Note to Editors: Martin Shields is an associate professor of economics at Colorado State University. His research on Northern Colorado’s economy is sponsored by a partnership between the Northern Colorado Economic Development Corp. and Colorado State University.
Economic indicators are notoriously cryptic, and today’s volatile environment makes them even more so. Because of this, it is a bit tricky to determine how this Great Recession is affecting northern Colorado.
Let’s try to figure it out.
According to the Colorado Department of Labor, Larimer County’s February seasonally adjusted unemployment rate stood at 6.1 percent. Although this is well below both the state and the nation, it was merely 3.9 percent 12 months earlier.
What complicates our understanding is that while the jobless rate is increasing, the data also show the number of employed people is increasing, as is the number of jobs. February data shows Larimer County’s number of employed people grew by 200 from a year earlier, and the county added an estimated 300 new jobs.
The reason for the increased unemployment rate, then, is that job growth has not been able to keep up with labor force growth. Over the same 12 months the county’s workforce grew by more than 4,400. The 2.5 percent labor force growth rate was just slightly more than the average growth over the past 9 years.
What we are seeing locally is not so much an economy in free fall (as opposed to the US economy, which has lost nearly 4.8 million jobs since last March). Rather, Larimer County’s job market has simply ground to a halt.
As I have been saying for some time, things aren’t good, but they could be a lot worse.
One puzzle is why the county’s labor force is growing so fast, despite stagnant job growth. There are several potential reasons.
First is natural growth of the working age population. Because northern Coloradans are relatively young on average, the number of people entering the labor force each month exceeds the number of older workers leaving. This is even more likely as people postpone retirement due to the huge devaluation in the stock market.
The second reason is in-migration. The state demographer’s office estimates that 4,200 more people moved into Larimer County in 2007 than moved out. Although we don’t know how many of our new neighbors are actively in the workforce, it’s likely that they make up a sizable component of the new job market participants.
Third, some local residents may have decided it is time to start looking for a job to supplement household income. It’s not hard to imagine a stay-at-home mom or dad getting a job if their spouse lost theirs or saw their hours cut.
In the end, it’s probably a combination of all three that has grown the labor force. But perhaps the silver lining is that the labor force is not shrinking, which means that there has not been a blitz of people giving up on finding a job locally.
Given that the national economy is still struggling, I don’t expect things to turn around quickly here. And even when the job market bounces back, there is no guarantee that the recent trend of substituting low wage jobs for high paying ones will subside. The most important lesson is that our local officials can’t take a meaningful recovery as imminent.