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Colorado Recovery Watch

In February, the U.S. unemployment rate fell below 9 percent for the first time in nearly two years. At the same time, Colorado's unemployment rate continued its recent trend above the national rate, posting the all-time high of its recorded history. There are definite signs of recovery in Colorado, despite the high unemployment rate. Still, almost two years on, the rebound is proving slow and painful for Colorado’s workers.

Unemployment
Colorado’s unemployment rate rose to 9.3 percent in February, the highest rate on record for the state since the Bureau of Labor Statistics began tracking state unemployment in 1976. (Figure 1) That increase continued Colorado’s recent and unusual trend above the national unemployment rate (Colorado had posted lower unemployment rates than the nation for six years). (Figure 1) Colorado’s unemployment rate now ranks 18th worst among states, and its increase in unemployment rate since the beginning of the downturn (December 2007) ranks 7th largest.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 8.8 percent for 2011, 8.5 percent for 2012, and 7.7 percent for 2013.2

Current unemployment compared to past recessions
The 2007-09 recession left unusually high unemployment in its wake. Typically, unemployment in Colorado subsides a year and a half after the onset of recession. Yet today, Colorado continues to experience very high unemployment, three years on. (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. In technical terms, that means the worker must be in the labor force (defined as the total number of workers with jobs or looking for work). Thus, changes in the labor force can have a big effect on the unemployment rate. For instance, if the economy is suffering, unemployed workers may stop looking for work, thereby decreasing the labor force, and keeping the unemployment rate down. That was likely the case in Colorado the past year and a half. (Figure 3)

Conversely, when the economy improves, workers resume looking for jobs and re-enter the labor force. In doing so, they are once again counted as unemployed, and the unemployment rate often spikes with their re-entry. Judging from recent data, Colorado may be experiencing just such a spike. (Figure 3) That trend, along with improved unemployment insurance claims, increased personal incomes, and other indicators suggests Colorado is recovering, despite its high unemployment rate.3

 

Employment
Recessionary employment losses in Colorado have been dramatic. (Figure 4) Since the onset of the downturn in December 2007, Colorado has lost 122,000 jobs, or 5 percent of its nonfarm labor force. That loss ranks 25th worst in the country.5

While more than a year has passed since Colorado’s low point in jobs, the state has struggled to recover. Recently, Colorado has posted steady but modest gains in employment. (Figure 4) Those have not been sufficient to keep up with working-age population growth, or to keep the unemployment rate from increasing. (figures 5 and 1, respectively)

 

Job shortfall
Job shortfall measures the difference between actual employment and what employment would need to be to keep up with working-age population growth. Tracking from the onset of the recession in December 2007, the Colorado job shortfall stands at roughly a quarter-million jobs. (Figure 5)

 

Medicaid and CHP+
Since the downturn, Colorado has seen consistent and substantial caseload growth in Medicaid and the Child Health Plan Plus (CHP+). Those programs provide medical care for low-income residents and children, respectively. In February 2011, the Medicaid and CHP+ programs served 640,000 Coloradans.6

Enrollment growth in CHP+ and Medicaid accelerated during the recession and continues to outpace population growth. (Figure 6) In the current fiscal year, total program enrollment has grown by 41,000 individuals, or 7 percent. By contrast, during that period the state population grew 1 percent, adding 52,000 residents. That means combined Medicaid and CHP+ caseload is growing seven times as fast as the state population. As the effects of the recession reverberate and need continues to grow, those programs are increasingly 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 Nutrition Assistance Program (SNAP), formerly known as food stamps. As with the state’s public health insurance programs, that need continues to grow a year and a half after the official end of the Great Recession. (Figure 7)

According to the most recent count in December 2010, 441,000 Coloradans receive food stamps. (Figure 7) That is up 6,000 people from the month before, completing a quarter of particularly heavy growth. Overall, SNAP enrollment has increased 78 percent since the beginning of the 2007-09 recession.7 Clearly, SNAP continues to be a lifeline for many amidst Colorado’s painful recovery.

 

Eligible but not enrolled
It is important to note food stamp enrollment does not fully reflect hunger in Colorado. According to the latest estimates, only 52 percent of Coloradans eligible for SNAP are enrolled. That ranks 48th in the county among states.8

Colorado’s poor performance is largely driven by problems administering food assistance. Eligible clients are required to complete a 26-page application, show multiple forms of identification and lawful residence documents, and verify income every three to six months. Furthermore, the Colorado Benefits Management System (CBMS) database, which is used to administer SNAP and other Colorado assistance programs, is plagued with problems. Since its introduction in 2004, CBMS has consistently failed to deliver timely application processing, and has exhibited unreliable performance. Colorado needs to improve CBMS and its administration of assistance programs to ensure that eligible families get the help in this unprecedented time of need.

Looking worse, feeling better?
As the recovery nears its two-year mark, unemployment stands at an all-time high, and demand for food and health assistance continues to grow. Yet expansion of the labor force and other economic indicators suggest Colorado’s economy is on the rebound. The key for Coloradans is how long it takes for jobs to catch up to the rest of the economy.

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

Released March 30, 2011

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End notes
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, Mar. 18, 2011.

3 See Colorado Legislative Council Staff for more on current economic indicators and economic outlook in Colorado.

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

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

6 Analysis of “Premiums, Expenditures and Caseload Report,” Colorado Department of Health Care Policy Financing, February 2011 report.

7 Analysis of U.S. Department of Agriculture SNAP program data, provided by: “December 2010 SNAP/Food /Stamp Participation Data,” Food Research and Action Center.

8 “State Supplemental Nutrition Assistance Program Participation Rates in 2008,” U.S. Department of Agriculture: Food and Nutrition Service, December 2010.

 

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