Tag: Retail Trade

The Economic Impact of the Colorado Retail Trade Industry

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This post highlights the economic impact of the Colorado retail trade industry on the economies of Colorado and its twelve major metro counties: Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, El Paso, Jefferson, Larimer, Mesa, Pueblo, and Weld. It was prepared for the Economic Development Council of Colorado in the Spring of 2015.

Retail Trade is classified in the NAICS 44-45 category. The Retail Trade categories used in this report and their IMPLAN sector numbers are listed below. As can be seen Retail Trade includes everybody from American Furniture Warehouse to Burritos to Go in Broomfield.

320 Retail Stores – Motor vehicle and parts
321 Retail Stores – Furniture and home furnishings
322 Retail Stores – Electronics and appliances
323 Retail Stores – Building material and garden supply
324 Retail Stores – Food and beverage
325 Retail Stores – Health and personal care
326 Retail Stores – Gasoline stations
327 Retail Stores – Clothing and clothing accessories
328 Retail Stores – Sporting goods, hobby, book and music
329 Retail Stores – General merchandise
330 Retail Stores – Miscellaneous
331 Retail Nonstores – Direct and electronic sales

economic impact of the colorado retail trade industry

The key employment findings of the report are:
• There are 309,924 direct employees in the industry, including sole proprietors. This is 9.6% of total state employment.
• Overall, there are 439,315 total (direct, indirect, and induced) employees supported by the Colorado Retail Trade Industry.
• The counties with the greatest number of Direct Retail Trade employees are El Paso, Arapahoe, Denver, and Jefferson.

The key output findings of the report are:
• Average GRP per employee for Colorado is $90,658. Average Retail Direct GRP per employee is $68,404.
• The Retail Trade Sector contributes about $21.2 billion, or 7.2%, to the Direct Colorado GRP, $293 billion.
• Overall, the Retail Trade Sector supports $38.3 billion in GRP, or economic activity.
• The counties with the greatest Direct Retail Output are Arapahoe, El Paso, and Denver.
• The counties with the greatest Direct GRP per Direct Employee are Denver, Arapahoe, Boulder.

The key wage findings of the report are:
• The total direct wages are $10.1 billion, or 5.6% of total wages. Average Direct Retail Wages are lower than the average for all industries.
• Overall, the retail trade industry supports total wages of $16.6 billion.
• The counties with the highest average annual wages for Direct Retail are Denver, Arapahoe, and Jefferson.

Other key points follow:
• The Retail Trade Sector is a major employer in Colorado.
• The Bureau of Labor Statistics reports that Colorado has 175,355 establishments. There are 17,035 establishments in the Retail Trade Sector. This is 9.7% of total employment.
• Average wages and output are below the average for other industries.
• It is difficult for states to develop a competency in the Retail Trade sector even though many states and municipalities rely on retail sales taxes to fund their operations. The Colorado Retail Trade Sector has a location quotient slightly less than 1.0.

For a copy of the report click here.

Colorado Job Growth Outpaces the U.S.

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Colorado is outpacing the U.S. in the rate of job growth. The mix of jobs added by the top sectors is different for Colorado than the U.S. In addition, many of the jobs being added in the state pay lower than average wages.

Through seven months, the sectors that contributed the greatest number of jobs (top five) account for 70.4% of jobs created in Colorado.

  • Accommodations and Food Services 19.8%
  • Health Care 15.9%
  • Professional, Scientific, and Technical Services 12.0%
  • Construction 11.9%
  • Retail Trade 10.8%.

Through seven months, these same five sectors contributed only 56.4% of the jobs created in the U.S.

  • Accommodations and Food Services 14.1%
  • Health Care 12.6%
  • Professional, Scientific, and Technical Services 9.1%
  • Construction 7.7%
  • Retail Trade 12.8%.

Colorado’s rate of growth for these sectors during the first seven months is faster than the U.S.

