Colorado Recovery Watch
The nation’s labor market experienced little improvement during the month of May. Recovery has stagnated, keeping states at a level similar to previous months. However, even with a high unemployment rate, Colorado continues to outperform the most affected states with its slow decline in the unemployment rate for the second straight month. Even though the state is performing slightly better, high demand for food and medical assistance programs confirm the state has yet to reach a desired stable economy.
As the national unemployment rate rose from 9 percent to 9.1 percent, Colorado’s unemployment rate decreased from 8.8 percent in April to 8.7 percent in May. (Figure 1) Colorado’s unemployment rate ranks 22nd worst among states, showing only average performance compared to the rest of the country.
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 2013.1
Current unemployment compared to past recessions
Coloradans suffered a harsh reality during the 2007-09 recession. Similarly detrimental recession periods have caused high unemployment. The difference, however, is the state has been experiencing high unemployment for more than three years, something Coloradans hadn’t experienced in previous recessions. (Figure 2) Unemployment is easing slightly with time, but it has been a slow and painful journey.
Unemployment rate and the labor force
The unemployment rate excludes those workers who feel discouraged and cease searching for work. Therefore, a spike in the unemployment rate can be a sign of recovery as previously discouraged workers return to the labor market searching for employment. Colorado experienced this spike in the previous months, but in May the gap between unemployment and employment rate declined.
At a slow but steady pace, Colorado has increased its labor force, adding 4,200 jobs in May and 12,200 jobs during the past six months. Total recessionary employment losses in Colorado have been dramatic, though. (Figure 4) In May, Colorado was down 116,100 jobs, or 4.9 percent of its nonfarm labor force since the onset of the downturn in December 2007. That loss ranks 25th worst in the country.3 With unemployment decreasing for the second straight month and employment increasing steadily, Colorado is showing signs recovery. It may take longer than Coloradans hoped for, but the signs of improvement indicate the state is moving in the right direction.
The 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.
When the recession began in December 2007, Colorado had 2.35 million jobs. Since then, Colorado has experienced 27 months of job loss. Colorado’s employment trough occurred in January 2010, when the state had 140,100 fewer jobs than it did before the recession started. In May, Colorado had 116,100 fewer jobs.
Colorado’s jobs deficit, or the difference between the number of jobs the state has and the number it needs to regain its pre-recession employment rate, is 254,100. That number includes the 116,100 jobs Colorado lost plus the 138,000 jobs it needs to keep up with the 5.9 percent growth in population experienced during the 41 months since the recession began. (Figure 5)
Medicaid and CHP+
As Coloradans wait for the long-desired recovery, the number of people enrolled in Medicaid and Child Health Plan Plus (CHP+) continues to increase. (Figure 6) Since the beginning of the recession, assistance through government health programs has gone up almost 50 percent. Although the number has not increased substantially from the previous month, it is still at an alarming level. More than 583,000 low-income, senior and disabled Coloradans received assistance through Medicaid, while 1,840 children and pregnant women were served through CHP+. The continuing high levels of demand for Medicaid and CHP+ indicate the severity of devastation to Colorado’s economy.4
The number of Coloradans seeking help buying food continues to increase, reaching 455,250 for the month of March. That is a 2.6 percent increase from the previous month and an 83 percent increase since the start of the recession. The constant and dramatic upward trend in food assistance provided by the U.S. Department of Agriculture’s Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) is a clear warning that Coloradans are still struggling in the wake of the recession. (Figure 7)
Even though the state’s economy is performing better than it did a year ago and continues to show steady signs of hope, the damage of the Great Recession has not been reversed. Many Coloradans still struggle with joblessness and economic insecurity. The increase in health and food assistance, our most basic needs, gives us an understanding of the tremendous impact the recession has had on our state. Employment levels are not where desired, but continuing along this path will undoubtedly lead Colorado to full recovery.
Contact: Valeria Caso
303-573-5669, ext. 317
Released June 17, 2011
1 “Focus Colorado: Economic and Revenue Forecast,” Colorado Legislative Council Staff: Economics Section, Mar. 18, 2011.
2 Colorado Legislative Council Staff for the chart design.
3 Economic Policy Institute analysis of U.S. Bureau of Labor Statistics Current Employment Survey data.
4 Analysis of “Premiums, Expenditures and Caseload Reports,” Colorado Department of Health Care Policy Financing .