Tag: low-wage jobs

All Jobs are Important to the Economy

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All jobs are important to the economy for different reasons.

For example, health care jobs make it possible for us to maintain a high quality of life. Construction jobs allow us to build new homes, commercial space, and maintain and improve the quality of our roads. Tourism jobs make it possible for us to enjoy the mountains, the waterways, and the natural beauty of Colorado.

Primary jobs are particularly important because they bring in wealth from outside the state to produce products that are then exported. Manufacturing jobs, such as those at Vestas or Ball Aerospace, are examples of primary jobs. Quite often primary jobs have higher than average wages.

On the topic of wages…

In 2014, average Colorado private sector wages for all industries were $53,068.

Although 2015 has been a solid year for job growth, there have been concerns the state has been adding too many low-paying jobs and that wage increases have not kept up with inflation.

Through the first six months of 2015 average wage and salary employment for the private sector is 63,500 greater than the same period in 2014.

For the first half of 2014 the leading sectors for job growth were:
• Private Education and Health Care added 15,400 jobs. The sector accounted for 24.3% of total jobs added. Average annual wages for 2014 were $45,879.
• Accommodations and Food Services added 12,900 jobs. The sector accounted for 20.3% of total jobs added. Average annual wages for 2014 were $19,445.
• Construction added 12,700 jobs. The sector accounted for 20.0% of total jobs added. Average annual wages for 2014 were $53,664.
Only the wages for the Construction sector were slightly greater than the state average.

These three sectors accounted for about two-thirds of the jobs added in the first half of 2015. Estimated average annual wages for these sectors was $39,973, based on 2014 average wages.

Average annual wages for the following sectors were below the state average.
• Administrative and Wage Management.
• Arts, Entertainment, and Recreation
• Other Services
• Retail Trade
In the first half of 2015 they accounted for slightly more than 9% of jobs added. Estimated average annual wages for these sectors was $31,677, based on 2014 average wages.

The seven sectors mentioned above accounted for about three-fourths of the job growth in the first half of 2015, yet the average wages for these jobs were about $38,945. This is well below the state average.

The following sectors were responsible for slightly more than one-fourth of the state’s job growth in the first half of the year. All sectors have average annual wages above the state average.
• Corporate Headquarters (MCE)
• Financial Activities
• Information
• Manufacturing
• Natural Resources and Mining
• Professional and Scientific
• Transportation, Warehousing, and Utilities
• Wholesale Trade
Estimated average annual wages for these sectors was $78,685, based on 2014 average wages.

There are several takeaways from Colorado’s wage and job growth in the first half of 2015:
• Jobs and wages don’t expand at an even pace across all industries.
• Strong job growth is not always accompanied by strong wage growth.
• Strong growth in low paying sectors has been accompanied by declines or minimal growth in some higher paying sectors.
• The wage and salary employment data may not be accurately representing actual job growth in the state.

Strong job growth may not translate into increased consumption because average annual wages for many of the additional workers are well below the state average. In turn, the addition of a disproportionate number of lower wage jobs may result in lower than expected tax collections for state and local governments.

All jobs are important, but sometimes higher paying jobs have a greater importance than lower paying jobs.

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?