Colorado Recovery Watch - May 2012
The most recent economic data from the U.S. Bureau of Labor Statistics show mixed trends for the recovery. The month of May saw an increase in the state unemployment rate, which includes the self-employed and farm workers, and the state labor force. Interestingly, another survey reported data that excludes the self-employed and farm workers and showed a net increase in employment for the month of May.1 However, a robust jobs recovery has yet to solidify in Colorado or nationwide. Enrollment in the U.S. Department of Agriculture’s Supplementary Nutritional Assistance Program (SNAP), formerly known as food stamps, erased positive movement in February as enrollment increased by nearly 7,500 people in the month of March (the most recent data available).
In May, Colorado’s unemployment rate increased for the second consecutive month to 8.1 percent. (Figure 1) Although this 8.1 percent unemployment rate is still 0.3 percent lower than May of last year, it represents a 0.2 percent increase from April and a return to the October 2011 level. The national unemployment rate also saw a 0.1 percent increase to 8.2 percent during the month of May leaving the rate 0.8 percent lower than May 2011.
While Colorado’s unemployment rate has remained below the national average, it ranks 17th highest among the 50 states.1 The most recent economic forecasts from the Colorado Legislative Council Staff, released in March, show an improved outlook for unemployment in 2012, though they project high unemployment for the next several years. Colorado’s unemployment rate is forecast at 7.6 percent for 2012, 7.6 percent for 2013 and 7.5 percent for 2014.2 The forecast also predicts wage and salary income to increase 4.6 percent in 2012.3
Current unemployment compared to past recessions
Both the Colorado and national unemployment rates remain elevated over four and a half years since the beginning of the 2007 recession. Colorado’s unemployment rate peaked at 9 percent in September 2010, 38 months after the start of the recession. Despite the fact that the current rate of 8.1 percent is 0.8 percent below the high, the current unemployment rate in Colorado is almost a full two percentage points higher than the highest unemployment rate of the 2001 recession. (Figure 2)
Unemployment rate and the labor force
The unemployment rate has an important connection to the size of the labor force. To be counted as unemployed, a worker must be actively looking for a job. The labor force is defined as the number of workers with a job or actively looking for work. In May, just under 7,000 individuals entered the labor force, which is the largest single month increase since the recession began. This may help to explain the uptick in the unemployment rate as more workers begin actively searching for a job and are therefore counted as “unemployed”. Over the past year nearly 20,000 workers have entered the labor force in Colorado.
Still, there are about 20,000 fewer workers in the labor force today than when the labor force peaked in April 2009, this keeps the unemployment rate lower than it would be otherwise. On the other hand, when job prospects improve in the future and workers begin to enter or re-enter the labor force, the unemployment rate may not drop dramatically despite encouraging signs such as hiring and employment growth.
The increases in the unemployment rate and in labor force participation are measured by a U.S. Bureau of Labor Statistics household survey, called the Local Area Unemployment Statistics survey (LAUS), which reported a net increase in employment of 526 individuals in May. (Figure 4)
Encouragingly, another survey, called the Current Employment Statistics survey (CES), which excludes the self-employed, farm jobs and striking workers, reported a larger net increase of 2,000 jobs as the level of nonfarm employment inched closer to pre-recession levels. (Figure 4) In May, Colorado was down 58,500 jobs or 2.49 percent since the recession started in December 2007. But since May 2011 Colorado has added 40,800 jobs, a 1.81 percent increase. Despite being far below pre-recession job levels, in May, Colorado employment reached its highest level since January of 2009.
From April to May 2012, the financial sector saw the largest gain in employment while leisure and hospitality and construction gained as well. Trade, transportation and utilities saw the largest decrease in employment, losing 1,700 jobs from April to May.
When the recession began Colorado had 2,350,200 jobs. Colorado's employment trough occurred in January 2010, when the state had 141,000 fewer jobs than before the recession started. Now, in May 2012, Colorado has 58,500 fewer jobs compared to the pre-recession level.
