What’s Working: Colorado business leaders are down on the economy, but not because of inflation

Quick links: Why business leaders are pessimistic | Colorado wages increase | New jobs are paying less | Looming government shutdown | Denver is LGBTQ+ founder friendly| RTD needs workers

Colorado’s economy fared better than expected in the first half of the year, at least if you ask 222 business leaders, which economists at the University of Colorado did. That didn’t stop those surveyed from feeling grim about hiring, profits and expenses for the next six months, though. 

“There are a number of headwinds that pose challenges that we’re watching very closely,” Brian Lewandowski, executive director of the Business Research Division at CU’s Leeds School of Business, said Thursday during a news conference. “And I’ll just describe a few of them: high interest rates, commercial real estate, energy prices, inflation, worker shortages, along with possible government shutdown.”

People dine along Harrison Avenue in Leadville, Aug. 16, 2022. (Hugh Carey, The Colorado Sun)

But surprisingly, inflation wasn’t the top concern as it was in past quarters. To help out with this week’s column, The Colorado Sun’s new journalism resident Clare Zhang reported on the results of the latest Business Confidence Index that should give Coloradans a sense of where the economy is heading in the next six months. 

Of course, there may be more interest in today’s economy depending on what may happen if Congress doesn’t pass a funding bill to keep the federal government going. If nothing passes by the end of the day, many federal workers won’t be back to work on Monday.

UCCS Economic Forum Director Bill Craighead, who attended The Colorado Sun’s inaugural  SunFest event on Friday, joked about all that federal economic data that will be on hold because federally-employed economists won’t be working if the government shuts down.

A westward view of N Tejon St. in Colorado Springs. (Olivia Sun, The Colorado Sun via Report for America)

But he’s really more concerned about what will happen in his community of El Paso County and Colorado Springs, a big military town. And statewide, there’s roughly 45,000 people in the armed forces and 55,700 civilian federal employees, he said, after checking the latest Census data.

“They’ll all get back pay when this is over, but it creates a lot of uncertainty,” he said. “I think they’ll respond by tightening their belts and that will affect local economic activity — the restaurants and coffee shops and things like that. That impacts a huge share of our population.”

We’ll all know more soon, so look to The Sun for more coverage if there is a shutdown. Also, if you missed SunFest and the session with Colorado State Demographer Ellizabeth Garner, I’ll have an update in the next edition of What’s Working. 

Related: Governor orders his staff to form plan to keep Colorado’s national parks, public lands open if there’s a federal shutdown

Business leaders bearish for next six months

The newest Leeds School survey continues Colorado business leaders’ 18-month streak of pessimism on the economy.

On a scale of 1 to 100, the overall outlook for the fourth quarter landed at 43.6, staying below the “neutral” score of 50 — and that’s despite the majority of respondents indicating that the economy has outperformed their expectations so far in 2023. The index has been below 50 for more than a year.

The national economy weighed down the index the most, with business leaders citing high interest rates as their primary concern. 

But they may be getting used to inflation.

Only about one-sixth of respondents said inflation was the primary reason for their response, and some of those felt positive about the outlook.

“Now that we’re back in the 3% range, they saw that as a source of optimism, that we’re not in the 8% range that we were in a little over a year ago,” Lewandowski said.

Brian Lewandowski, executive director of the Business Research Division at University of Colorado Boulder, Leeds School of Business, attending an economic conference in Colorado Springs on Sept. 7, 2023. (Tamara Chuang, The Colorado Sun)

But that doesn’t mean inflation will get better. It may just mean it’s no longer the worst-case scenario.

“As they get more used to having to operate in a more uncertain environment, maybe they do adjust a little bit better,” said Richard Wobbekind, senior economist and faculty director of the Business Research Division.

Though high interest rates have hit the finance and real estate industry the hardest, it’s not just those executives who are concerned. In another analysis, Lewandowski said they removed responses from real estate agents, bankers and others in the financial community. The index still didn’t break 50. Banks determine the flow of money for everyone from venture capitalists to small businesses, who pass the higher costs on to consumers, he said.

