December Recovery Watch
Colorado unemployment rate drops for fifth straight month, reaching lowest point in nearly four years
The most recent economic data from the U.S. Bureau of Labor Statistics show a decrease in the state unemployment rate from 7.7 percent in November to 7.6 percent in December, which is the lowest unemployment rate since February 2009 when the state’s unemployment rate was 7.2 percent. Furthermore, the most recent decline in the unemployment rate seems to be a result of positive movement in the labor market. During the month of December workers entered the labor force, and according to one measure, employment increased. That said, the other common measure of employment showed a slight decrease in the number of jobs in Colorado. The national unemployment rate remained at 7.8 percent through the month of December. Also, enrollment in public assistance programs increased during December as Medicaid, CHP+ and the SNAP program saw increases in enrollment.
The unemployment rate in Colorado decreased for the fifth straight month in November. The rate fell 0.1 percentage points, from 7.7 percent in November to 7.6 percent in December. (Figure 1) The rate is 0.3 percentage points lower than December 2011, and is the lowest rate since February 2009. However, Colorado’s unemployment rate is still 3.5 percentage points higher than when the recession began in December 2007. Nationally, the unemployment rate remained slightly above the Colorado rate at 7.8 percent.
The December unemployment rate leaves Colorado with the 20th highest (worst) unemployment among the 50 states and the District of Columbia.1 Furthermore, the December unemployment rate in Colorado is still 3.5 percentage points higher than when the recession began in December 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 2009 and is now more than one full percentage point below the highest unemployment rate during this recession. Colorado reached its unemployment peak during the fall of 2010, 38 months after the start of the recession. However, now, in the 60th month since the beginning of the recession, the unemployment rate in Colorado is still 3.2 percentage points above where it was when the recession began in 2007. By comparison, 60 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, which was 1.6 percentage points lower than the high of 8.8 percent set during that recession. As the months pass, it is clear the 2007 recession was extremely severe in both magnitude and duration. (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. During December the Colorado labor force grew by nearly 7,000 people, recovering all of the decrease in the labor force that occurred in November. While it is good news that the labor force grew during December, the size of the state’s labor force is still more than 8,000 people smaller than it was December 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 December the two surveys, again, had very different 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 December. The survey also reported that more than 8,000 jobs were added over the course of the month. According to LAUS, the current level of employment is 3.4 percent lower than it was in December 2007, the beginning of the recession. However, the other survey that calculates employment, the CES, reported a decrease of 2,400 jobs in December, leaving the employment level in Colorado at slightly more than 2.3 million people. (Figure 4)
When the recession began in December 2007, Colorado had nearly 2.4 million jobs. Since then, Colorado has experienced monthly job losses 32 times, 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 December 2012, Colorado had 33,600 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 205,089. That number includes the 33,600 jobs Colorado lost plus the 171,489 jobs it needs to keep up with the 7.3 percent working-age population growth Colorado has experienced in the 60 months since the recession began. (Figures 5-6) In short, Colorado will likely struggle with the effects of the 2007 recession for months to come.
Medicaid and CHP+
During December, enrollment in the public health care programs Medicaid and the Children’s Health Plan Plus (CHP+) increased by more than 3,000. This is the fifth straight month of increased enrollment and marks the 11th month with an increase during 2012. The total caseload for Medicaid and CHP+ at the end of December was 759,046, which is a 0.45 percent increase relative to November’s enrollment. In 2012, 64,217 individuals newly enrolled in Medicaid and CHP+.4 (Figure 7) Looking at the numbers, it is clear that such public health programs remain incredibly important as high unemployment continues in Colorado and the nation.
During October (the most recent data available), Colorado enrollment in the Federal Supplemental Nutrition Assistance Program rose above 500,000 for the first time in at least a decade. Enrollment increased by 7,745 from 497,621 in September to 505,366 in October. Total enrollment is more than 5 percent higher than it was in October 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
December shows a step in the right direction as both labor force and employment increase
During December, both the labor force and state employment (by one measure) increased. The increase in employment was of a greater magnitude than the increase in the labor force, therefore the unemployment rate fell 0.1 percentage points. The national rate, on the other hand, stayed steady at 7.8 percent during December. After taking a step back in November, it seems Colorado may be heading in a positive direction for the start of the new year.
Furthermore, enrollment in Medicaid, CHP+ and SNAP continued to see increased enrollment, with the SNAP program posting enrollment above 500,000 during the month of October (the most recent data available). The high levels of enrollment in all of these programs show just how important these programs remain. While lawmakers work to craft legislation that will put people back to work, they must also ensure that these safety-net programs are enhanced and strengthened to continue to provide for those families, children and people who are most vulnerable.
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, December. 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.