Colorado’s Employment Situation After Ten Months

After ten months, enough of the year has passed that Colorado’s employment situation for 2014 is virtually set. This post looks at overall and regional job growth, drivers of the regional economies, and industries that dominate state job growth.

Job Growth (Overall)
After BLS makes their March 2015 revisions the wage and salary employment will show that Colorado added at least 70,000 jobs this year. That is job growth of at least 2.9%.

Job Growth (Regional)
About 81% of Colorado’s job growth occurs in Colorado’s seven metro areas (listed below). The industry composition and the economies in these seven metro areas are distinct. As a result they have grown at different rates.

The estimated rates of job growth through ten months are:
• Greeley 5.0%
• Boulder 3.1%
• Fort Collins 2.8%
• Denver 2.8%
• Pueblo 1.8%
• Grand Junction 0.9%
• Colorado Springs 0.8%

During this period the percentage of job growth in the MSAs was:
• Denver added 67.4% of the MSA jobs.
• Boulder added 10.0%.
• Combined, the Northern Colorado MSAs added 16.0% of all jobs (Greeley 8.5% and Fort Collins 7.5%).
• Colorado Springs added 3.6% of the MSA jobs.
• Pueblo added 2.1%.
• Grand Junction added almost 1%.

Drivers of Regional Economies
The economies of Colorado’s seven metro areas are very distinct as evidenced by the industries driving their economy.
• Greeley has been driven by the extractive industries and Vestas.
• Fort Collins has been driven by the high-tech industry, CSU, and spillover from the extractive industries.
• Boulder has posted gains as a result of the high-tech industry, and CU employment.
• Denver’s economy is more balanced than the smaller economies. Interestingly enough, it has grown at a slower rate in 2014 than 2013.
• Pueblo has benefitted from Vestas.
• Grand Junction has struggled to recover from the most recent “oil shale bust”.
• Colorado Springs is still feeling the pain from the exit of Intel. In addition, the wildfires during the summers of 2012 and 2013 played havoc with the economy. The local economy is very dependent on the military and defense funding for local businesses. These industries are typically more volatile than the overall economy.

Industries Dominating State Job Growth
• Throughout 2014, job growth across the state has been led by the following  sectors
o Accommodations and Food Services (AFS)
o Health Care
o Professional, Scientific, and Technical Services (PST)
o Construction
o Retail
These five sectors account for about 71% of total job growth in the state.

2012 CDLE Monthly Employment Numbers Didn’t Reflect Reality

In 2012, the monthly Colorado Department of Labor and Employment (CDLE ) employment press releases told a story about the economy that did not agree with what happened on the streets.  The initial seasonally adjusted employment data depicted huge swings in employment, ranging from an unbelievable gain of 19,500 jobs in January to an equally absurd loss of 6,900 jobs in June.  This is a range of 26,500 jobs.

The initial data showed losses in two months and no growth in a third. The initial data indicated that job gains only occurred in nine months.

The benchmarked revision, released in March 2013, told a much different story. There were consistent job gains in all 12 months, rather than the erratic job growth portrayed by the initial data.  That range of job growth was 7,300 jobs, from a low of 1,700 jobs added in May to a peak of 9,000 jobs added in October.

The correlation coefficient between the initial data and the March benchmark data is .56. The coefficient of determination is .31. In other words, the relationship between the two sets of data is weak. It is difficult to understand why the initial data set does such a poor job projecting employment growth.

It is important for public and private leaders to have “accurate” data available to make critical business decisions relating to their industry. In this case, it was difficult for consumers to have confidence in the business climate when the story being told by state officials did not reflect what was actually happening on the street. CDLE must revisit its priorities. Publishing credible data is much more important than conducting a media blitz for the sake of gaining exposure for the agency.

©Copyright 2011 by CBER.