Colorado Recovery Watch - October 2012
The most recent economic data from the U.S. Bureau of Labor Statistics show a decrease in the state unemployment rate as employment growth outpaced the growth in the state’s labor force. The Colorado unemployment rate was down 0.1 percentage points from 8 percent in September to 7.9 percent in October. According to the Local Area Unemployment Statistics survey, the number of people employed in Colorado increased by more than 7,000 for the second straight month. The National unemployment rate rose slightly during the month of October, to match the Colorado unemployment rate at 7.9 percent. The national rate edged upward despite an increase in the number of people employed nationwide. 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 third straight month in October. The rate fell 0.1 percentage points, from 8 percent in September to 7.9 percent in October. (Figure 1) This is the first time the Colorado unemployment rate has dropped below 8 percent since April of this year, and is 0.2 percentage points lower than November of 2011. Nationwide, the unemployment rate increased slightly during the month of October to match the Colorado rate at 7.9 percent. The increase in the national unemployment rate notwithstanding, employment levels in Colorado and across the nation increased and more people resumed their search for work, a sign that the job market may be improving.
The October unemployment rate leaves Colorado right in the middle of the pack compared with the 49 other states; Colorado has the 22nd highest unemployment rate in the country.1 Further, the October unemployment rate in Colorado is 3.8 percent higher than when the recession began in December of 2007. 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 7.9 percent 58 months since the beginning of the 2007 recession. The unemployment rate in Colorado is now more than 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. However, by comparison, 58 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, elevated unemployment associated with the 2007 recession illustrates the recession’s severity 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 in Colorado has begun to grow again, with more than 3,500 people entering the labor force in the month of October. This is good news especially in light of the decrease in the unemployment rate, meaning that the increase in employment during the month of October was larger than the increase in the labor force. With that said, the labor force has about 1,000 fewer people in it now then in October of 2011.
Further, there are more than 32,000 fewer people in the Colorado labor force now, compared with the peak of labor force participation that was hit in April 2009. However, it is possible that even as 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 and in October both surveys showed an increase in employment. (Figure 4)
In Colorado, the LAUS survey reported employment at more than 2.5 million people for October. The survey also reported a gain of more than 7,000 jobs for the second month in a row, erasing damage done during month of August (when the survey reported a loss of nearly 9,000 jobs). According to LAUS, the current level of employment is 3.6 percentage points lower than it was in December 2007, the beginning of the Recession. Encouragingly, the CES reported an increase of about 8,600 jobs in October, 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. After that Colorado 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. The number of jobs has slowly rebounded since then. In October of 2012, Colorado had 40,100 fewer jobs than at the start of the recession. (Figure 5)
Colorado's job shortfall or the difference between the number of jobs Colorado has and the number it needs to regain its pre-recession employment rate, is 206,183. That number includes the 40,100 jobs Colorado lost plus the 166,083 jobs it needs to keep up with the 7.1 percent population growth Colorado has experienced in the 58 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 continues to be of critical importance for Coloradans during this prolonged 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 more than 300,000 cases since the start of the recession. October saw only a slight increase in Medicaid and CHP+ enrollment, as total caseload grew by 1,386 during the month of October.(Figure 7)4 Since the beginning of 2012, more than 90,000 new patients were enrolled in public health assistance, a caseload growth of just under 14 percent. The growth of public medical care for Coloradans during the recovery is a testament to the programs’ importance to the population’s well-being especially as Coloradans continue to struggle.
During August (the most recent data available), enrollment in the Federal Supplemental Nutrition Assistance Program increased only slightly from 496,559 people in July to 499,273 people in August. Total enrollment is nearly 6 percent higher than it was in October of 2011 and is more than double the pre-recession level of enrollment. With about 1 in 10 Coloradans enrolled in SNAP, the program remains a crucial safety net for low-income Coloradans and those still suffering from the 2007 recession. (Figure 8)5
October shows continuing signs of improvement in the Colorado economy
During October, the Colorado jobs market built on the positive growth from September as employment and labor force participation increased. Even though people re-entered the labor force, the unemployment rate decreased by 0.1 percentage points, as employment also increased. And, even though the national unemployment rate ticked up slightly in October, national employment levels increased as well. After dismal employment numbers throughout the summer, two months of employment and labor force growth is a welcome sign in Colorado and across the United States.
Public assistance programs such as Medicaid, CHP+ and SNAP saw yet another month of growing enrollment; however, the increase in enrollment in these programs was relatively small. Still, with many Coloradans continuing to rely on the important protection these programs provide, legislators need to reinforce the effectiveness of these safety-net programs especially as federal and state budget cuts loom.
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1Economic 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.
3Colorado Legislative Council Staff for the chart design.
4Analysis of “Premiums, Expenditures and Caseload Reports,” Colorado Department of Health Care Policy Financing.
5Analysis of U.S. Department of Agriculture SNAP program data, provided by: “Latest Available Month - State Level Participation,” USDA Food and Nutrition Service.