CO recession
Colorado Recovery Watch March 30, 2011 In February, the U.S. unemployment rate fell below 9 percent for the first time in nearly two years. At the same time, Colorado’s unemployment rate continued its recent trend above the national rate, posting the all-time high of its recorded history. There are definite signs of recovery in Colorado, despite the high unemployment rate. Still, almost two years on, the rebound is proving slow and painful for Colorado’s workers. Unemployment Colorado’s unemployment rate rose to 9.3 percent in February, the highest rate on record for the state since the Bureau of Labor Statistics began tracking state unemployment in 1976. (Figure 1) That increase continued Colorado’s recent and unusual trend above the national unemployment rate (Colorado had posted lower unemployment rates than the nation for six years). (Figure 1) Colorado’s unemployment rate now ranks 18th worst among states, and its increase in unemployment rate since the beginning of the downturn (December 2007) ranks 7th largest.1 High unemployment is likely to be a fixture of the state economy for some time to come. Colorado’s unemployment rate is forecasted at 8.8 percent for 2011, 8.5 percent for 2012, and 7.7 percent for 2013.2 Figure 1
Colorado moves above nation in unemployment rate 11% 10% 9.3% 8.9%
Unemployment rate
9% 2007 - 2009 Recession
8% 7% 6% 5% 4%
United States Colorado
3% 2% 2007
2008
2009
2010
2011
Source: U.S. Bureau of Labor Statistics (data through February 2011)
Page 1 of 7 Colorado Fiscal Policy Institute, a project of the Colorado Center on Law and Policy 789 Sherman Street, Suite 300, Denver, Colorado 80203 / 303-573-5669 / www.cclponline.org
Current unemployment compared to past recessions The 2007-09 recession left unusually high unemployment in its wake. Typically, unemployment in Colorado subsides a year and a half after the onset of recession. Yet today, Colorado continues to experience very high unemployment, three years on. (Figure 2) Figure 2
10%
Colorado unemployment rate elevated longer than in past recessions
9%
Unemployment rate
8% 7% 6% 5% 4% 3% 2007-09 Recession 2001 Recession 1990 Recession 1981 Recession
2% 1% 0% -3
0
3
6
9 12 15 18 21 24 Months from start of recession
27
30
33
36
Source: Economic Policy Institute analysis of U.S. Bureau of Labor Statistics Current Employment Statistics Survey (Data through February 2011)
Page 2 of 7 Colorado Fiscal Policy Institute, a project of the Colorado Center on Law and Policy 789 Sherman Street, Suite 300, Denver, Colorado 80203 / 303-573-5669 / www.cclponline.org
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. In technical terms, that means the worker must be in the labor force (defined as the total number of workers with jobs or looking for work). Thus, changes in the labor force can have a big effect on the unemployment rate. For instance, if the economy is suffering, unemployed workers may stop looking for work, thereby decreasing the labor force, and keeping the unemployment rate down. That was likely the case in Colorado the past year and a half. (Figure 3) Conversely, when the economy improves, workers resume looking for jobs and re-enter the labor force. In doing so, they are once again counted as unemployed, and the unemployment rate often spikes with their re-entry. Judging from recent data, Colorado may be experiencing just such a spike. (Figure 3) That trend, along with improved unemployment insurance claims, increased personal incomes, and other indicators suggests Colorado is recovering, despite its high unemployment rate.3 Figure 3
Colorado unemployment rate and labor force (seasonally adjusted) 2,800
10%
8% 2,750 7% 6% 2,700
5% 4% 3%
2,650
Unemployment rate
Labor force (thousands)
9%
2% 1% 2,600 2007
0% 2008
2009
2010
2011 Labor force Unemployment rate
Source: U.S. Bureau of Labor Statistics (data through February 2011)4
Page 3 of 7 Colorado Fiscal Policy Institute, a project of the Colorado Center on Law and Policy 789 Sherman Street, Suite 300, Denver, Colorado 80203 / 303-573-5669 / www.cclponline.org
Employment Recessionary employment losses in Colorado have been dramatic. (Figure 4) Since the onset of the downturn in December 2007, Colorado has lost 122,000 jobs, or 5 percent of its nonfarm labor force. That loss ranks 25th worst in the country.5 While more than a year has passed since Colorado’s low point in jobs, the state has struggled to recover. Recently, Colorado has posted steady but modest gains in employment. (Figure 4) Those have not been sufficient to keep up with working-age population growth, or to keep the unemployment rate from increasing. (figures 5 and 1, respectively) Figure 4
Seasonally adjusted non-farm employment (thousands)
