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Colorado Recovery Watch - June 2012

The most recent economic data from the U.S. Bureau of Labor Statistics for the month of June show a step in the wrong direction compared with May numbers. The month of June saw an increase in the state unemployment rate, which includes the self-employed and farm workers, as well as the state labor force. In addition, another survey reported data that excludes the self-employed and farm workers and showed a net decrease in employment for the month of June. Clearly, the recovery from the Great Recession has been timid at best and has yet to solidify in Colorado or nationwide. Fortunately, enrollment in the U.S. Department of Agriculture’s Supplementary Nutritional Assistance Program (SNAP), formerly known as food stamps, decreased in the month of April (the most recent data available), regaining some of the ground lost during the month of March.

Unemployment

 In June, Colorado’s unemployment rate increased for the third consecutive month to 8.2 percent. (Figure 1) Although this 8.2 percent unemployment rate is still 0.2 percentage points lower than June of last year, it is a 0.1 percentage point increase from May and a return to the September 2011 level. The June unemployment rate is now over 4 percentage points higher than when the recession began and puts the Colorado unemployment rate even with the National unemployment rate.

 

Colorado’s unemployment rate is tied for 13th highest among the 50 states.1 Unfortunately, the most recent economic forecasts from the Colorado Legislative Council Staff, released in June, show a slightly disheartening outlook for the Nation’s and Colorado’s economy throughout the rest of 2012. The Colorado Legislative Council’s report notes that while the manufacturing sector and the real estate market have improved slightly, employment, income and consumer spending have slowed most likely due to the large amount of uncertainty in many aspects of the economy.2

 

Current unemployment compared to past recessions

Both the Colorado and national unemployment rates remain elevated over four and a half years since the beginning of the 2007 recession. Colorado’s unemployment rate peaked at 9 percent in September 2010, 38 months after the start of the recession. Despite the fact that the current rate of 8.2 percent is 0.8 percentage points below the high, the current unemployment rate in Colorado is almost double the highest unemployment rate of the 2001 recession. The long-term elevation of the unemployment rate illustrates the severity of the “great recession” especially when compared with the three previous economic down-turns. (Figure 2)

 

 

Unemployment rate and the labor force

The unemployment rate has an important connection to the size of the labor force. To be counted as unemployed, a worker must be actively looking for a job. The labor force is defined as the number of workers with a job or actively looking for work. In June, just over 3,000 individuals entered the labor force. Over the past year nearly 24,000 workers have entered the labor force in Colorado.

Still, there are about 18,000 fewer workers in the labor force today than when the labor force peaked in April 2009. This keeps the unemployment rate lower than it would be otherwise. On the other hand, when job prospects improve in the future and workers begin to enter or re-enter the labor force, the unemployment rate may not drop dramatically despite encouraging signs, such as hiring and employment growth.

 

 

Employment

The increases in the unemployment rate and in labor force participation are measured by a U.S. Bureau of Labor Statistics household survey, called the Local Area Unemployment Statistics survey (LAUS), which reported a net increase in employment of 324 individuals in May. (Figure 4)

However, another important survey, called the Current Employment Statistics survey (CES), which excludes the self-employed, farm jobs and striking workers, unfortunately reported a substantial net decrease in employment. This survey reported a loss of 6,900 jobs during June, erasing the progress made in the month of May. In June, Colorado was down 65,800 jobs or 2.8 percent since the recession started in December 2007. Despite the falling numbers, the number of individuals employed in June in Colorado remained 1.5% higher than June 2011. (Figure 4)

 

 

Job shortfall

When the recession began in December 2007, Colorado had 2,350,200 jobs. Since then, Colorado has experienced 31 months of job loss. Colorado's employment trough occurred in January 2010 when Colorado had 141,000 fewer jobs than it did before the recession started. Now in June 2012, Colorado has 65,800 fewer jobs. (Figure 5)                                                        

                                                           

Colorado's job shortfall, or the difference between the number of jobs the state has and the number it needs to regain its pre-recession employment rate, is 220,157. That number includes the 65,800 jobs that Colorado lost plus the 154,400 jobs it needs to keep up with the 6.6 percent growth in working-age population that the state has experienced since the recession began. (Figures 5-6)

 

 

 

As the job shortfall numbers show, Colorado has not recovered from the “Great Recession”. As elected officials at both the state and federal level make policy choices to deal with budget shortfalls, they should avoid decisions that threaten to throw even this very tentative recovery into reverse. Putting people back to work needs to be the primary goal for lawmakers.

 

Medicaid and CHP+

Public assistance for health care remains of critical importance for Coloradans in the current recovery. The caseload for Medicaid and Child Health Plan Plus (CHP+), the programs that provide medical assistance to low-income residents and children, has increased 65 percent since the start of the recession. The month of June continued heavy caseload growth with an increase in enrollment of 6,987 individuals. This brings the total enrollment as of June 2012 to 736,157.4 (Figure 7) Over the past year, from June 2011 to June 2012, total state health care caseload increased by about 12.5 percent or about 81,000 people. Coloradans’ increasing dependency on the programs for medical care during the recovery is a testament to the programs importance to the state’s well-being.

 

 

Food assistance

The Supplemental Nutrition Assistance Program has continued to grow at a high rate since the start of the recession in 2007. However, the most recent data from April of this year show the largest monthly decrease enrollment since the recession began. It should be noted, however, that this decrease comes from the high point of 496,109 individuals enrolled in SNAP, established in March of this year. Furthermore, enrollment remains 98.3 percent higher than when the recession began and 8.0 percent higher than a year prior. While it is encouraging that the latest data show a decrease in enrollment, it will only be representative of real improvement if the trend continues in the coming months. (Figure 8)5

 

 

As unemployment rises, so too does uncertainty about the recovery’s future

The month of June showed a continued rise in the Colorado unemployment rate to 8.2 percent. This coupled with the reported loss by the Current Employment Statistics survey of nearly 7,000 jobs affirms that the current recovery is struggling to survive. Furthermore, a serious job shortfall remains as the state’s working-age population continues to grow which could pose even more difficulty for the recovery.

Colorado’s safety net assistance, such as Medicaid and SNAP, has proven its merit during the recession, helping hundreds of thousands of Coloradans stay afloat. Enrollment in SNAP decreased in April but this decrease only recovers a portion of what was added in March. The latest data regarding Medicaid and CHP+ June show continual growth in the month of June. Both enrollment in SNAP and in state medical assistance programs are still very high, highlighting the importance of these programs to low-income Coloradans while a recovery develops. Until we experience a full-scale, self-sustaining jobs recovery, these programs will continue to be vital to Colorado’s well-being.

 

Contact:

Andrew Ball

CC/Rice Fellow

aball@cclponline.org

303-573-5669, ext. 316

 

[1] Economic Policy Institute analysis of U.S. Bureau of Labor Statistics Current Employment Survey data.

[2] “Focus Colorado: Economic and Revenue Forecast,” Colorado Legislative Council Staff: Economics Section, Jun. 20, 2012.

[3] Colorado Legislative Council Staff for the chart design.

[4] Analysis of “Premiums, Expenditures and Caseload Reports,” Colorado Department of Health Care Policy Financing.

[5] Analysis of U.S. Department of Agriculture SNAP program data, provided by: “Latest Available Month - State Level Participation,” USDA Food and Nutrition Service.

 

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