Colorado Recovery Watch
In March, a majority of states — including Colorado — recorded unemployment rate decreases and posted job gains. While Colorado’s unemployment rate improved only slightly, the state boasted a healthy increase in its labor force, indicating a stronger rebound than the unemployment rate would suggest. Still, as the economy turns around, Coloradans continue to feel the pain of recession. Enrollment growth in food and medical assistance programs continues unabated.
In March, the Colorado unemployment rate eased off its all-time high of 9.3 percent, dropping to 9.2 percent. (Figure 1) That was not enough to shake 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 17th 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. 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. In past recessions, unemployment in Colorado returned to the norm of about 6 percent after two years. (Figure 2) Yet today, Colorado continues to experience very high unemployment more three years on. (Figure 2)
Unemployment rate and the labor force
The unemployment rate is connected to the size of the labor force. Workers are counted as unemployed only if they are looking for work, or are “in the labor force.” In times of recovery, the unemployment rate often spikes as laid-off workers who had given up on finding work resume the job hunt.
Judging from recent data, Colorado is experiencing just such a spike. (Figure 3) So while Colorado’s unemployment rate is striking, coupled with the recent increases in Colorado’s labor force, high unemployment rate is actually a sign of recovery. That trend, along with improved unemployment insurance claims, increased personal incomes, increase production and other indicators suggests Colorado is recovering despite its high unemployment rate.3
Recessionary employment losses in Colorado have been dramatic. (Figure 4) In March, Colorado was down 122,200 jobs, or 5 percent of its nonfarm labor force since the onset of the downturn in December 2007. That loss ranks 24th worst in the country.5
Recently, Colorado has shown signs of recovery in employment. The state is up 10,800 jobs from six months ago and has posted modest but steady employment gains in the past quarter. Those are encouraging developments given the state’s job performance the last three years. Still, Colorado will have to do better to bring prosperity back.
Job shortfall measures the difference between actual employment and what employment would have been if jobs had continued apace with working-age population growth instead of plummeting during the downturn — in short, how far the state has been “set back” by the recession in jobs. Tracking from the onset of the recession in December 2007, Colorado’s 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 Child Health Plan Plus (CHP+). Those programs provide medical care for low-income residents and children, respectively. Medicaid and CHP+ programs served 649,000 Coloradans in March. (Figure 6)
In the current fiscal year, combined Medicaid and CHP+ caseload is growing seven times as fast as the state population, adding an average of 5,700 enrollees each month.6 That growth illustrates the vulnerability of many Coloradans during the tentative recovery.
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 continued to grow a year and a half after the official end of the Great Recession. (Figure 7)
According to the most recent count in January 2011, 443,242 Coloradans receive food stamps. (Figure 7) That is 48,000 more people than a year earlier. Overall, SNAP enrollment has increased 79 percent, or 195,000 individuals since the beginning of the 2007-09 recession.7 Such tremendous growth in need demonstrates the force of the past recession.
Eligible but not enrolled
Food stamp enrollment does not fully reflect hunger in Colorado. According to a recent study by the U.S. Department of Agriculture (the federal agency that oversees SNAP) only 52 percent of Coloradans eligible for SNAP are enrolled. That ranks 48th in the county among states.8
Colorado’s poor performance is driven largely 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 eligible families get help in this time of unprecedented need.
Headed back down?
The unemployment rate is a “lagging indicator,” meaning it changes after the economy as a whole does. In March, Colorado’s unemployment rate backed off from its all-time high, amidst job growth, labor force expansion and other positive signs of recovery. For now Colorado can only hope those are signs a strong recovery is under way. The continuing rise in demand for safety net services shows that recovery has a long way to go.
Contact: Alec Harris
303-573-5669, ext. 316
Released April 20, 2011
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 and Draper, Heather, “Jobless rate not the whole picture,” Denver Business Journal, April 15-21, 2011.
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 Reports,” Colorado Department of Health Care Policy Financing .
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, January 2011.