According to the Bureau of Labor Statistics, for the first and only time in history, Colorado employment increased at an accelerating rate for four full years, from 2011 to 2014. But by 2018, the lack of qualified workers may begin to inhibit economic expansion.
BY JAN WONDRA
The good economic news just keeps coming. According to the Colorado 2018 Economic Forecast, through the first two months of 2018, Colorado’s average job growth far outpaced the pace of prior years.
During January and February 2018, Colorado added 67,000 more jobs than it did during the same two months of 2016. In 2017, across the 23 tracked sectors, there were 2.66 million Colorado wage and salary employees. The latest statistics bring that figure to 2.7 million.
According to the report, officially published as the Colorado-based Business and Economic Research report, the largest job sectors of healthcare, construction, financial services, professional and scientific and higher education, are also growing at a much faster rate than other sectors. They are contributing a majority of the new jobs; 57 percent of all new jobs are within these five sectors and all of them are major employment sectors within the Denver south corridor.
The increases, according to the report are due to a combination of strong net migration and people re-entering the job force in full-time positions. The construction trades are seeing strong orders, but the question remains; when will the supply of housing catch up with demand?
The robust growth comes with some warning signs. Not only is Colorado’s inflation increasing faster than the U.S. (at 3.4 percent for 2017). in part because of the continued increases in housing prices, the cost of housing here is rising faster than across the U.S. A continued rise in housing costs raise the question; at what point will the lack of affordable housing cause Colorado’s economy to slow?
Moving ahead into 2018, there are some trends to watch:
• In-migration will continue, but the rate of growth is tapering off. With the state officially at full-employment (defined as 3 percent or less unemployment) companies will continue to struggle to attract qualified workers.
• The growth of real wages is an unknown economic factor. Typically, when unemployment is low, the scarcity of workers causes real wages to increase. But Colorado wage growth has been weak for the past decade.
• Colorado’s infrastructure – highways, multimodal transportation, water, broadband – is struggling to keep up with the state’s growth.
• Production sectors such as the extraction industries are posting healthy job gains, while retail employment is proceeding at a much slower rate. It begs the question; is Colorado now saturated with retailers, and is there some fallout underway for retailers not meeting customer’s needs?
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