What’s Working: The future of Colorado Springs’ economy and what it takes to live there

Quick links: 8 companies approved for public incentives | Colorado Springs housing market | $104 pay raise| Unemployment loan status

Economic indicators have been bonkers for more than the past year. Rising then slowing inflation, spiking then declining median home prices and labor shortages followed by wage increases have left many businesses and consumers wondering what is next. 

But in Colorado Springs, there’ve been several economic coups — from landing U.S. Space Command headquarters to welcoming a number of expanding employers since December — that have kept the region’s growth pushing past its pandemic recovery. However, even those tracking development offered a cautious outlook on the city’s future Thursday during the annual University of Colorado Colorado Springs Economic Forum. 

“Job growth is still positive, the unemployment rate is still at historic lows,” said Bill Craighead, executive director of UCCS Economic Forum. “It’s kind of like when you’re in your car and the check engine light comes on and you get that feeling in your gut, ‘Oh no, what am I in for?’ But you keep driving. There’s no funny smells or weird noises. You’re starting to think your car’s OK and it was a false alarm. That’s kind of where we are right now.”

Post pandemic, the Colorado Springs area has often fared better than the state and its larger neighbor to the north. In late 2021, Colorado Springs was the first metro area in Colorado to recover all of the jobs it lost in the pandemic disruption. And it has maintained its lead for employment levels, according to state Department of Labor and Employment data. El Paso County has also dominated state economic development activity by attracting eight companies in advanced industries since December. (Boulder was second with five companies approved for incentives if they actually add new jobs.) 

Eve Lieberman, director of the Colorado Office of Economic Development and International Trade, was the keynote at the University of Colorado Colorado Springs Economic Forum on Sept. 7, 2023 at the ENT Arts Center in Colorado Springs. (Tamara Chuang, The Colorado Sun)

But with that comes other challenges, Eve Lieberman, director of the Colorado Office of Economic Development and International Trade, noted at the event.

“As companies like Caliola, Entegris and Meyer Burger choose Colorado Springs for expansion, we need to make sure they have the talent able to fill those jobs,” Lieberman said. “As a state, we now have over two jobs for every unemployed person. We’re aware that Colorado will leave talent behind if we don’t help Coloradans get the skills they need. Right now, there are 600,000 adults with some college (but) no degree, and 200,000 without a high school diploma.”

And there it is again: the mismatch of available jobs to those seeking employment, as this newsletter has documented for the past few weeks. While some workers eschew the stat because they feel jobs don’t pay what they’re worth, the focus on more job training continued this week with another boost from the governor himself. Gov. Jared Polis, also on Thursday, expanded the state’s push for more registered apprenticeship programs (more on this below) beyond the 300-plus that now exist.

But there are other signs of a slowdown. Colorado Springs city sales tax collections in July were slightly behind where they were a year earlier, though the year-to-date was up 0.01%. (Craighead said one factor was lower revenues on building supplies as there were likely fewer home-renovation projects). And available office space has increased from 10% in the first quarter to 10.9% in the second quarter, which is the highest for the city since 2015. That’s better than Denver’s 16.9% office vacancy rate. 

Attracting more companies in advanced industries, like semiconductor and aerospace-related businesses, and offering job training, however, isn’t enough. Making sure residents can afford to live in town are also policies the city must address. 

“Growth is a mixed blessing,” Craighead said. “There are a lot of challenges associated with growth. It can strain resources, create issues in transportation and education, and particularly in housing. As a region, we’re going to continue to face those challenges in the years ahead. But I think I would rather be facing the challenges of growth than the challenges of managing decline.”

Housing and real estate

Higher housing costs in recent years weren’t solely due to demand. Pandemic-era eviction moratoriums resulted in landlords raising monthly rents as soon as the bans ended. In Colorado Springs, rents increased 25% between January 2021 and August 2022, according to ApartmentList data. 

But there was demand by folks in need of more space during the pandemic. That pushed home prices to record highs in Colorado. Interest rate hikes by the Federal Reserve curtailed price growth, even dropping a bit in places like Colorado Springs, where the median price fell 1.9% in El Paso County in July to $476,000 from a year earlier. The median sales price of a house in Colorado Springs, however, is still 43% higher than it was in July 2019.

