Unemployment Rates in Colorado Near What They Were During the Late-90s Boom

According to the  most recent monthly data from the Bureau of Labor Statistics, the unemployment rate in Colorado in March 2018 fell to 2.9 percent, down from 3.3 percent in February. March's rate was up slightly from March 2017's rate of 2.8 percent.

This continues a nine-year trend, beginning in 2010, in which unemployment rates in general have been falling in Colorado, and in its metro areas.

It also continues a trend in which Colorado's unemployment rate has been lower than the national rate.  Since May of 2013, Colorado has had a lower unemployment rate than the US overall in every month. In March 2018, the nationwide unemployment rate was 4.1 percent.

Through Colorado Metro areas, similar trends of declining unemployment have existed in recent years. Although rates have inched up slightly since mid-2017, unemployment rates nevertheless remain quite low.

In March, Colorado's metro areas had the following unemployment rates:

US	4.1
Colorado	2.9
Ft Collins	2.5
Denver-Aur	2.8
Greeley	2.7
GJ	4.0
Colo Spr	3.4
Pueblo	4.4
Boulder	2.5

Graphed monthly, the metros compare like this:

To add a bit more clarity, though, I've graphed the rates at 3-year intervals for each  metro area, for March of each year: 

We find that Boulder tends to consistently have the lowest unemployment rate in the state. Grand Junction and Pueblo, on the other hand, tend to have the highest rates. Overall, though, rates statewide are near where they were in 2000 before the dot-com bust, and during the very large economic expansion of the late 1990s and early 2000s in Colorado. 

There are signs that the economy in Colorado is cooling down, but at this time, there are not signs of large changes in current employment trends. 

How have oil prices affected Greeley employment?

According to the most recent employment data from the Department of Labor and Employment, there were  approximately 101,00 payroll jobs in Greeley during July 2016. That's up from the 98,000 jobs estimated during July of last year. However, total payroll employment in the region has gone only sideways since 2014.

In October of 2014, there were 102,000 jobs in the Greeley area, but since then, payroll employment has never exceeded 102,000 positions. In other words, employment growth has been flat for the past two years:

Compare this trend to the one in Fort Collins, right next door. In the case of Fort Collins, the overall job trend mirrors that of the state overall with an unbroken upward slope since 2009: 

Since 2014, unlike Greeley, Fort Collins has only continued upward on the same trend as before.

Oil prices, not surprisingly, appear to be a big factor in this trend in Greeley. Last December, for example, The Tribune reported that "Colorado's oil rigs drop to lowest in 13 years." By May of 2016, the Denver Post was reporting that rigs had dropped to a 16-year low.

In late 2014 and early 2015, oil prices plummeted from over 100 dollars per barrel to under 50 dollars per barrel. Nationwide, less-productive rigs shut down and national oil production fell.

This has had an impact on employment in the area, and we see it in the numbers.

In fact, during a seven month period in late 2015 and early 2016, job growth actually turned negative in the Greeley area. Meanwhile, the state of Colorado overall has not experienced year-over-year losses since 2010.

Here are the Greeley YOY changes. During July 2016, job growth was up 2.3 percent. But, that is on the fourth month in a row of growth following a period of decline. The graph shows how job growth began to disappear in 2015:

We can contrast this with the same time period in Fort Collins where job growth remains solid throughout the period. In July of 2016, there were 160,000 payroll jobs, which was an increase of 3 percent of the previous July.  In Fort Collins, that's a continuation of the general trend we've seen since 2012:

Of course, the decline of employment in Greeley doesn't mean there are immense numbers of unemployed people in Greeley now. Many of the newly-unemployed workers in Greeley moved away, as many of them were not native to Greeley in the first place. On the other hand, those temporary workers did often spend their wages in Greeley, enriching local businesses. Now that many of those workers have gone will mean a scaling back for the Greeley economy.

The magnitude of this remains, to be seen, however, and it look like the Greeley area has already returned to a period of job growth. For now.