Business leaders are a little more optimistic about the first quarter of 2024, possibly expecting lower interest rates by March or April, Wobbekind said.

The hope is that with time, the commercial real estate situation will also improve. But they had the same idea in the last survey, with respondents expecting the fourth quarter to have a better outlook than the third. Thursday’s report proved that wrong.

In the meantime, the potential government shutdown is pushing long-term interest rates up, Wobbekind said. How long those effects will last remains to be seen.

~ By Clare Zhang

Notable forecasts for Colorado:

  • Consumer prices: Colorado inflation expected to end the year at 3.1%, compared with 8% growth last year.
  • Employment: The number of new nonfarm jobs is expected to grow 2.2% this year from 2022. But that’s slower than last year, when employment grew 4%. In August, Colorado gained 42,700 new jobs, a 1.5% growth from a year ago.
  • Money: Colorado’s per capita personal incomes are expected to grow 5.3% this year. In the first quarter, incomes grew 5.1% over last year, ranking the state 37th. 

>> See report

Wages are up again, can you believe it?

That’s according to the latest state jobs data, which estimated that the average hourly wage in Colorado grew 5.2% in August to $35.27 from a year ago.

Coloradans continue to make more than the average worker in America, but it also costs more to live here. There’s the ongoing struggle with incomes trying to keep up with inflation. According to an analysis by the state labor department, wages have grown 3.6% this year but after adjusting for inflation, they’re down 1.9%. Here’s a chart showing the rate of wage growth in Colorado compared to Denver-area inflation: 

Higher pay is probably not too much of a surprise to those who track current affairs. The state’s minimum wage has increased annually for the past few years and more cities are joining Denver with their own minimum wage starting in January. But to some workers looking at their paychecks? Not so much, especially if your salary is that of a public servant. 

“State work is important, but you wouldn’t know it from how much more municipalities pay for the same work,” said Ariana Cuevas, an Aurora resident, who shared a comment on a recent What’s Working reader poll. She said wages are unlivable as a state legislative aide — around $23 an hour with no benefits. “Our state needs to prioritize wages, justice and housing first in order to see desired results from their laws that cover free training for in-demand careers.”

Cuevas, who works for the nonprofit Colectivo de Paz to help the unhoused and migrants find resources, said that while there may be a lot of job openings, who can afford to live here? 

She wrote, in a followup email, “there are so many job opportunities (with free training afforded through House Bill 1246) out of reach for people due to housing instability near the metro Denver-Aurora area, transportation and unlivable wages.”

The monthly wage report comes from the U.S. Bureau of Labor Statistics and doesn’t include all U.S. workers. It uses sample-based estimates of the private sector, said Ryan Gedney, who put the state data together as the senior economist at the state Department of Labor and Employment. 

It’s also an average wage, so it counts entry-level minimum wage earners and the highest-paid executives, which, he added, “can move the needle, but there’s no way to know how or if that impacts the wage estimates from the establishment survey.”

Economists like Gedney look at trends over time rather than just one month at a time. In this case, since inflation began to spike last year, wages have done better at keeping up, though not completely. Those earning six figures may not wince when the price of gasoline goes up 50 cents a gallon, but that certainly impacts lower-wage earners faster.

“Real average earnings are down 1.9% this year but have generally kept up with inflation since it started to spike last year,” he said. “There are of course variances when we look at wage growth by industry, particularly those at the lower end of the wage scale.”

Do newer job openings pay less?

A strange thing has happened since Colorado passed a wage transparency law to improve pay parity equity for women and people of color: Average salaries in job posts are going down.

The full-time median salary culled from thousands of job openings in Colorado was $50,440 last week, down 3% from a year ago’s $51,990, according to Aspen Tech Labs, a recruitment-tech agency that pulls salary data from online job listings. On Wednesday, that median wage had edged up about $500 to $51,033, which is still a decline, if barely.

