Colorado Construction employment peaked in 2006 and has been on a downward path since. Not seasonally adjusted data topped 175,000 jobs in 2006. Today, there are 102,000 workers, comparable to mid-1995.
The large number of foreclosures and reduction in housing prices brought the construction of single family housing to a screeching halt. Approximately 9,500 permits will be pulled in 2011, up from the trough in 2009 (7,231). This is a far cry from the peak in 2004 (40,753).
Because it is difficult for geographically large states to develop distinctive competencies in construction, the concentration or workers, or location quotient (LQ), should be near 1.0. (A location quotient is the ratio. It is the percentage of state construction workers divided by the percentage of U.S. construction workers).
A LQ greater than 1.0 indicates a higher concentration of construction workers, much as the state has had for the past 20 years. On the other hand, a LQ less than 1.0 means Colorado has less of a concentration, much as occurred at the end of the 1980s because of overbuilding.
The state LQ for construction workers remained below 1.0 through mid-1991. It increased for the next 10 years (2001) to about 1.5. In early 2001, the LQ began declining and dropped off sharply for three years (2004). It leveled off for five years, then plummeted again in 2009.
How low will the LQ go? In theory it is reverting to 1.0. As the country recovers from the Great Recession, other sectors will expand at a faster, thus driving the LQ lower. It will rise again when Colorado experiences another strong expansionary phase.
©Copyright 2011 by CBER.