Colorado employment struggles to rebound 2,400
2,350
2,300
2007 - 2009 Recession
2,250
2,200
2,150
2,100 2007
2008
2009
2010
2011
Source: U.S. Bureau of Labor Statistics (data through February 2011)
Job shortfall Job shortfall measures the difference between actual employment and what employment would need to be to keep up with working-age population growth. Tracking from the onset of the recession in December 2007, the Colorado job shortfall stands at roughly a quarter-million jobs. (Figure 5) Figure 5
COLORADO JOB SHORTFALL SINCE ONSET OF DOWNTURN (December 2007 to February 2011) Working-age population growth
5.5%lank
Employment this month
2,228,300lank
Employment level needed (the total number of jobs in the state if job growth kept pace with working age population growth)
2,480,338lank
Job shortfall
252,038 ank
Source: Economic Policy Institute analysis of U.S. Bureau of Labor Statistics Current Employment Statistics Survey
Page 4 of 7 Colorado Fiscal Policy Institute, a project of the Colorado Center on Law and Policy 789 Sherman Street, Suite 300, Denver, Colorado 80203 / 303-573-5669 / www.cclponline.org
Medicaid and CHP+ Since the downturn, Colorado has seen consistent and substantial caseload growth in Medicaid and the Child Health Plan Plus (CHP+). Those programs provide medical care for low-income residents and children, respectively. In February 2011, the Medicaid and CHP+ programs served 640,000 Coloradans.6 Enrollment growth in CHP+ and Medicaid accelerated during the recession and continues to outpace population growth. (Figure 6) In the current fiscal year, total program enrollment has grown by 41,000 individuals, or 7 percent. By contrast, during that period the state population grew 1 percent, adding 52,000 residents. That means combined Medicaid and CHP+ caseload is growing seven times as fast as the state population. As the effects of the recession reverberate and need continues to grow, those programs are increasingly crucial in providing health and security for vulnerable Coloradans. Figure 6
Colorado combined Medicaid and CHP+ caseload growth dramatically outpaces population growth 25%
20%
19.9%
Colorado population
Growth rate
Medicaid and CHP+ 15%
13.2%
12.0% 10% 6.9% 5% 1.0%
1.4%
1.6%
FY 2009-10
FY 2008-09
2.4%
0% FY 2010-11 to-date
2007-09 Recession
Source: Department of Health Care Policy and Financing; Colorado Legislative Council The 2007-09 recession lasted from December 2007 to June 2009. Data are through February 2011.
Page 5 of 7 Colorado Fiscal Policy Institute, a project of the Colorado Center on Law and Policy 789 Sherman Street, Suite 300, Denver, Colorado 80203 / 303-573-5669 / www.cclponline.org
Food assistance The recession touched off a substantial need for the food assistance provided by the U.S. Department of Agriculture’s Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps. As with the state’s public health insurance programs, that need continues to grow a year and a half after the official end of the Great Recession. (Figure 7) According to the most recent count in December 2010, 441,000 Coloradans receive food stamps. (Figure 7) That is up 6,000 people from the month before, completing a quarter of particularly heavy growth. Overall, SNAP enrollment has increased 78 percent since the beginning of the 2007-09 recession.7 Clearly, SNAP continues to be a lifeline for many amidst Colorado’s painful recovery. Figure 7
Colorado food stamp enrollment continues to grow after recession 500,000
Number of individuals
450,000
441,221
400,000
350,000
300,000
250,000
2007 - 2009 Recession
200,000 2007
2008
2009
2010
Source: Analysis of U.S. Department of Agriculture SNAP program data (through December 2010)
Eligible but not enrolled It is important to note food stamp enrollment does not fully reflect hunger in Colorado. According to the latest estimates, only 52 percent of Coloradans eligible for SNAP are enrolled. That ranks 48th in the county among states.8 Colorado’s poor performance is largely driven by problems administering food assistance. Eligible clients are required to complete a 26-page application, show multiple forms of identification and lawful residence documents, and verify income every three to six months. Furthermore, the Colorado Benefits Management System (CBMS) database, which is used to administer SNAP and other Colorado assistance programs, is plagued with problems. Since its introduction in 2004, CBMS has consistently failed to deliver timely application processing, and has exhibited unreliable performance. Colorado needs to improve CBMS and its administration of assistance programs to ensure that eligible families get the help in this unprecedented time of need.