  • Accommodations and Food Services, 5.5% vs. 2.8%.
  • Health Care, 4.3% vs. 1.7%.
  • Professional, Scientific, and Technical Services, 4.3% vs. 2.7%.
  • Construction 6.5% vs. 3.2%.
  • Retail Trade 3.0% vs. 2.0%.

For the first seven months, the cumulative total of the Colorado sectors where primary jobs were categorized (manufacturing, information, PST) expanded at a faster rate than the U.S, 2.7% vs. 1.3%.

The following are the average annual private sector wages for the sectors that are adding the most jobs.

  • Accommodations and Food Services $18,808.
  • Health Care, $45,905.
  • Professional, Scientific, and Technical Services, $84,842.
  • Construction, $51,064.
  • Retail Trade $28,159.

Many of the jobs being added in Colorado are low paying jobs.

It is great that the Colorado economy is adding jobs. Time will tell whether the mix of jobs being added will be to Colorado’s benefit or detriment.

Colorado Adds High Number of Low-Wage Jobs

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Is Colorado adding too many low-wage jobs?

When analyzing the job changes in an economy there are several points that are understood. For example:

  • Jobs are often added unevenly. For instance, during expansionary periods construction jobs will usually be added at a faster pace than other jobs.
  • All jobs are important to the economy for different reasons. Some jobs provide basic services while others generate tax revenue.
  • Some jobs have higher than average wages while others have lower than average wages. There is often greater consumption when workers are paid higher wages.

For the past seven months the following five sectors account for about 45% of total jobs in the state, yet they are responsible for almost 75% of the jobs added this year.

  • Accommodations and Food Services
  • Health Care
  • Construction
  • Professional and Scientific Services
  • Retail Trade.

The following information includes the top sectors, the average annual private sector wages for the sectors, and the reasons those sectors are important. The average private sector wages $50,768.

  • Accommodations and Food Services, $18,808. About 10% of all jobs are in the Accommodations and Food Services sector. AFS has accounted for about 20% of the jobs added this year. As a major component of the tourism sector, AFS is an important part of the economy in all 64 counties.
  • Health Care, $45,905. Just under 11% of the state’s s jobs are in the Health Care sector. This category has accounted for about 15% of total jobs added this year. The Health Care sector affects our quality of life and plays a key role in the economy in all 64 counties.
  • Construction, $51,064. The Construction industry is small by comparison, with about 5.0% of total state jobs. Approximately 12% of the job growth is in this category. A segment of the Construction jobs are tied to the growth of the extractive industries.
  • Professional, Scientific, and Technical Services, 84,842. A portion of the Professional, Scientific, and Technical jobs are a key part of the state’s advance technology industries. They account for about 8% of the jobs and 11% of the job growth.
  • Retail Trade, $28,159. Retail Trade jobs account for almost 11% of total jobs and 11% of total job growth. The retail sector is critical to most local governments because a majority of their revenue is derived from retail trade sales taxes.

There is legitimate reason to be concerned that the state is adding so many low-wage jobs. On the other hand, it is a positive sign that the state is adding jobs that potentially impact all counties, jobs are being added in sectors that generate tax revenues, and jobs are being added that allow for a better quality of life.

So, is Colorado adding too many low-wage jobs?

 

Colorado Economy Remains Strong

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National Economy

The Colorado economy is outperforming the U.S. economy. Recent strength in the U.S. economy is a positive sign for Colorado.

Nationally, employment remains strong. The non-seasonally adjusted data shows that an average of 230,000 jobs have been added each month through seven months. Most likely the U.S. will add about 2.5 million jobs this year.

On a positive note, the labor force participation rate appears to have bottomed out.

Real GDP increased by 4.0% in Q2. The reasons for the increase in the real GDP were:

  • Stronger personal consumption.
  • Greater private inventory investment.
  • Increased residential fixed investment.
  • Stronger non-residential fixed investment.
  • Improved state and local government spending.
  • Greater demand for exports

Factors that offset the growth were:

  • Increased demand for imports.
  • Decreased federal government spending.