Note on data: All this data comes from the "Establishment" survey of employment which measures payroll positions. It is different from the Household survey that is used to calculate the unemployment rate and which measures employed persons. Thus, the establishment survey can include part time positions, and a person holding two jobs could show up as two jobs in the establishment survey data. 

Total nonfarm employment in Colorado up in July, growth trend continues

For now, there are few dark clouds on the horizon for payroll employment totals in Colorado. While employment growth has softened somewhat since 2014, it remains well above zero.

According to state-level employment data, released on August 22, year-over-year employment growth in Colorado increased 3 percent, which was the largest increase since July of last year when growth reached 3.2 percent. There were a total of 2.62 million jobs in Colorado in July, compared to 2.55 million jobs one year earlier.

That equates to 76,000 more jobs, year-over-year.

This should not be equated for new employed persons, however, as this measure of employment counts only jobs and not people. Thus, a single person with two jobs would show up as two jobs by this measure, and two job holders should not be assumed. The Household Survey, which counts employed persons, will be considered in a separate post.

Nevertheless, job growth, strictly speaking, continues in positive territory.

On a month-to-month basis, we also find that July 2016 was strong. In this case, job growth tends to be negative from June to July due to seasonal issues. So, to get a better sense of how July compares, we must compare to previous June-July periods in each year. When we do this, we find that the job losses for the June-July period were the smallest we've seen in more than a decade:

So, by both these measures, we find that job growth in July was solidly positive.

This continues a period of net job growth over the job losses that occurred in the wake of the 2008 financial crisis when more than 200,000 jobs were lost in Colorado. Since 2013, though, Colorado has added 255,000 jobs above and beyond its old 2008 peak prior to the last recession:

Northern Colorado job growth holds steady

Along with the Denver area, Northern Colorado — i.e., the Greeley and Ft Collins metro areas — has long been one of the more economically robust parts of the state. This has held true since the end of the 2008-2009 recession, with significant job growth in both metro areas.

Historically, Ft Collins has tended to see more growth than Greeley, but thanks to recent growth in oil jobs, Greeley has experienced very large growth levels.

During December 2015, payroll jobs grew 3.6 percent over December 2014, with 5,400 jobs added. During November 2015, payroll jobs grew 3.1 percent, or 4,600 jobs, year over year.  I n general, job growth appears to be holding steady in the Fort Collins metro area (which includes Loveland):

In fact, job growth in the Ft. Collins area has outpaced the last expansion from 2003 to 2007, when job growth hovered around 2 percent.

Meanwhile, in Greeley, job growth reached very high levels, topping out at 9.7 percent during July of 2014. Across Colorado, job growth rates have tended to come in below five percent over the past 20 years, so the job growth rates over 7 percent in Greeley during 2014 and early 2015 do show remarkable growth in employment in the region.

Much of this growth was due to the growth of oil extraction jobs in the region, and not surprisingly, we have seen that growth taper off as the price of oil has fallen quickly over the past year. Nevertheless, with job growth rates still near four percent, it would premature to say that job growth in the Greeley area is looking to disappear.

During December 2015, the year-over-year increase in payroll employment was 3.7 percent, or 3,800 jobs. During November 2015, YOY job growth was 3.8 percent, or 3,900 jobs:

Clearly, a decline in the demand for oil jobs has affected the region, but it's not clear just how large of an impact this will have.

Data source: Data comes from the BLS's establishment survey which features payroll employment, and thus measures the number of jobs in the region. This is not to be confused with the Household Survey that measures number of employed persons.

(All employment data is from the Bureau of Labor Statistics. These numbers are from the "Establishment Survey.")

After slow recovery, job growth fading again in Colorado Springs

A look at the unemployment rate in Colorado Springs suggests that things are going swimmingly. In fact, they're back to the old boom levels below five percent. During December 2015, the unemployment rate, was at four percent which was down from 5.1 percent during December of 2014:

The last time unemployment rates were generally this low was back during 2007, before the 2008 financial crisis and during the last boom.

