloradans of Hispanic descent have both the highest unemployment and underemployment rate for measurable demographic groups, followed closely by African-Americans. (Figure 3) White workers have the lowest rates of unemployment and underemployment of any group.
While African-American and Hispanic workers have experienced varied rates of underemployment over time, white workers have lower rates of underemployment than both groups, currently and historically. (Figure 4) The implications of those data should not be overlooked when considering policies to mitigate the effects of the recession.
Long-term unemployment
Another useful measurement to gauge the depth of the recession’s damage is long-term unemployment (LTU), which measures the share of the unemployed who have been out of work for at least 27 weeks. The LTU in the current recession is notable for its severity, indicating the economy is struggling to create jobs and return people to work. (Figure 5) While previous recessions have caused a short spike in the LTU, in this current recovery, 41.3 percent of Colorado’s unemployed people have been jobless for at least six months.
Public sector employment
Government, excluding public education and health workers, continues to employ a large number of workers in Colorado, especially local governments, which collectively employ over twice as many workers as the state. (Figure 6) The highest number of public sector jobs is in professional and service occupations such as law enforcement workers and firefighters.2
Investment in education would set the stage for prosperity
As Labor Day 2011 approaches, Colorado’s unemployment rate stands at 8.5 percent, lower than the national average of 9.1 percent. Job growth is minimal but positive compared with other places in the nation. However, those encouraging signs of a recovery mask troubling undercurrents in the labor market. A closer look at unemployment, underemployment and long-term unemployment tells a different story of how Colorado workers are faring today. Many Coloradans, 15.4 percent, are underemployed, either working sporadically or working part time because no full-time work is available. That is even more likely for African-American and Hispanic workers. Too many unemployed workers, 41.3 percent, have been jobless for more than six months and soon face the threat of having no safety net, whether it be personal savings or unemployment insurance benefits.
In the face of a dire employment situation, elected leaders must do more to help workers. Unfortunately, states are limited in what they can do to manipulate the economy and create jobs. The magnitude of the current crisis demands bold fiscal and monetary policy solutions that only the federal government can enact. However, states can and should take steps to mitigate the harm to their workers. During the past few years, Colorado policymakers have taken a few of these steps by shoring up the state’s unemployment insurance financing system, implementing a work share program to help avoid layoffs, and establishing a modest retraining program as part of an unemployment insurance modernization package.
Some of those programs will need to be renewed in the coming year, and lawmakers should act to ensure safety-net programs for unemployed workers continue to be available and effective. Colorado can also put people back to work by rebuilding and expanding the state’s infrastructure – aggressively going after federal dollars and targeting limited state dollars to programs proven to employ Coloradans. The state can avoid budget-balancing actions like deep program cuts or broad layoffs that undercut the recovery.
Colorado can do more. It can invest in education – early childhood education, customized training programs, colleges and universities. The most important thing Colorado can do today is prepare workers for the knowledge-based economy of tomorrow. Education and training allow workers to increase their skills, compete for better jobs and boost their earnings. Early childhood education prepares children to learn and allows parents to be more productive workers. Companies benefit by having workers who can learn, adapt and perform as needed under changing economic circumstances. Quality schools and an educated workforce have been proven to attract industry, increase employment and raise personal income – all drivers of a thriving economy. To prepare for the future, Colorado can and should expand its investments in the proven path to long term economic prosperity – education.
Contact: Ben Felson
Fiscal policy analyst/Rice Fellow
303-573-5669, ext. 316
Released Sept. 1, 2011
Endnotes
1 Economic Policy Institute analysis of U.S. Bureau of Labor Statistics Current Employment Survey data.
2 “State and Local Government, Except Education and Health,” Bureau of Labor Statistics, Career Guide to Industries, 2010-11 Edition.
3 Thomson, Jeffrey. “Prioritizing Approaches to Economic Development in New England: Skills, Infrastructure and Tax Incentives,” Political Economy Research Institute, University of Massachusetts, August 2010.
