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You can already hear City Council candidates touting Denver’s reported 4.2 percent unemployment rate in their campaigns.
If only it were so.
We’ve been keeping track of Colorado’s real unemployment rate, adjusting for the state’s increasing population and decreasing labor force participation rate. The situation is even more disconnected in Denver. Employment statistics come from the Colorado Department of Labor and Employment (CDLE), and the population estimates come from the U.S. Census.
First, here’s the nominal unemployment rate of Denver, as reported in most of the media:
Looks pretty good. Denver has been on a nice, downward trajectory since early 2010, and we’re almost back to pre-recesssion levels. (Note: seasonally-adjusted numbers for Denver are not available through the CDLE site, which is why the seasonality is so evident here, and so absent in the Colorado charts.)
Unfortunately, as with the state as a whole, the number of jobs hasn’t kept pace with the population growth:
Since the previous peak of employment, in 2008, Denver has 15,000 more jobs, but around 90,000 more people. So why is the unemployment rate down? Because a smaller percentage of the population considers itself part of the labor force:
At its peak, in June 2008, 57 percent of the population considered itself part of the labor force—meaning that those people were either working or looking for work. Since then, the percentage has declined, even as Denver’s population has increased substantially.
What would the labor force look like if participation had kept pace with population growth? The orange line represents the labor force, if that same 57 percent of the population were participating. The blue line is the labor force as reported by CDLE.
That’s about 40,000 people who would be in the labor force who aren’t. If we counted those people as being in the labor force, we would see that the numbers have barely moved over the last five years, only recently dropping in any significant way:
We would have just under 14.5 percent unemployment for the City and County of Denver, if people hadn’t exited the labor force in such numbers over the last few years, or if Denver’s additional population were joining the labor force in proportion to those already here. In order for the real unemployment rate to match the stated unemployment rate of 4.2 percent, Denver would need to have created about 38,000 more jobs than it has.
When this calculation is made nationally, one counter-argument has been that as the Baby Boomers get older, Americans are basically aging out of the work force, with a higher percentage of the population 65 or older. Those people naturally shouldn’t be counted in the labor force.
But in Denver, the opposite is true. According to Census estimates, the percentage of the population that’s 18-64 has increased since the recession, as the city enacts pro-density zoning and planning policies:
It’s not much of a difference: 65 percent to 68.5 percent, but it certainly doesn’t sustain a story of large families and urban retirees.
Either many people working aren’t being counted in the employment figures, or else the employment situation—and thus, the state of Denver’s economy, is far more fragile than we’re being told.
Either way, this has serious policy implications for the route that Denver’s government is taking. The increase in population is not an accident, it’s the result of a deliberate policy of densification. And if the increase in property values and “recovery” in jobs is for an increasingly narrow portion of the city, it also means that fewer and fewer people will be paying the higher and higher taxes needed to pay for politicians’ desiderata, making Denver less and less friendly for the middle class.
Image from Shutterstock
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