Page 6 of 7 Colorado Fiscal Policy Institute, a project of the Colorado Center on Law and Policy 789 Sherman Street, Suite 300, Denver, Colorado 80203 / 303-573-5669 / www.cclponline.org
Looking worse, feeling better? As the recovery nears its two-year mark, unemployment stands at an all-time high, and demand for food and health assistance continues to grow. Yet expansion of the labor force and other economic indicators suggest Colorado’s economy is on the rebound. The key for Coloradans is how long it takes for jobs to catch up to the rest of the economy. Contact: Alec Harris Policy analyst [email protected] 303-573-5669, ext. 316
1
Economic Policy Institute analysis of U.S. Bureau of Labor Statistics Current Employment Survey data. “Focus Colorado: Economic and Revenue Forecast,” Colorado Legislative Council Staff: Economics Section, Mar. 18, 2011. 3 See Colorado Legislative Council Staff for more on current economic indicators and economic outlook in Colorado. 4 Also, Colorado Legislative Council Staff for the chart design. 5 Economic Policy Institute analysis of U.S. Bureau of Labor Statistics Current Employment Survey data. 6 Analysis of “Premiums, Expenditures and Caseload Report,” Colorado Department of Health Care Policy Financing, February 2011 report. 7 Analysis of U.S. Department of Agriculture SNAP program data, provided by: “December 2010 SNAP/Food /Stamp Participation Data,” Food Research and Action Center. 8 “State Supplemental Nutrition Assistance Program Participation Rates in 2008,” U.S. Department of Agriculture: Food and Nutrition Service, December 2010. 2
Page 7 of 7 Colorado Fiscal Policy Institute, a project of the Colorado Center on Law and Policy 789 Sherman Street, Suite 300, Denver, Colorado 80203 / 303-573-5669 / www.cclponline.org
Colorado moves above nation in unemployment rate 11% 10% 9.3% 8.9%
Unemployment rate
9% 2007 - 2009 Recession
8% 7% 6% 5% 4%
United States Colorado
3% 2% 2007
2008
2009
2010
2011
Source: U.S. Bureau of Labor Statistics (data through February 2011)
Page 1 of 7 Colorado Fiscal Policy Institute, a project of the Colorado Center on Law and Policy 789 Sherman Street, Suite 300, Denver, Colorado 80203 / 303-573-5669 / www.cclponline.org
Current unemployment compared to past recessions The 2007-09 recession left unusually high unemployment in its wake. Typically, unemployment in Colorado subsides a year and a half after the onset of recession. Yet today, Colorado continues to experience very high unemployment, three years on. (Figure 2) Figure 2
10%
Colorado unemployment rate elevated longer than in past recessions
9%
Unemployment rate
8% 7% 6% 5% 4% 3% 2007-09 Recession 2001 Recession 1990 Recession 1981 Recession
2% 1% 0% -3
0
3
6
9 12 15 18 21 24 Months from start of recession
27
30
33
36
Source: Economic Policy Institute analysis of U.S. Bureau of Labor Statistics Current Employment Statistics Survey (Data through February 2011)
Page 2 of 7 Colorado Fiscal Policy Institute, a project of the Colorado Center on Law and Policy 789 Sherman Street, Suite 300, Denver, Colorado 80203 / 303-573-5669 / www.cclponline.org
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. In technical terms, that means the worker must be in the labor force (defined as the total number of workers with jobs or looking for work). Thus, changes in the labor force can have a big effect on the unemployment rate. For instance, if the economy is suffering, unemployed workers may stop looking for work, thereby decreasing the labor force, and keeping the unemployment rate down. That was likely the case in Colorado the past year and a half. (Figure 3) Conversely, when the economy improves, workers resume looking for jobs and re-enter the labor force. In doing so, they are once again counted as unemployed, and the unemployment rate often spikes with their re-entry. Judging from recent data, Colorado may be experiencing just such a spike. (Figure 3) That trend, along with improved unemployment insurance claims, increased personal incomes, and other indicators suggests Colorado is recovering, despite its high unemployment rate.3 Figure 3