An area of potential concern is construction. Hopefully the industry is taking a breather after its recovery from the Great Recession. The number of building permits issued over the past year has been flat.

In addition, the housing market is cooling off. The rapid appreciation in housing prices is tapering off.

Both manufacturing and services have been solid since the second half of 2009. At least this is being reflected in the growth of the GDP.

Implications of the National Economy on Colorado

These indicators have several implications for Colorado. The short-term outlook points to stronger personal consumption, which bodes well for retailers and tourism, particularly if Mother Nature cooperates by bringing early and frequent snow for the ski season.

Stronger retail sales will add to the coffers of the state and local governments, which should point to continued increases in government spending. This would benefit everything from schools to infrastructure.

On the downside, lower or constrained government spending could impact the military and federal facilities and laboratories. This has the potential to impact the universities and federal facilities in Colorado Springs, Denver, Boulder, and the Northern Colorado metro areas.

The unemployment rate and the number of unemployed continue to trend downward; however, critical labor shortages are developing in many occupations. This is particularly critical to high-tech industries.

Labor shortages are impacting all industries in Northern Colorado which is experiencing rapid growth as a result of the extractive industries boom. Workers are being raided from other companies and industries, which will ultimately drive wages up.

The Colorado construction market still appears to be solid and the value of residential housing is growing, albeit at a slower rate than last year. At the same time the Dow Jones Industrial Average is about where it was at the end of 2013.

Appreciation in the housing and equity markets play into consumer confidence. If consumers feel their house and investments have appreciated, their wealth on paper is greater, and they are more likely to purchases goods and services.

Colorado Economy

The following five sectors account for about 45% of total jobs in the state, yet they are responsible for almost 75% of the jobs added this year.

  • Accommodations and Food Services
  • Health Care
  • Construction
  • Professional and Scientific Services
  • Retail Trade.

All of these jobs are important to the state for various reasons.

  • About 10% of all jobs are in the Accommodations and Food Services sector. AFS has accounted for about 20% of the jobs added this year. As a major component of the tourism sector, AFS is an important part of the economy in all 64 counties.
  • Just under 11% of the state’s s jobs are in the Health Care sector. This category has accounted for about 15% of total jobs added this year. The Health Care sector affects our quality of life and plays a key role in the economy in all 64 counties.
  • The Construction industry is small by comparison, with about 5.0% of total state jobs. Approximately 12% of the job growth is in this category. A segment of the Construction jobs are tied to the growth of the extractive industries.
  • A portion of the Professional, Scientific, and Technical jobs are a key part of the state’s advance technology industries. They account for about 8% of the jobs and 11% of the job growth.
  • Finally, Retail Trade jobs account for almost 11% of total jobs and 11% of total job growth. The retail sector is critical to most local governments because a majority of their revenue is derived from retail sales taxes.

Through seven months of 2014, the average job growth is about 67,300 greater than the same period in 2013.

Lack of Primary Job Creation May Slow Future Employment Growth

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The Bureau of Labor Statistics recently released data showing that, on average, Colorado added almost 62,000 jobs for the first four months of the year compared to the same period last year.

As has been the case in the past, the tourism and healthcare industries led the continued expansion.  The top five sectors for growth were:

  • Accommodations and Food Services
  • Healthcare
  • B-to-B (excluding Employment Services)
  • Retail
  • Construction

About 64% of the jobs added can be attributed to these sectors.

While it is good news that jobs are being added in most sectors, the expansion may be slowed by the lack of primary/high-tech jobs – jobs that create other jobs or bring in investment from the outside. The following sectors serve as a proxy for “primary job creation.”

  • Professional, Scientific, and Technical
  • Corporate Headquarters (MCE)
  • Manufacturing
  • Information

So far this year, these sectors are responsible for adding about 10% of the jobs.

All jobs are important and interrelated, but not all jobs are equal in terms of their ability to create other jobs.

A review of the Colorado economy after four months can be found by clicking here.

©Copyright 2011 by CBER.