November Recovery Watch
Colorado unemployment rate at lowest point since 2009, despite ominous signs in the labor market
The most recent economic data from the U.S. Bureau of Labor Statistics show a decrease in the state unemployment rate from 7.9 percent in October to 7.7 percent in November, reaching a 44-month low. However, it appears the most recent decline in the unemployment rate is for the wrong reasons. During the month of November workers exited the labor force and, by one measure, employment in Colorado decreased. The national unemployment rate also fell 0.2 percentage points from 7.9 percent to 7.7 percent. However, the change in the national rate was largely due to an increase in employment, not the decrease in the size of the labor force. Also, enrollment in public assistance programs was mixed during November as Medicaid and CHP+ saw increases but enrollment declined in the SNAP program.
The unemployment rate in Colorado decreased for the fourth straight month in November. The rate fell 0.2 percentage points, from 7.9 percent in October to 7.7 percent in November. (Figure 1) The rate is 0.3 percentage points lower than November 2011, and is the lowest rate since March 2009. Nationally, the unemployment rate also dropped from 7.9 percent in October to 7.7 percent in November. However, it should be noted that the labor force declined at both the national and state level, which played a part in the lower unemployment rates. In other words, the decline was not entirely due to higher employment.
The November unemployment rate keeps Colorado right in the middle of the pack compared with the 49 other states and the District of Columbia; Colorado currently has the 21st highest unemployment rate in the country, meaning there are 20 states that have worse unemployment rates.1 With that said, the November unemployment rate in Colorado is still 3.6 percent higher than when the recession began in December of 2007.
The most recent economic forecast from the Colorado Legislative Council staff (LCS), released December 20, provides a mixed message. According to the LCS, Colorado’s economy outperformed the national economy as employment and consumer spending as well as housing in Colorado grew steadily. That said, the LCS predicts that a weak international economy and uncertainty at the Federal level will cause the positive signs in Colorado to recede slightly in 2013.2
Current unemployment compared to past recessions
The Colorado unemployment rate is at its lowest level since March of 2009 and 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, now, in the 59th month since the beginning of the recession, the unemployment rate in Colorado is still 3.6 percentage points above where it was when the recession began in 2007. By comparison, 59 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. As the months pass, it is clear that the 2007 recession was extremely severe and many Coloradans are still trying to regain pre-recession status. (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 two months of growth in the Colorado labor force, nearly 7,000 people left the workforce in November. While this is only a 0.25 percent decrease in the number of Coloradans that are either employed or actively looking for a job, it is still a step in the right direction and is a large factor in November’s lower unemployment rate. The labor force in Colorado during the month of November was smaller by more than 11,000 people compared with November 2011.
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 November the two surveys had differing results. (Figure 4)
In Colorado, the LAUS survey, which is used to calculate the state’s unemployment rate, reported employment at more than 2.5 million people for November. The survey also reported that more than 2,000 jobs were lost over the course of the month. According to LAUS, the current level of employment is 3.7 percentage points lower than it was in December 2007, the beginning of the recession. However, the other survey that calculates employment, the CES, reported an increase of about 8,000 jobs in November, placing the employment level in Colorado at slightly more than 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 according to the Current Employment Statistics survey. Colorado reached its lowest level of employment in January 2010 when the state had 141,000 fewer jobs than it did before the recession started. In November of 2012, Colorado had 33,100 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 201,990. That number includes the 33,100 jobs Colorado lost plus the 168,890 jobs it needs to keep up with the 7.2 percent working-age population growth Colorado has experienced in the 59 months since the recession began. (Figures 5-6)
Medicaid and CHP+
As enrollment in public health care grew again in November, it is clear that public assistance programs such as Medicaid and Children’s Health Plan Plus (CHP+) remain vitally important to a large swath of Coloradans. The total caseload for Medicaid and CHP+ has increased by more than 310,000 cases since the start of the recession. This past month Medicaid and CHP+ saw a large increase in enrollment, as total caseload grew by 9,384 from October to November.4 (Figure 7) This year about 100,000 new patients were enrolled in public health assistance, a caseload growth of just under 15 percent since the beginning of 2012. Looking at the numbers, it is clear that such medical programs remain incredibly important as high unemployment continues in Colorado and the nation.
During September (the most recent data available), enrollment in the Federal Supplemental Nutrition Assistance Program decreased for the first time since April. Enrollment fell by 1,652 from 499,273 in August to 497,621in September. Total enrollment is nearly 5 percent higher than it was in September of 2011 and remains more than double the pre-recession level of enrollment. With about 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
November reports misleading unemployment as labor force and employment decrease
During November, both the labor force and state employment (by one measure) decreased. The decline in the labor force was of a greater magnitude than the decrease in unemployment, therefore the unemployment rate fell 0.2 percentage points to 7.7 percent. The national rate was also 7.7 percent during the month of November. After a few months of good news during the tail end of the summer and through most of fall, it seems the labor market took a slight step back during the month of November.
Furthermore, enrollment in the Medicaid and CHP+ programs continued to see increased enrollment which shows how important these programs remain. On the other hand, SNAP saw its first decrease in enrollment since April, which could mean that families are moving toward a place where they no longer need to rely on such a public assistance program. Still, with a large portion of the population continuing to rely on the important protection these programs provide, legislators need to ensure the continued 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, December. 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.