“Affordability has a lot of different dimensions. But one place we can see this is looking at the point of view of somebody thinking about buying a home in Colorado Springs. How much is their monthly payment going to be,” Craighead said. “In 2020, that monthly payment would have been about a quarter of median household income. Now it’s over 40%.”

That’s not unique to Colorado Springs, of course. He said in Denver, buying a median-priced home required about one-third of the median household income in 2020 but nearly half in June 2023, as seen in this chart: 

Aggravating the housing market these days are mortgage interest rates that are still above 7%.  Homeowners with lower rates are staying put so fewer houses are available for sale. The majority of Colorado homeowners have a mortgage with an interest rate of less than 4%, according to the Federal Housing Finance Agency. While interest rates are expected to fall next year, nobody is forecasting them to fall below 4% again.

But, as noted, home prices are flat or in decline. Colorado Springs rents averaged $1,491 in July, down 4.6% from the peak. There may be a silver lining here, Craighead added, showing a slide that has residential building permits in July near the same levels they were prior to the pandemic. 

“One of the things about fewer existing homes going on the market is that it might actually be a bit of help for homebuilders,” he said. “This pushes people into the market for new homes.”

➔ What’s in the governor’s new apprenticeship order? The state’s official apprenticeship initiative now has 300 active programs and 6,000 participants. Gov. Polis wants more and in a new executive order Thursday set these goals for the state that include state departments must expand their own programs by 50% by June 30; encourage another 100 private companies to add one of their own with support from the state’s Department of Labor and Employment’s Office of the Future of Work; and create 10 more work-based programs for state departments with excessive openings in specific jobs by June 30, 2025. >> Read the order

$104 more per week

For some, earning $104 more per week may not sound like much but for others, it can mean the ability to cover the latest rent hike. That average weekly wage hike is what Coloradans saw in their paychecks in March, compared to a year earlier.

The data is from the U.S. Bureau of Labor Statistics full update of county employment and wages. While Colorado’s average weekly wage growth of 7.1% ranks the state at 34th highest, the $1,559 paycheck puts residents as the 8th highest earners in the nation. 

>> See the rest of the  states at this link

Colorado Sun business stories you may have missed:

Other working bits

➔Pandemic unemployment debt now just a bad memory. At least for state coffers. Colorado had to borrow $1 billion during the pandemic to pay unemployment benefits to eligible workers. That upended the state’s unemployment insurance trust fund, which workers and employers pay into — not taxpayers. Most employers saw premiums rise in order to fill the trust fund back up, but the state did use some federal relief funds to pay it off. 

As of May 2023, the federal loan plus interest has been paid, and the trust fund was back up to $286.6 million by June. The trust fund still has a way to go to get to a “healthy” $1.7 billion to $2.9 billion, which it’s scheduled to reach by the end of 2028. That means employers must still pay higher unemployment insurance rates than prior to the pandemic plus a solvency surcharge. But at least most companies will move to a lower rate schedule in 2024, according to the Trust Fund Status Report, published Aug. 31. >> Read report 

➔ $700,000 in grants for small businesses. Colorado’s share of the $20 million in grants from a federal trade and exports program is $700,000, according to the announcement from the U.S. Small Business Administration. The funds are part of the SBA’s State Trade Expansion Program and will be provided to the state’s Office of Economic Development and International Trade. Last year’s round of $500,000 helped local exporters attend trade shows and conduct international sales trips. OEDIT will start accepting applications for the next round of grants on Sept. 11. >> Details

➔ Renters Rights 101 workshop in Colorado Springs. The city is behind this free session scheduled for Sept. 13, from 6 to 8 p.m. Led by Colorado Legal Services attorney Clinton Albert, the Renters Rights 101 provides information on leases, evictions and updates on new Colorado  housing laws. The event will be virtual or in person at Pikes Peak Library East, 5550 N. Union Blvd. Dial-in numbers are also available. >> Details (in Spanish)

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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What’s Working is a Colorado Sun column about surviving in today’s economy. Email tamara@coloradosun.com with stories, tips or questions. Read the archive, ask a question at cosun.co/heyww and don’t miss the next one by signing up at coloradosun.com/getww