Colorado unemployment rate and labor force (seasonally adjusted) 2,800
10%
8% 2,750 7% 6% 2,700
5% 4% 3%
2,650
Unemployment rate
Labor force (thousands)
9%
2% 1% 2,600 2007
0% 2008
2009
2010
2011 Labor force Unemployment rate
Source: U.S. Bureau of Labor Statistics (data through February 2011)4
Page 3 of 7 Colorado Fiscal Policy Institute, a project of the Colorado Center on Law and Policy 789 Sherman Street, Suite 300, Denver, Colorado 80203 / 303-573-5669 / www.cclponline.org
Employment Recessionary employment losses in Colorado have been dramatic. (Figure 4) Since the onset of the downturn in December 2007, Colorado has lost 122,000 jobs, or 5 percent of its nonfarm labor force. That loss ranks 25th worst in the country.5 While more than a year has passed since Colorado’s low point in jobs, the state has struggled to recover. Recently, Colorado has posted steady but modest gains in employment. (Figure 4) Those have not been sufficient to keep up with working-age population growth, or to keep the unemployment rate from increasing. (figures 5 and 1, respectively) Figure 4
Seasonally adjusted non-farm employment (thousands)
Colorado employment struggles to rebound 2,400
2,350
2,300
2007 - 2009 Recession
2,250
2,200
2,150
2,100 2007
2008
2009
2010
2011
Source: U.S. Bureau of Labor Statistics (data through February 2011)
Job shortfall Job shortfall measures the difference between actual employment and what employment would need to be to keep up with working-age population growth. Tracking from the onset of the recession in December 2007, the Colorado job shortfall stands at roughly a quarter-million jobs. (Figure 5) Figure 5
COLORADO JOB SHORTFALL SINCE ONSET OF DOWNTURN (December 2007 to February 2011) Working-age population growth
5.5%lank
Employment this month
2,228,300lank
Employment level needed (the total number of jobs in the state if job growth kept pace with working age population growth)
2,480,338lank
Job shortfall
252,038 ank
Source: Economic Policy Institute analysis of U.S. Bureau of Labor Statistics Current Employment Statistics Survey
Page 4 of 7 Colorado Fiscal Policy Institute, a project of the Colorado Center on Law and Policy 789 Sherman Street, Suite 300, Denver, Colorado 80203 / 303-573-5669 / www.cclponline.org
Medicaid and CHP+ Since the downturn, Colorado has seen consistent and substantial caseload growth in Medicaid and the Child Health Plan Plus (CHP+). Those programs provide medical care for low-income residents and children, respectively. In February 2011, the Medicaid and CHP+ programs served 640,000 Coloradans.6 Enrollment growth in CHP+ and Medicaid accelerated during the recession and continues to outpace population growth. (Figure 6) In the current fiscal year, total program enrollment has grown by 41,000 individuals, or 7 percent. By contrast, during that period the state population grew 1 percent, adding 52,000 residents. That means combined Medicaid and CHP+ caseload is growing seven times as fast as the state population. As the effects of the recession reverberate and need continues to grow, those programs are increasingly crucial in providing health and security for vulnerable Coloradans. Figure 6
Colorado combined Medicaid and CHP+ caseload growth dramatically outpaces population growth 25%
20%
19.9%
Colorado population
Growth rate
Medicaid and CHP+ 15%
13.2%
12.0% 10% 6.9% 5% 1.0%
1.4%
1.6%
FY 2009-10
FY 2008-09
2.4%
0% FY 2010-11 to-date
2007-09 Recession
Source: Department of Health Care Policy and Financing; Colorado Legislative Council The 2007-09 recession lasted from December 2007 to June 2009. Data are through February 2011.