The problem with the unemployment rate, though, is that it is a function of both labor force size and employment. That is, if people give up looking for work, leave town, settle for a part time job at a low wage, decide to live on student loans, or retire early, all these things can reduce the unemployment rate, even in the absence of any job growth.

If we look at payroll job growth, however (from the Establishment survey) we find that job growth has been slowing and has been in a downward trend for the past ten months.

During December 2015, payroll employment growth was at 0.8 percent, which was down by about half from the previous December's growth rate of 1.5 percent. In other words, December's employment was up by a mere 2,100 jobs, year over year. A year earlier, durign December 2014, job growth had been up by 4,100 jobs, year over year:

Moreover, job growth has never returned to the sort of job growth we saw before 2008, and it has taken seven years for total employment in Colorado Springs to get back to where it had been before the 2008 crisis. This next graph shows how many months went by before employment returned to previous peak levels. It begins with June 2007 as month 1, and then proceed to the right as each month passes with total employment below the peak level. You can see that employment finally returns to its peak level at the  85th month (more than seven years), which was December 2014. Since then, employment has continued above the old peak level:

This recovery time, by the way, was 26 months (or more than two years) longer than what was needed to recover all lost jobs following the dot-com bust in 2001. In this case, jobs peaked during June of 2001 and finally recovered during May of 2006:

(All employment data is from the Bureau of Labor Statistics. Payroll numbers are from the "Establishment Survey" and unemployment percentages are from the "Household Survey.")

Inflation-adjusted rents in Metro Denver still near all-time highs

The 4th Q 2015 vacancy and rent survey showed that vacancy rose to a five-year high while rents were flat from the 3rd Q of 2015 to the 4th Q. Year-over-year, though rent growth was still substantial.

The rent data released by the Apartment Association's survey, however, are just nominal rents, and are not adjusted for inflation. So, I like to take a look at rents in terms of 2015 dollars only, so we can compare more accurately with rents as they were in previous business cycles.

We know that nominal rents are currently near the highest levels ever. But where are they once adjusted for inflation?

Well, it turns out that even when adjusted for inflation, the average rent in metro Denver is still near all-time highs.

In this case, the fourth quarter average rent for metro Denver was $1,292, which is equal to the third quarter and up from the average rent during the fourth quarter of 2014 which was $1174.

However, it wasn't that long ago that the average rent was still below where it had been during the dot-com boom days in real terms. Specifically,  the average rent hit 1,084 during the fourth quarter of 2000. That level was not passed again until the first quarter of 2014. During most of the period from 2001 to 2001, the average rent was actually falling in real terms:

So, when adjusted for inflation, we do find that rents really do go down, as they did during the housing boom and many households were leaving rental housing behind for purchase homes. The foreclosure crisis and lackluster income growth since 2009 (among other things), however, has made rentals relatively more attractive in recent years, and rent growth has now surpassed the dot-com days. 

As  a final note, let's look at  the unemployment rate versus the vacancy rate. Historically, the two have often trended together, and this was especially true before 2008:

Since 2008, though, the vacancy and rent has become less sensitive to employment trends, perhaps due to a relative decline in the attractiveness of purchase housing, and the fact that household formation has tended to outpace multifamily construction in recent years. With the fourth quarter's sizable increase in vacancies, it is unclear if this signals a trend, although vacancy rate may be responding the the continued decline of job creation in metro Denver.

All data comes from the Apartment Association of Metro Denver's apartment vacancy and rental survey, and from the Bureau of Labor Statistics.

Job growth flatlines in Pueblo and Grand Junction

Although job growth has slowed in Colorado, the year-over-year change is still positive. That is, new jobs are still being created, according to the Establishment survey. The situation is a bit different in Grand Junction and Pueblo, however, where the latest Establishment employment survey shows that in December, total payroll employment actually went down, year over year.

