Dr. Richard Wobbekind
BY JAN WONDRA
Updated statistics on state wages are beginning to come in. They reveal that the northern Front Range counties are losing wealth to the southern counties, including Arapahoe, Jefferson, Douglas and Adams. But the numbers also reveal that as a group 20-24-year-olds are falling behind.
So say Tim Jones and Travis Brown, who were among the speakers at the South Metro Denver Chamber’s 2018 Economic Forecast breakfast a few weeks ago.
Jones, director of communications for First Rule Media and a spokesman for the Job Creators Network and Tax Cuts Now movement, says “Our focus was tax policy—different than spending policy. Income migration affects real-world policy.”
Low-tax environments, says Jones, tend to attract wealth, while high-tax environments lose wealth.
“No one yet knows exactly what the tax-cut package will do to the national economy,” he said. “What I can already tell you is that we expect to see increased capital investment. More than 100 companies have already announced they are giving tax bonuses. Wells Fargo announced that it is increasing its minimum wage to $15 an hour.”
Another sobering reality is also accelerating. Northern states are losing wealth to southern states like Arizona and Florida.
“I call it the value of a Florida minute,” Jones said. “If you look at adjusted gross income, Florida encourages dollars to walk into that state. Every minute of every day, $15,000 of adjusted gross income just walks into the state. Florida is the biggest gainer state every year. Then, there’s Illinois, which lost more people than any other state in the union last year.”
Across the country, the metropolitan effects are being felt in bedroom communities and school districts. According to Jones, Arizona is recruiting more people and income than Colorado. Phoenix’s Maricopa County had the biggest population growth in the United States last year. California was second, behind Florida, for income gains.
“People are moving to Nevada, Arizona, Texas, Oregon and Washington,” Jones said.
Other high tax-burden states, such as New York (12.7 percent), New Jersey (12.2 percent) and Illinois (11 percent) fall into the northern tier. They also appear to be states that invest in social programs.
Colorado’s healthy inbound migration has slowed in the past two years. Unemployment levels are at record lows across the nation, meaning people are less likely to have to move to find a job.
With an unemployment rate below the 3 percent full employment level and rapidly-rising housing costs, metro Denver has entered rarefied territory.
“We have the second-worst ratio in the country between housing and wages behind Washington D.C.,” said Dr. Richard Wobbekind, executive director of the Business Research Division and senior associate dean for academic programs at the University of Colorado’s Leeds School of Business. “Here in the south metro area, while overall wages are edging up, we lost 10 percent of our wages in the corporate-headquarters category, companies like Sports Authority. Now, two thirds of our jobs are below that middle-income wage.”
With growth in total wages, the average wage for Arapahoe and Douglas counties stands at $63,295. Colorado’s average wage is $56,232. The United States has the highest female participation in the labor force (44 percent) of any other developed country, said Wobbekind. He added that the tax-cut effects might fall unevenly, based upon the age of the wage participants.
“This is the peak year for participation in each age bracket,” Wobbekind said. “We’ve never had higher participation for those age 65-plus than we had in 2017. But it’s disturbing, the younger age bracket—the 20-to-24-year-olds—are falling behind.”
When asked what possible benefit Colorado and the nation would get from the tax cuts, Wobbekind was blunt.
“We’ll get a two-year bump from the tax cut, then what we’ll get is debt,” he said.
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