Colorado Recovery Watch - July 2012
The most recent economic data from the U.S. Bureau of Labor Statistics for the month of July depict the development of an unfortunate trend in Colorado. July saw yet another increase in the state unemployment rate, which includes the self-employed and farm workers, and a decrease in the state labor force. Although employment data from July is varied, it is clear that the recovery from the 2007 recession is facing serious problems. At the same time, safety net programs showed inconsistent participation trends. Total enrollment in Medicaid and CHP+ decreased slightly, marking the first decline in enrollment in those public health programs for the first time in more than two years. However, the food stamp program experienced a minor increase in enrollment.
In July, Colorado’s unemployment rate increased for the fourth consecutive month to 8.3 percent keeping pace with the National unemployment rate which was also 8.3 percent. (Figure 1) Colorado’s 8.3 percent unemployment rate is a return to the August 2011 rate and is a 0.4 percentage increase since the beginning of 2012. The July unemployment rate in Colorado is now 4.2 percentage points higher than when the recession began.
Colorado’s unemployment rate is tied for 17th highest among the 50 states.1 Furthermore, the Bureau of Labor Statistics notes the West region continues to have the highest regional unemployment, coming in at 9.4 percent. To add to this, the most recent economic forecast from the Colorado Legislative Council Staff, released in June, shows a slightly disheartening outlook for Colorado’s economy throughout the rest of 2012. The Council’s report notes that while the manufacturing sector and the real estate market have improved slightly, employment, income and consumer spending have slowed most likely due to the large amount of uncertainty in many aspects of the economy.2
Current unemployment compared to past recessions
Both the Colorado and national unemployment rates remain elevated 55 months after 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 8.3 percent is 0.7 percentage points below the high, Colorado has seen the unemployment rate increase for four straight months, reversing the hopeful downward trend established in 2011. The long-term elevation of the unemployment rate illustrates the severity of the “Great Recession” especially when compared with the three previous economic downturns. (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 July, according to the Local and Area Unemployment Statistics (LAUS) survey, more than 8,000 people left the labor force. Nevertheless, the Colorado labor force in July was more than 16,000 individuals larger than it was in July 2011. (Figure 3)
Still, there are about 25,000 fewer workers in the labor force today than when the labor force peaked in April 2009. This keeps the unemployment rate even 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 decrease in employment of more than 10,000 people in July although employment is still 15,000 individuals higher than a year prior. (Figure 4)
However, another important survey, called the Current Employment Statistics survey (CES), which excludes the self-employed, farm jobs and striking workers, reported a substantial net increase in employment. This survey reported a gain of 4,500 jobs during July, putting employment at its highest level in 2012. In July, Colorado was down 55,300 jobs or 2.4 percent since the recession started in December 2007. The number of individuals employed in July in Colorado remained 1.7 percent higher than July 2011. (Figure 4)
When the recession began in December 2007, Colorado had 2,350,200 jobs. Since then, Colorado has experienced 31 months of job loss. Colorado's employment trough occurred in January, 2010 when Colorado had 141,000 fewer jobs than it did before the recession started. Now in July, 2012, Colorado has 55,300 fewer jobs. (Figure 5)
Colorado's jobs deficit, or the difference between the number of jobs Colorado has and the number it needs to regain its pre-recession employment rate, is 212,500. That number includes the 55,300 jobs Colorado lost plus the 157,200 jobs it needs to keep up with the 6.7 percent growth in population that Colorado has experienced in the 55 months since the recession began. (Figures 5-6)
As the job shortfall numbers show, Colorado has not recovered from the “Great Recession”. As elected officials at both the state and federal level make policy choices to deal with budget shortfalls, putting people back to work needs to be a 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 65 percent since the start of the recession. The month of July posted the first decrease in total Medicaid and CHP+ enrollment since June of 2010. Total caseload decreased by 1,288 cases from June to July. This brings the total enrollment as of July 2012 to 734,869.4 (Figure 7) Despite the decrease in total caseload, the July 2012 total is still 11.8 percent or 77,489 cases higher than it was in July 2011. Coloradans’ continued reliance on the programs for medical care during the recovery is a testament to the programs importance to the state’s well-being.
During the month of May (the most recent data available), enrollment in the Federal Supplemental Nutrition Assistance Program returned to its pattern of steady growth since the beginning of the recession in 2007. Enrollment in May grew by 2,305 people and total enrollment is now 7.2 percent higher than it was at the end of 2011 and is nearly double the enrollment at the beginning of the recession. Recently, the U.S. House of Representatives passed a Farm Bill that would eliminate billions of dollars in federal funding for the Supplemental Nutrition Assistance Program. If this Farm Bill becomes law, SNAP, which has proved to be a key safety net after the great recession, would likely leave thousands of Coloradans scrounging for food. Critics of SNAP fail to recognize that social safety net programs such as SNAP often increase in enrollment in response to a prolonged period of economic strife. With almost 10 percent of Colorado’s population enrolled in SNAP, the program remains a crucial safety net for those who are still badly suffering as a result of the Great Recession. (Figure 8)5
As unemployment continues to rise, safety net programs remain critical
The month of July unfortunately continued the trend of a rising unemployment rate, as Colorado’s unemployment edged up to 8.3 percent. This coupled with the reported loss of over 10,000 jobs by the Local Area Unemployment Statistics survey affirms that the current recovery is struggling to survive. Furthermore, a serious job shortfall remains as the state’s working-age population continues to grow which could pose even more difficulty for the recovery.
In light of the economic data from July, policy makers must acknowledge the merit of social safety net programs and recognize that things such as Medicaid, CHP+ and SNAP are central to helping thousands of Coloradans keep their heads above water especially as enrollment in all three programs remains well above pre-recession levels. Until we experience a full-scale, self-sustaining jobs recovery, these programs will continue to be vital to Colorado’s well-being.
303-573-5669, ext. 316
1 Economic Policy Institute analysis of U.S. Bureau of Labor Statistics Current Employment Survey data.
2 “Focus Colorado: Economic and Revenue Forecast,” Colorado Legislative Council Staff: Economics Section, Jun. 20, 2012.
3 Colorado Legislative Council Staff for the chart design.
4 Analysis of “Premiums, Expenditures and Caseload Reports,” Colorado Department of Health Care Policy Financing.
5 Analysis of U.S. Department of Agriculture SNAP program data, provided by: “Latest Available Month - State Level Participation,” USDA Food and Nutrition Service.