Colorado's jobs shortfall, or the difference between the number of jobs the state has and the number it needs to regain its pre-recession employment rate, is 210,044. That number includes the 58,500 jobs that Colorado lost plus the 151,544 jobs it needs to keep up with the 6.4 percent growth in working-age population that the state has experienced since the recession began. (Figures 5-6)
As the jobs shortfall shows, Colorado has not yet recovered from the Great Recession. As state and federal elected officials make policy choices to deal with budget shortfalls, putting Americans back to work needs to be their primary goal.
Medicaid and CHP+
Public assistance for health care remains of critical importance for Coloradans in the current recovery. The caseload for Medicaid and Child Health Plan Plus (CHP+), the programs that provide medical assistance to low-income residents and children, has increased 61 percent since the start of the recession. Years after heavy caseload growth, the month of April showed increased enrollment of only 380, bringing the total enrollment level to 716,981.3 (Figure 7) That is the smallest monthly caseload growth since April 2011. Between April 2011 and April 2012 Medicaid enrollment increased about 10 percent, or about 68,000 people. Coloradans’ increasing dependency on the programs for medical care during the recovery is testament to the programs importance to the state’s well-being.
The Supplemental Nutrition Assistance Program (SNAP) has continued to experience increased enrollment throughout the recession and current recovery. In February 2012, the program experienced the largest decrease in enrollment since July 2007. Unfortunately, the most recent data from March of this year show an increase in enrollment of 7,418 individuals, completely erasing the gains made in February. This leaves current SNAP enrollment at twice the pre-recession level. The month of March continued the overall upward trend that has occurred since the beginning of the recession in December 2007. In March, 496,109 Coloradans, or 9.6 percent of Colorado’s population received help buying food through SNAP.(Figure 8)3
A recent report from the U.S. Department of Agriculture found that food stamps benefits helped reduce poverty across the country by 4.4 percent between 2000 and 2009.1 The impact on the child poverty rate was even higher. These figures provide a glimpse at the important role that our public safety net has played throughout the recovery.
Mixed indicators show full recovery a ways off
Mixed trends from different employment surveys show some improvement in employment, but a serious job shortfall remains as the state’s working-age population continues to grow. While the unemployment rate did rise, this could be attributed to more people resuming their job search in light of a perceived improvement in employment opportunities. On the bright side, Colorado has regained 82,500 jobs since the lowest point of the recession; over half of what was lost in the 2007 recession. That is a good step, but it will take many years of improvement to bring the labor market back to health.
Colorado’s safety net assistance, such as Medicaid and SNAP, has proven its merit during the recession, helping hundreds of thousands of Coloradans stay afloat. Enrollment in SNAP increased in March. This highlights that despite any good news many low-income Coloradans are still feeling the effects of the recession. Until we experience a full-scale, self-sustaining jobs recovery, these programs will continue to be vital to Colorado’s well-being.
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1 Every year, the Bureau of Labor Statistics revises its historical labor force estimates to reflect new Census Bureau population controls, updated input data, and re-estimation. These data also incorporate new seasonal adjustments for more accurate estimates. Effective with the January 2012 edition of Colorado Recovery Watch, these revised estimates will be used. As a result, the data for charts in this and future editions of Recovery Watch will differ from versions prior to January 2012 .
2 Economic Policy Institute analysis of U.S. Bureau of Labor Statistics Current Employment Survey data.
3 “Focus Colorado: Economic and Revenue Forecast,” Colorado Legislative Council Staff: Economics Section, Mar. 19, 2012.
4 “Focus Colorado: Economic and Revenue Forecast,” Colorado Legislative Council Staff: Economics Section, Mar. 19, 2012.
5 Colorado Legislative Council Staff for the chart design.
6 Analysis of “Premiums, Expenditures and Caseload Reports,” Colorado Department of Health Care Policy Financing.
7 Analysis of U.S. Department of Agriculture SNAP program data, provided by: “Latest Available Month - State Level Participation,” USDA Food and Nutrition Service.
8 U.S. Department of Agriculture Economic Research Service, Report number 132: “Alleviating Poverty in the United States. April 2012.