Page 5 of 7 Colorado Fiscal Policy Institute, a project of the Colorado Center on Law and Policy 789 Sherman Street, Suite 300, Denver, Colorado 80203 / 303-573-5669 / www.cclponline.org
Food assistance The recession touched off a substantial need for the food assistance provided by the U.S. Department of Agriculture’s Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps. As with the state’s public health insurance programs, that need continues to grow a year and a half after the official end of the Great Recession. (Figure 7) According to the most recent count in December 2010, 441,000 Coloradans receive food stamps. (Figure 7) That is up 6,000 people from the month before, completing a quarter of particularly heavy growth. Overall, SNAP enrollment has increased 78 percent since the beginning of the 2007-09 recession.7 Clearly, SNAP continues to be a lifeline for many amidst Colorado’s painful recovery. Figure 7
Colorado food stamp enrollment continues to grow after recession 500,000
Number of individuals
450,000
441,221
400,000
350,000
300,000
250,000
2007 - 2009 Recession
200,000 2007
2008
2009
2010
Source: Analysis of U.S. Department of Agriculture SNAP program data (through December 2010)
Eligible but not enrolled It is important to note food stamp enrollment does not fully reflect hunger in Colorado. According to the latest estimates, only 52 percent of Coloradans eligible for SNAP are enrolled. That ranks 48th in the county among states.8 Colorado’s poor performance is largely driven by problems administering food assistance. Eligible clients are required to complete a 26-page application, show multiple forms of identification and lawful residence documents, and verify income every three to six months. Furthermore, the Colorado Benefits Management System (CBMS) database, which is used to administer SNAP and other Colorado assistance programs, is plagued with problems. Since its introduction in 2004, CBMS has consistently failed to deliver timely application processing, and has exhibited unreliable performance. Colorado needs to improve CBMS and its administration of assistance programs to ensure that eligible families get the help in this unprecedented time of need.
Page 6 of 7 Colorado Fiscal Policy Institute, a project of the Colorado Center on Law and Policy 789 Sherman Street, Suite 300, Denver, Colorado 80203 / 303-573-5669 / www.cclponline.org
Looking worse, feeling better? As the recovery nears its two-year mark, unemployment stands at an all-time high, and demand for food and health assistance continues to grow. Yet expansion of the labor force and other economic indicators suggest Colorado’s economy is on the rebound. The key for Coloradans is how long it takes for jobs to catch up to the rest of the economy. Contact: Alec Harris Policy analyst [email protected] 303-573-5669, ext. 316
1
Economic Policy Institute analysis of U.S. Bureau of Labor Statistics Current Employment Survey data. “Focus Colorado: Economic and Revenue Forecast,” Colorado Legislative Council Staff: Economics Section, Mar. 18, 2011. 3 See Colorado Legislative Council Staff for more on current economic indicators and economic outlook in Colorado. 4 Also, Colorado Legislative Council Staff for the chart design. 5 Economic Policy Institute analysis of U.S. Bureau of Labor Statistics Current Employment Survey data. 6 Analysis of “Premiums, Expenditures and Caseload Report,” Colorado Department of Health Care Policy Financing, February 2011 report. 7 Analysis of U.S. Department of Agriculture SNAP program data, provided by: “December 2010 SNAP/Food /Stamp Participation Data,” Food Research and Action Center. 8 “State Supplemental Nutrition Assistance Program Participation Rates in 2008,” U.S. Department of Agriculture: Food and Nutrition Service, December 2010. 2
Page 7 of 7 Colorado Fiscal Policy Institute, a project of the Colorado Center on Law and Policy 789 Sherman Street, Suite 300, Denver, Colorado 80203 / 303-573-5669 / www.cclponline.org
