Thursday, March 10, 2011

Employment situation worsens in Colorado

As noted this morning by the Denver Business Journal, "Colorado jobless rate tops nation's."

After staying below the national unemployment rate through the recession, Colorado rose above the national jobless rate in January, according to state data released Thursday.
The Colorado unemployment rate stood at 9.1 percent in January, over the national rate of 9 percent for that month, the Colorado Department of Labor and Employment reported.

The stats above reflect a seasonally adjusted number for employment. Below, I use the non-seasonally-adjusted numbers, since the state's Department of Labor and Employment only provides the unadjusted data at the regional level. So, in order to make comparisons at the more local level in Colorado, I stick to the unadjusted data. Since we're using unadjusted data, we need to stick to year-over-year comparisons.

The employment situation worsened in Colorado in January. The unemployment rate rose from 9.5 percent in January 2010 to 9.9 percent in January 2011. The first Chart shows that unemployment rate in recent years. According to the state's data, the unemployment rate spiked in January 2010 as well, but January's 2011 spike is higher.

In the second chart, we see total employment plotted with the total labor force for each month since 2007.

What is driving the recent acceleration in the unemployment rate is the fact that the total labor force has increased, while total employment has continued to deteriorate. During 2009, the labor force fell with total employment, keeping the unemployment rate down somewhat. However, in recent months, the labor force has flattened out while total employment has continued to fall.

During January 2011, there were 30,800 fewer jobs than there were during January 2010. There were 23,000 fewer people in the labor force during Janaury 2011 than was the case during January 2010. Since the labor-market peak was reached during July 2008, total employment is now down 222,000 jobs, while the total labor force is now down 94,000 people.

In the third graph, I've shown the year-over-year percentage change in total employment. In every month since September 2008, the change has been negative, meaning that for the last 27 months, each month's employment total has been lower than the same month one year earlier. In January 2011, total employment was 1.2 percent lower than during January 2010.

[All these graphs are for Colorado statewide.]

Clearly, this will have an impact on affordability of rental units as incomes continue to be squeezed by a lack of demand in the labor markets. This will put downward pressure on rents, although it may not be enough to keep rents down given the declines in rental vacancies in recent quarters. See here for more.

This will also continue to impact the demand for purchase housing as household incomes are squeezed and as many potential home buyers continue to worry about job security, thereby causing some buyers to put off buying a home.

Check back with this site for additional regional analyses for: Northern Colorado, Colorado Springs and other regions.