September Recovery Watch
The most recent economic data from the U.S. Bureau of Labor Statistics show a decrease in the state and national unemployment rates, this time for the right reasons. The Colorado unemployment rate was down 0.2 percentage points from 8.2 percent in August to 8.0 percent in September. The decrease in the unemployment rate for the month of September was due to an increase in the employment level rather than a decrease in the labor force. According to the Local Area Unemployment Statistics survey, the number of people employed in Colorado increased by more than 7,000 during the month of September. Also, enrollment in public assistance programs such as Medicaid, CHP+ and SNAP continued to increase in the month of September.
The unemployment rate in Colorado decreased for the second straight month in September. The rate fell 0.2 percentage points, from 8.2 percent in August to 8.0 percent in September. (Figure 1) The unemployment rate at the national level also decreased this past month, from 8.1 percent in August to 7.8 percent in September. Fortunately, the decreases in both the national and Colorado rates were for the right reasons. The rates were down because of an increase in employment, not because of people exiting the labor force, a sign that the job market may be improving.
The September rate places Colorado in the middle of the pack compared with the 49 other states and is 3.9 percentage points higher than when the recession officially began in December 2007. Colorado has the 22nd highest unemployment rate in the country.1 Despite the good news, the most recent economic forecast from the Colorado Legislative Council staff (LCS), released September 20, recognizes the weak economy both on the national and state level. Consumers and businesses are holding back on things like spending, hiring and investment because of economic and political uncertainty, according to LCS. As a result, LCS expects economic growth to lose momentum as 2012 comes to a close, nearing recessionary levels in the early part of 2013.2
Current unemployment compared to past recessions
Although the Colorado unemployment rate is at its lowest level since April of this year, it remains elevated, at 8.0 percent, 57 months since the beginning of the 2007 recession. The September unemployment rate is one full percentage point below the highest unemployment rate during this recession, which occurred during the fall of 2010, 38 months after the start of the recession. By comparison, 57 months after the beginning of the 1981 recession (which was the most severe recession of the previous three) the unemployment rate was 7.2 percent, 1.6 percentage points lower than the high of 8.8 percent set during that recession. The long-term disability associated with the 2007 recession illustrates the severity of the great recession especially when compared with the previous three 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. After more than 11,000 workers left the labor force in August, the labor force remained statistically unchanged in September. This is good news especially in light of the decrease in the unemployment rate, signaling an increase in the employment level during the month of September. With that being said, there labor force in August was slightly smaller than a year prior.
Furthermore, there are more than 36,000 fewer people in the Colorado labor force now, compared with the peak that was hit in April 2009. As workers exit the labor force, the unemployment rate could become a misleading indicator that does not capture the frustration of finding a job in today’s market. On the other hand, when job prospects improve and workers begin to re-enter the labor force, the unemployment rate may not drop dramatically despite encouraging signs such as hiring and employment growth.
The U.S. Bureau of Labor Statistics uses two different surveys to measure employment around the nation. The Local Area Unemployment Statistics survey (LAUS) and the Current Employment Statistics survey (CES). The LAUS includes the self-employed, striking workers and farm jobs while the CES does not. This difference in survey definitions results in two separate measures of employment. However, in September both surveys showed similar results. (Figure 4)
In the state of Colorado, the LAUS survey reported employment at more than 2.5 million people for the month of September. The survey also reported a gain of more than 7,000 jobs helping to repair some of the damage from the month of August (when the survey reported a loss of nearly 9,000 jobs). According to LAUS, the current level of employment is 3.88 percentage points lower than it was in December 2007, the beginning of the Recession. Similarly, the CES reported an increase of almost 7,000 jobs in September, placing the employment level in Colorado at about 2.3 million people. (Figure 4)
When the recession began in December 2007, Colorado had 2,350,200 jobs. Since then, Colorado has experienced 31 months of job losses. Colorado reached its lowest level of employment in January 2010 when Colorado had 141,000 fewer jobs than it did before the recession started. In September of 2012, Colorado had 50,000 fewer jobs than at the start of the recession. (Figure 5)
Colorado's job deficit or the difference between the number of jobs Colorado has and the number it needs to regain its pre-recession employment rate, is 213,128. That number includes the 50,000 jobs Colorado lost plus the 160,200 jobs it needs to keep up with the 6.9 percent population growth Colorado has experienced in the 57 months since the recession began. (Figures 5-6)
As the job shortfall numbers show, Colorado has still not recovered from the 2007 recession. Elected officials at the state and federal level need to implement a focused plan to put people back to work, and need to be wary of any decisions that could result in further harm to the economy.
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 by nearly 300,000 cases since the start of the recession. The month of September saw a slight increase in Medicaid and CHP+ enrollment, the total caseload grew by 3,520 in September.4 (Figure 7) Since the beginning of 2012, more than 90,000 new patients were enrolled in public health assistance, a caseload growth of about 13 percent. The growth of public medical care for Coloradans during the recovery is testament to the programs’ importance to the population’s well-being especially with as the ill-effects of the 2007 recession persist.
During the month of July (the most recent data available), enrollment in the Federal Supplemental Nutrition Assistance Program increased only slightly from 494,316 people in May to 496,559 people in July. Total enrollment is now a full 7 percent higher than it was in July of 2011 and is more than double the pre-recession level of enrollment. With 1 in 10 Colorado residents enrolled in SNAP, the program remains a crucial safety net for low-income Coloradans and anyone still suffering from the 2007 recession. (Figure 8)5
A change in season brings a change in trends
During the month of September, the Colorado labor and jobs market finally showed some improvement. The unemployment rate decreased by 0.2 percentage points, not as a result of people exiting the labor force as was the case in August, but because there was an increasing in hiring. The same story is true at the national level where the unemployment rate fell by 0.3 percentage points from 8.1 percent to 7.8 percent. After dismal employment numbers throughout the summer, September brought a change in the trend and is welcome news for Coloradans.
However, public assistance programs such as Medicaid, CHP+ and SNAP saw yet another month of increased enrollment. Enrollment in these three programs remains unreasonably high, highlighting the important protection these programs provide to many throughout the state. Policy makers need to recognize the large sector of the population that is still in dire straits as a result of the 2007 recession. Policy makers, at the state and national level, must make a concerted effort to further aid the low-income and disadvantaged populations throughout the state and country in order to provide a chance for upward growth, a chance for progress.
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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, Sept. 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.