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Colorado Recovery Watch

Colorado’s economy continues to show signs of slow recovery. In 2010, personal income grew with increasing strength, consumer sentiment improved and corporate profits rose to new heights.1 Yet, as laid-off workers begin to look for jobs again, Colorado’s unemployment rate inches upward. And while the recovery lurches ahead, enrollment growth in state food- and health-assistance programs continues unabated.

Unemployment
In December, Colorado’s unemployment rate increased to 8.8 percent, easily its highest level since the beginning of the recent downturn, and historically the highest state unemployment rate in 28 years.2 (Figure 1) High unemployment is likely to be a fixture of the state economy for some time to come. Colorado’s unemployment rate is forecasted at 8.4 percent for 2011, and 8.2 percent for 2012.3

Relative to other states, Colorado’s predicament is not unusual. The Colorado unemployment rate ranks 25th worst among states, and the increase in unemployment since the beginning of the downturn (December 2007) is only the 20th largest.4 Indeed, in recent months Colorado’s unemployment rate has crept up toward the national rate. (Figure 1)

Unemployment rate and the labor force
The recent rise in Colorado’s unemployment rate is not all bad news. In fact, a look at the state labor force alongside the unemployment rate reveals that increased labor force participation is behind much of the recent unemployment rate increase. (Figure 2) Since laid off workers are counted only as “in the labor force” and “unemployed” if they are actively looking for work, more workers resuming the job hunt might actually increase the unemployment rate.

Such is the case in Colorado. While the state’s economy is not generating enough jobs for full employment, it is doing well enough to bring workers back into the economy after they left en masse in 2009. (Figure 2) Colorado stands in contrast to the national economy, which recently saw a decrease in its unemployment rate as it shed workers from the labor force.5

 

Employment
Recessionary employment losses in Colorado have been dramatic, and low levels of employment persist well after the official end of the recession in June 2009. (Figure 3) Since the onset of the downturn (December 2007), Colorado has lost 140,000 jobs, or 6 percent of its nonfarm labor force. That loss ranks 20th worst in the country.7

In December, Colorado gained jobs for the fourth straight month. However, December’s employment estimate was only 500 jobs higher than the month before — not enough to be considered a statistically significant change, or to stop rising the unemployment rate. With that anemic December job count, Colorado ended last year 40,000 jobs short of its employment at the beginning of the decade, despite having 860,000 more residents.8

 

Job shortfall
One way to measure Colorado’s employment lag is job shortfall, a measurement of the difference between actual employment and what employment would need to be to keep up with population growth. The job shortfall calculation essentially tracks how far behind population growth state employment has fallen during a downturn. Tracking from the onset of the recession in December 2007 to December 2010, the Colorado job shortfall stands at more than a quarter-million jobs. (Figure 4)

 

Medicaid and CHP+
In recent years, Colorado has seen consistent and substantial caseload growth in Medicaid and the Child Health Plan Plus (CHP+) programs that provide medical care for low-income residents and children, respectively. Enrollment growth in those programs accelerated during the recession and continues to outpace population growth. (Figure 5) In the current fiscal year, total Medicaid and CHP+ enrollment has grown by 27,000 (as of the latest count in December 2010). The Medicaid and CHP+ programs now serve a total of 624,000 Coloradans.9 As the effects of the recession reverberate, those programs are crucial in providing health and security for vulnerable Coloradans.

 

Food assistance
The recession touched off a substantial need for the food assistance provided by the U.S. Department of Agriculture’s Supplemental Nutritional Assistance Program (SNAP), formerly known as food stamps. As with the state’s public health insurance programs, that need has outlived the official duration of the Great Recession. (Figure 6)

According to the most recent count in October, 429,000 Coloradans receive food stamps. That is up 4,000 people from the month before, an increase on par with the average monthly growth over the previous six months. (Figure 6) Overall, SNAP enrollment has increased 73 percent since dramatic growth began with the onset of the recent recession.10 In 2011, SNAP will continue to be a key tool ensuring the health of Coloradans and the state economy.

 

A new year
Colorado has now surpassed its recessionary peak in unemployment, making its recovery look more like a relapse. Yet a closer look at the state’s growing labor force suggests the state might be making progress where the nation as a whole is struggling. Sadly, full recovery is a long way off, and high unemployment is forecasted for several years to come. In the interim, Colorado would do well to carefully steward programs like Medicaid, CHP+, and SNAP, which will help keep Coloradans afloat as they get back to work.

Contact: Alec Harris
Policy analyst
303-573-5669, ext. 316

Released Jan. 26, 2011

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End notes
1 “Focus Colorado: Economic and Revenue Forecast,” Colorado Legislative Council Staff: Economics Section, Dec. 20, 2010.

2 Unemployment last stood at 8.8 percent in January 1983. Analysis of U.S. Bureau of Labor Statistics State and Local Area Unemployment data, Jan. 1, 2011.

3 “Focus Colorado,” Colorado Legislative Council Staff, Dec. 20, 2010.

4 Economic Policy Institute analysis of U.S. Bureau of Labor Statistics Current Employment Survey data.

5 U.S. Bureau of Labor Statistics Current Population Survey, December 2010.

6 Also, Colorado Legislative Council Staff for the chart design.

7 Economic Policy Institute analysis of U.S. Bureau of Labor Statistics Current Employment Survey data.

8Analysis of U.S. Bureau of Labor Statistics Employment data and U.S. Census Bureau and Colorado Legislative Council population data.

9 Analysis of “Premiums, Expenditures and Caseload Report,” Colorado Department of Health Care Policy Financing, October 2010 report.

10 Ibid.

 

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