Colorado’s Economy: Strong Yet Uneven

In recent years, Colorado’s economy has been strong, growing faster than the national economy and that of most other states. In August 2017, our state had the second lowest unemployment rate in the nation at 2.4 percent, near its lowest level on record. Colorado’s economy will continue to benefit from low unemployment, as the rate is projected to remain at 3 percent or less in 2018 and 2019.

But a tight labor market and lack of qualified workers have analysts believing economic growth is being held back. They argue Colorado needs more workers; these could be older Coloradans foregoing retirement, new people moving to the state, or simply an increase in the number of people joining the workforce.

Colorado’s Economy: The Implications

As many economists predicted, these conditions are beginning to put pressure on employers to increase wages. In October 2017, average wages in Colorado increased year-over-year by 2.7 percent or $0.73 per hour. However, the pace of wage growth has been much slower than in the recovery periods from past recessions. When adjusting for inflation, average weekly wages have been essentially flat since 2000: They’ve only increased $33, or a little over 3 percent, since 2000.

In our Guide to Economic Mobility, our section on Colorado’s economy focuses on the uneven growth throughout the state, an uptick in low-wage jobs and industries, and continued wealth and income inequality. In Colorado, the top 1 percent takes in 16.6 percent of all income, compared to 20.1 percent nationally. According to the Economic Policy Institute (EPI), this puts Colorado at 21st among the states for income inequality.

Research finds inequality leads to several negative outcomes, including: unequal access to education opportunities; a range of health problems; reduced economic growth; and a shrinking middle class.

The last point is crucial, as income and wealth inequality in America now affect everyone struggling to enter or stay in the middle class. Even within the bottom 90 percent of American households, though, these repercussions are especially severe for those who have historically been looked over by current policies, programs, and practices.

When we look at these factors together, we see how Colorado has one of the strongest state economies in the country, but still many Coloradans are left behind. Find out more by reading the section on Colorado’s economy in our Guide to Economic Mobility.