Practically speaking, though, jobs were simply flat in both cases. In Grand Junction, for example, payroll employment was flat at 62,000 jobs with no change to speak of from December 2014 to December 2015. We do see a general trend of decline since early 2014:

In Grand Junction, payroll employment growth hit 3.2 percent (a gain of nearly 2,000 jobs) back in March of 2014, but it's been declining since, and has been flat over the past four months. In fact, total employment in Grand Junction hasn't much budged from the 62,000 jobs mark for the past six months. 

In Pueblo, payroll employment was also essentially flat at 61,000 jobs in December. Employment growth had reached 3.9 percent (a gain of more than 2,000 jobs) in February of 2015, but has been falling since (this is YOY change):

The employment situation in GJ and Pueblo reminds us that the happy economic data we've been hearing about Colorado for the past couple of years has largely been driven by developments in northern Colorado and the metro Denver area. Oil employment in northern Colorado has helped push up overall job growth in the state, but southern and western Colorado have different experiences.

Historically, at least over the past 30 years, Pueblo has tended to have weaker  job growth than metro Denver and the state overall.

It's harder to generalize about Grand Junction, however, as GJ experienced enormous booms in the late 70s/early 80s, and also again from 2006 to 2008. GJ has seen lackluster growth ever since the 2008 financial crisis, however, and has in some ways not shared in the benefits of the expansion that has occurred in Colorado and the US since 2010.

(All data from the "Establishment Survey" which measures payroll employment for larger employers. This measure counts, jobs, not employed persons.)

Payroll employment growth in Metro Denver hits 4-year low

According to the Establishment employment survey, total year-over-year payroll employment growth fell to 1.7 percent during December 2015. This was the lowest growth level seen since October 2011, when the growth rate was 1.6 percent.

Growth rates in payroll employment have been generally falling over the past 11 months, and the growth rate had been 4.1 percent during February 2015:

Growth rates have not fallen off this quickly since 2008, although the growth rate itself remains at relatively robust levels compared to the last economic expansion between 2003 and 2008.

In terms of employment totals, there were 1,398,000 payroll jobs in December 2015, compared to 1,374,000 payroll jobs one year earlier. That's an increase of 24,000 jobs over the year.

So, we're still looking at increases, but the rate of increase in each month has been falling.

Unless this trend reverses itself, of course, we will be facing negative job growth by the end of 2016.

(This data is for the Establishment survey which measures total payroll jobs, and not the number of persons. A person with two or more jobs could potentially show up as three jobs in this survey.)

The measure I'm using here is total nonfarm employment for the Denver-Aurora-Lakewood MSA, not seasonally adjusted.

Statewide Colorado

The metro Denver numbers show a bit more of a downward trend although the overall percentage increases are pretty similar at this point. As of December 2015, the YOY growth rate was at 1.8 percent, which translates to a gain of about 47,000 jobs from December 2014 to December 2015. In total, there were about 2,559,000 payroll jobs in December.

To compare to Denver, we might say that metro Denver was humming along with more growth than the state overall for much of 2014 and 2015, but both are now seeing growth around a little under 2 percent. Denver's growth rate has come down to match the state's rate.

Employment growth for the state is also down near 4-year lows:

Statewide, growth is being helped along by Northern Colorado economies while it's being dragged down by sluggish job growth in Grand Junction and Pueblo.

(This is the nonfarm payroll employment data for Colorado, not seasonally adjusted.)

All data used in this article is from the BLS.

Colorado continued to outperform nationwide job market in late 2015

Colorado's unemployment rate has been below the national rate since 2012. As the Colorado economy has begun to outpace the national economy in recent years, this gap has grown.

As of December 2015, the national unemployment rate was 4.8 percent, while it was 3.3 percent in Colorado.

Indeed, unlike the US unemployment rate, the Colorado rate has returned to its pre-crisis levels last seen in 2007.

Oil extraction activity has certainly been a factor here, and we have not yet seen any effects of closing oil operations as the price of oil has fallen. We may know more after we've seen February's employment data.

How Colorado performs compared to the nation overall, and to other states will also continue to affect the decision of out-of-state residents to migrate to Colorado. As I noted here, Colorado has outpaced most states in in-migration in the past year.

