Unemployment Still High as Colorado's Economy Struggles

With the United States recovering from the worst recession in seven decades, unemployment is still at its highest rate in a quarter century. Jobs have been lost in all sectors and industries, except for health care and education. Many fear that it will be a jobless recovery, which will weaken and slow down any economic growth made in the next couple of years.

In Colorado, December 2009 was another month of negative job growth. Unemployment increased six tenths of a percent to 7.5, with an increase of 8,400 unemployed. Since December 2008, which had an unemployment rate of 5.8, Colorado has lost 86,600 jobs. In 2008, Colorado's average unemployment rate was 4.9. In 2009, this average increased to 7.3. Nationally, unemployment is at 10 percent.

In the Denver-Aurora-Bloomfield metropolitan area, 8 in 10 industries continue to eliminate jobs. During 2009, the Denver-Aurora-Bloomfield area has lost 43,400 jobs. Only two of ten sectors added jobs. Education and health care added 3,200 jobs, and government added 3,700 jobs in 2009.

Many feel that the unemployment numbers do not tell the entire story. The Labor Underutilization figures, using six different methods of calculations, has the national percentage ranging from 4.7, for those were unemployed for fifteen weeks or longer, up to 16.2 percent. The latter figure includes the total number of unemployed, in addition to marginally attached workers, as well as those forced into part time work for economic reasons. In Colorado, the Labor Underutilization Rate has averaged from 3.3 to 13.7 depending upon which of the six models is used.

An example of the Labor Underutilization in Colorado are the furlough days forced upon many of the state government employees by the budget crisis suffered by the government of the state of Colorado. In the fiscal year ending June 30, many state employees were required to take eight furlough days. Among the 15,500 Colorado executive-branch employees furloughed were workers at state driver's license offices and state history museums. It is estimated that the furlough days will save the state of Colorado 27.2 million dollars. The remaining two furlough days for the current fiscal year are April 2 and May 28.

So what do all these numbers mean? For one, they give strength to the specter of a jobless recovery that haunts many economists and politicians today. A reason for this is that businesses will use their existing labor surplus, in the form of workers who are only working part-time, to meet the initial demand for increased production as the economy recovers. Before employment can be considered fully recovered, all the jobs lost must be replaced. This may take years to accomplish.

Complicating this is the fact that many of the jobs that were lost were already being phased out when the recession begin. The economic downturn merely accelerated the rate these jobs were being eliminated. Some of these jobs were the modern equivalent of buggy whip manufacturers and VCR repairmen. Others were in sectors that are becoming less important. Quite simply, some of the jobs lost are just not going to come back. Workers previously in these positions are going to have to seek employment in other careers.

Caution must be used when trying to predict what sectors are going to generate new job growth. Previous recoveries have illustrated the fact that economists cannot predict where job creation is going to occur. Today's hot sector is tomorrow's dinosaur. This can be the result of new technology or oversaturation.

Both sectors that have generated new jobs in the last year are in danger of becoming oversaturated because of workers switching careers. In addition, both the education and government sectors face budget shortfalls as a result of decreased tax revenue. Only healthcare, which is bundled with the education sector, seems to be a safe bet; this is due to the aging population of the United States.

Many local K-12 school districts are being forced to make cutbacks, due to falling property taxes, either in the form of not replacing retiring teachers or outright elimination of positions. And with the state of Colorado facing another budget shortfall, estimated at one billion dollars, the policy of furlough days for state government employees will continue. The state budget will also affect job creation, both in government and education jobs.