“If you zoom out over the whole year, it just looks pretty flat,” said Isabelle Woodrow, Aspen’s senior product manager. “Year over year, it’s down 2%. But what’s interesting is if you look at the whole U.S., it’s not. There’s an 8% increase.”

Woodrow plans to do a deeper analysis after September and promises to share her third-quarter observations. But at a high level? It’s probably due to Colorado’s wage transparency law. The state was the first to require employers to include what jobs pay and that requirement started in January 2021.

Nearly 65% of Colorado’s 71,000 online job listings included a salary in September. New York, California and Washington have adopted similar laws, but they only went into effect recently.

The U.S., minus the four states with transparency laws, had just 29% of 1.6 million online job postings with a pay rate, compared with 18% a year earlier.

Hiring signs are posted outside a T.J. Maxx at the 16th St. Mall Oct. 13, 2022, in downtown Denver. (Olivia Sun, The Colorado Sun via Report for America)

“It’s interesting that Colorado has had salary transparency legislation for so long and it’s still flat,” Woodrow said. “I think that could quell some fears from employers that if you do have to disclose the salary that’s going to cause wages to go up a lot. But we’re not seeing that in Colorado.”

That theory jibes with Emmett, a Denver resident who also shared thoughts with What’s Working but asked that his last name not be used. Pre-COVID, he said, he took a pay cut to get a job in Denver because the “Colorado companies have historically underpaid (and) most companies wanted to pay me even less.” 

He then got a big raise during the pandemic as employers were frantically trying to find workers and keep the ones they had. Trends have changed in two years and he may not have been able to nab that raise these days.

“But now Denver companies seem to slip back into underpaying people,” he said. “I think they feel they can do this since so many people are moving to Colorado. So instead of paying people what they are worth, they make low offers because they can just move on to the next one.”

Other working bits

➔ Denver is among top 5 metros for funding LGBTQ+ founders. It’s a small sliver of the estimated $16.1 billion raised between 2000 and 2022 by 142,000 founders who identify as LGBTQ+. But the Denver region scores higher on entrepreneurship equity than other areas, including Austin, New York City and Chicago, according to StartOut, a nonprofit supporting LGBTQ+ entrepreneurs. Still, there’s room to improve, StartOut believes. The Denver region, where founders raised $509 million in funding that helped create 1,251 jobs, could have achieved double the amount and created 5,230 jobs had there been equal access to resources. Overall, though, StartOut did not identify any policies that could statistically change Denver’s outcomes, unlike several other metros nationwide. >> Report, StartOut interactive map

A bus leaves the RTD transit station at Eastlake & 124th in Thornton on Thursday, December 1, 2022. (Valerie Mosley, Special to the Colorado Sun)

➔ RTD hiring 181 bus operators. The Regional Transportation District has had a challenging time filling bus driver jobs, maintenance and mechanics, so it’s having a job fair Monday and Tuesday between 10 a.m. and 2 p.m. at its Platte office in Denver’s RiNo neighborhood. The agency said 19% of its bus operator jobs are open, for a total of 181 out of 952 at the end of August. Those jobs start at $24.96 an hour and training is provided. There are also 48 bus maintenance and repair positions, which start between $29.10 and $31.46, depending on the role. Applications are being accepted on site. >> Details

➔ 60% of public service workers under 35 may switch jobs soon. Serving their community and having job satisfaction are among the top reasons why young people take jobs in public service. But the financial stress is a top reason why they leave, according to a new report from MissionSquare Research Institute, a public service workforce research firm. While 60% of the 1,004 young public-service workers surveyed are thinking of leaving their jobs in the near future, most seek a higher salary, compared to burnout (third) or seeking greater work-life balance (sixth). >> Read report

Thanks for sticking with me for this week’s report. As always, share your 2 cents on how the economy is keeping you down or helping you up at cosun.co/heyww. ~ tamara 

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