With job trends like these, it's not surprising that many have elected to recently move to Colorado from other states:

Unemployment Rates in Colorado Metro Areas Keep Falling

Through October, the overall trend in unemployment rates for Colorado metros remain downward.

For October 2015, the unemployment rate for each metro area in Colorado (according to the Colorado Department of Labor and Employment) was:

Boulder: 2.7%
Colorado Spr:3.9%
Denver: 3.1%
Fort Collins: 2.8%
Grand Junction:
Greeley: 3.2%
Pueblo:4.6%

This numbers are remarkable low, and I discourage comparisons with unemployment rates in the current cycle to unemployment rates of past cycles. Declines in work force participation are a significant factor in determining the unemployment rate. Nevertheless, these rates are quite helpful; in comparing geographical areas.

Historically, the best job markets have been in Boulder, Ft. Collins and Denver. Greeley has recently joined that group thanks to oil jobs:

Unemployment, as expected, is a bit higher in the lower part of the state. Pueblo rather consistently has the highest unemployment rate among Colorado metros, but all areas have seen big drops since 2010.

Compared nationally, Colorado enjoys a very low unemployment rate, as can be seen in this data from the US Bureau of Labor Statistics:

Nationwide for October 2015, the unemployment rate was 4.8 percent, compared to 3.3 percent for Colorado. Colorado's unemployment rate situation has increasingly improved relative to the nation overall over the past year. In other words, the job market in Colorado is getting better faster than in the US overall. This likely has implications for the overall demand for real estate here.

All data used in this article is not seasonally adjusted.

Was the 2009 jobs bust worse than the 1980s bust in Colorado?

Many people are familiar with this graph from Calculated Risk:

Basically, it shows the number of months it took the job market to return to its previous peak.

I couldn't find a similar one for Colorado, so I created a couple myself. See below.

The first graph uses the Household Survey which measures employment by asking a sample of people if they want to be employed and if they are employed. So, this is a measure of the number of employed persons. I've simply indexed total employed persons as measured from peak to peak. Also, we only have data going back to 1976, so there are fewer recessions to measure here:

We can see that by this measure, the 1991 and 2001 recessions were over quickly, in terms of jobs. In fact, one could argue that the 1991 job losses were cyclical and show no recession at all.

On the other hand, the 1984 to 1988 job losses were very bad, and we find there a full 60 months needed for recovery. That's five years of lost jobs. Everyone who knows Colorado economics history knows the second half of the 80s were not good economically, so this probably won't come as a big surprise. Foreclosures were rampant, and the state actually had zero net population growth in 1990, as a result.

Interestingly, job losses that followed the 2008 financial crises were similar, and also took 60 months to recover. But, given that some of the troughs reached during the 1980s bust were deeper than the most jobs recession, one could argue that the 1980s were worse.

There are two measures of unemployment, however. The Establishment Survey shows different results since it measures the number of payroll jobs at larger employers, and not the number of persons employed.

In this case, the 1991 recession was so tiny as to not even be worth plotting on the graph. With payroll jobs, the 1980s bust was over (in terms of payroll jobs) in three years, instead of five. In this case, the 2001 recession was much worse than in the Household survey, and it took about 55 months for jobs to return to peak levels. The 2008-2013 jobs recession was the worst in this measure, and it took 58 months for jobs to return to peak in that case.

Why such a big difference in the 2001 recession? The data here tells us that the number of people employed returned quickly to peak levels and payroll employment struggled. This suggests that people during that period were employed somewhere, but not at major employers, and they were likely taking pay cuts and working fewer hours (i.e., they became part-time workers). But they were employed.

In the 1980s, we see the opposite, where payroll employment recovered faster than in the Household survey. In this case, we might guess that some people were taking on extra work at multiple employers (thus driving up total payroll employment) while many other people were still unable to find employment at all.

In both cases, however, the jobs situation after 2008 was pretty grim, with both payroll employment and persons employed taking at least 58 months to recover.

