Tag: Colorado Wage and Salary Employment

Bureau of Labor Statistics Data May Not Correctly Tell the Story

horvath

It is questionable whether the wage and salary data produced by the Bureau of Labor Statistics reflects what is happening on the streets of Colorado. With that in mind, the following paragraphs tell the story of the Colorado economy based on the headlines.

The Headlines

Comments made by Mark Snead

The former director of the Denver Branch of the Kansas City Fed has said that the Tier I energy states are on the verge of recession. To date, the economies in Tier II states have been much stronger and job gains in other industries have more than offset job losses in the energy sector.

On a different note, Snead posted in a blog post saying that” the current expansion is getting to be a bit long in the tooth.” It is 74 months and running.

Government

Governments are optimistic given the following actions:
• Boulder has approved their 2016 budget which includes the addition of 48 employees.
• Governor Hickenlooper has promised $100 million to make Colorado the “best state for biking.”
• The U.S. Treasury CDFI fund has given a $2 million grant to The Colorado Enterprise Fund to support local small businesses.
• The state approved $12.8 million in tax credits for two companies that might result in 1,600 jobs. These companies are in the health care and energy solutions industries.
• Loveland city council will discuss a proposal to provide high-tech manufacturing consulting and training organization EWI with $2 million in funding to open a facility at the Rocky Mountain Center for Innovation and Technology.
• In an uncharacteristic move, the state rejected a proposal for tax credits for a Colorado company that would increase health care employment by 1,418 jobs. The justification was the state did not have the workers to fill the jobs and would have to import them.

Aerospace
Aerospace is one of Colorado’s targeted high tech industries, yet it is in a state of flux with increased involvement from the private sector. The impact of some of the changes remains to be seen.
• Lockheed Martin could lay off 500 IT workers (nationally).
• Aeroject Rocketdyne made an unsolicited bid of $2 billion for United Launch Alliance.
• Jeff Bezos announces Cape Canaveral as the base for his commercial aerospace program.

Retail
The budgets for many cities rely heavily on taxes generated from retail trade sales. Nationally some retail chains are struggling. At the moment that appears to be an issue with the companies, not the industry.
• Best Buy in Broomfield has announced it is closing on October 31.
• A January restructuring caused Macy’s to shutter 14 stores and it recently announced it will close an additional 35 to 40 stores in early 2016. The company runs 770 Macy’s stores and has closed 52 locations over the last five years while opening 12. It is not known if Colorado stores will be closed.

Technology
Colorado has always prided itself for its technology clusters.
• Hewlett-Packard has announced worldwide cuts of 25,000 to 30,000. There is uncertainty whether this will negatively impact Colorado or benefit it if consolidation brings workers to the state.
• Level 3 has announced a round of layoffs associated with the company’s merger with TW Telecomm that took place last fall. The location and number of these workers has not been announced.
• Seagate will layoff 70 workers in Longmont
• Astra Zeneca bought the Boulder Amgen facility and may add 400 jobs.

Construction
Some construction leaders are clamoring that the growth of the industry and the economy may not reach its potential in part because of the lack of trained workers. The lack of a trained workforce has occurred despite solid growth in wages. At the same time, non-seasonally adjusted construction spending is at its highest level since May 2008.

Energy
Synergy Resources paid $78 million to K.P. Kaufman for assets in the Wattenberg Field. After record oil production in May, June production dropped off slightly.

Time will tell whether the Bureau of Labor Statistics or the headlines are correct.

Expect Solid Growth in Colorado Wage and Salary Employment

horvath

The U.S. economy remains on solid footing  in anticipation of the upcoming release of BLS Colorado wage and salary employment data.

U.S. Employment and GDP

Earlier this month BLS reported the U.S. added 126,000 jobs in March compared to February. This was the weakest level of month-over-previous-month job growth for the seasonally adjusted data since 2013. Despite the slower rate of growth for March 2015, U.S. employment for March is about 2.29 million jobs greater than March 2014..

Currently, Colorado wage and salary employment is about 1.8% of the U.S. total. About 2.8% of U.S. job growth can be attributed to Colorado.

Most economists think U.S. Real GDP growth will be in the neighborhood of 2.5% to 3.0% this year. This past week The Conference Board bumped its 2015 projection for the U.S. output growth up to 2.9% based on projections for stronger personal consumption. This is notable given their conservative estimates over the past ten years. Meanwhile, other economists have bumped their forecasts down to the range of 2.5% to 3.0%

Stronger output growth should translate into a greater number of wage and salary workers. In other words, the slower rate of U.S. job growth in March appears to be a glitch rather than the start of a downward trend. The strong rate of U.S. job and output growth will ensure that in the short term Colorado with continue to add jobs at a rate similar to the past twelve months.

U.S. and Colorado Unemployment Rates

In March the U.S. unemployment rate remained steady at 5.5%, but down from 6.6% a year ago.

The U.S. Congressional Budget Office has indicated the natural rate of unemployment is currently 5.2%. The natural rate is the point of equilibrium or the rate at which an economy will operate most efficiently.

When the unemployment rate drops below the natural rate there will be upward wage pressures and companies will be challenged to find qualified workers. The economy will operate inefficiently for different reasons than when the rate of unemployment is above the natural rate.

In Colorado, the February unemployment rate of 4.2% was well below the U.S. rate. Some Colorado industries are currently experiencing symptoms of an economy that is operating below the natural rate of unemployment. They are experiencing difficulty finding qualified workers in select occupations. In addition, there are upward wage pressures in industries such as construction and agriculture. Anecdotal evidence suggests some companies are not able to find workers even when they pay higher wages.

The state’s rate of unemployment is expected to remain below 4.5% in the near-term, although there are concerns the layoffs caused by lower oil prices will cause an increase in the unemployment rate. At the state level the direct impact of oil and gas layoffs may not have a major impact on total state employment and unemployment data, but it will definitely affect regions where the oil and gas industry has played a significant role in the economy, such as Weld and Garfield counties.

Expect continued solid growth in Colorado wage and salary employment in the short-term.