To answer the question in the title of this article, we could look at many other things, such as the total number of persons who were unemployed, versus the depth of wage cuts, and the other variables. Naturally, the definition of "worse" could vary as well.

But, speaking casually, we might be able to say seriously that the jobs situation of the 1980s was not worse than the post 2008 situation. If felt worse according to many people, and this may be due to a variety of factors including the fact that the rest of the country was doing well during the period of 1984-1988, so Colorado lost a lot of its population to other states where jobs could be more easily had. After 2008, Colorado looked no worse than most other states, so population even continued to grow during the period, making the state seem less beleaguered.

Chart of the Day: Colorado unemployment vs. US unemployment

The unemployment rate is good for basically one thing: comparing employment conditions in different markets at the same time. The unemployment rate isn't very good for comparing to the past because overall employment conditions have shifted significantly since the last expansion. The number of discouraged workers is much higher now than in, say, 2004, and the rates of under employment are higher as well. Neither of those things are really picked up in the unemployment rate, so it makes it hard to compare the present with the past.

Nevertheless, we can get a sense of how Colorado compares to the nation right now by having a look at the two rates. So here they are, and I've thrown in the past twenty years:

During March 2015, the unemployment rate in Colorado was 4.5 percent, down from 6.1 percent the previous March. Nationally, in March, the unemployment rate was 5.6 percent, down from 6.8 percent the previous March. The national rate fell further to 5.1 percent in April, but the Colorado rate is not yet available for April.

As if often the case, we see that Colorado's unemployment rate is below that of the nation, and in 2014, the Colorado rate dipped well below the US rate. This may have reflected the acceleration of the oil economy before it finally softened , and we began to see the Colorado rate inch back up. Certainly, the energy-related industries (most active in only a handful of states) have been out-performing the overall economy, and northern Colorado's oil jobs certainly are a part of that. Indeed, it was in August that the oil price really started to slip, which over time led to fewer hires in the industry and less production. And sure enough, the unemployment rate began to tick back up in December 2014.

Here's a graph of the WTI oil price:

We can also guess that a lower unemployment rate might also be impacting the larger economy. For example, the fact that metro Denver outpaced all other cities measured in the most recent Case-Shiller home price report may be partially explained by the fact that employment is relatively robust in Colorado. It also helps keep in-migration steady.

Initial unemployment claims in Colorado down 13 percent in May

Initial unemployment claims in Colorado fell to 2,713 during May 2014, dropping 13 percent, year over year, from 3,132 during May 2013. The first graph shows the general trend, which is clearly downward since the large surge during the most recent recession began in late 2008. May's initial claims were also down from April 2014, which reported a total of 3,133.

May's decline was the third month in a row during which initial claims dropped, year over year. Overall, May's drop at a level commonly seen during non-recessionary periods.

To check for seasonality, we compare to other Mays, and we find  that May 2014's total was the lowest May total since 2008, before the financial crisis. Claims are at a seven year low for May. 

Week 2 of the Chart of the Week feature

This time, I discuss unemployment. I'm trying to make these a little livelier, but so far the comments I've received have been good.

Examiner article: Unemployment up

Unemployment rises in Colorado to 7.3 percent
January 22, 2:57 PM Denver Economy Examiner Ryan McMaken

Colorado's unemployment rate (not seasonally adjusted) increased six-tenths of one percentage point from 6.7 to 7.3 percent in December, according to new data released today by the Colorado Department of Labor and Employment. Nationally, the unemployment rate remained at 10 percent for the second month, according to the Department of Labor's Bureau of Labor Statistics (BLS). December's seasonally adjusted unemployment rate in Colorado was 7.5 percent.

Year over year, the December rate increased in Colorado from 6.0 to 7.3, and the national rate increased from 7.4 percent to 10.0 percent.

Unemployment rates for states

Five states are now over 12%: Michigan, Nevada, Rhode Island, Oregon, and California. Of course, these are also the "official" numbers that exclude discouraged workers and the underemployed such as former financial sector workers who now work waiting tables.

See here for all states.