The entire northern Front Range, especially metro Denver, was a hot spot coming out of the Great Recession, drawing in young workers from all over the country. But that important driver of economic growth last decade looks like it has stalled and in some areas reversed.
Colorado may have both welcomed and feared the disproportionate flow of new residents last decade. But this decade it will need to find a way to attract its share from a shrinking pool of new workers, and early on it looks like it is falling behind.
“Large urban areas with very large labor markets had power and people were willing to pay up to live there. They have lost that edge a little bit. They are competing more with the suburbs and the exurbs. We expect Denver to be hit hard,” said Adam Ozimek, chief economist with the Economic Innovation Group, which conducted a study of population winners and losers among U.S. counties during the pandemic.
Zeroing in even more, EIG compared population trends of the largest counties, defined as 100,000 residents or more, in Colorado, Wyoming, Utah, Kansas and New Mexico from the middle of 2020 to the middle of 2022.
Denver County, which averaged a 2.4% annual rate of population growth between 2011 and 2019, kicked into reverse, losing population at an average annual rate of 0.3% for the past two years. That deacceleration was among the largest regionally and nationally. As in many places with population losses, it reflected a big drop in international migration, slower domestic migration overall, and a higher death rate because of the pandemic.
Denver, Boulder, Jefferson and Arapahoe counties lost nearly 34,000 residents combined in domestic out-migration in the past two years, according to counts from the U.S. Census Bureau. At the other end, Weld, Douglas and Larimer counties saw net migration of 35,656 people.
Ozimek said the fingerprint of remote work is all over the shift from costlier urban areas to outlying areas where land is still available for home construction. Even though Weld and Douglas counties lack the concentration of jobs that Denver and Boulder counties have, their population growth has been much stronger.
In 2019, 40% of residents in Weld County commuted to another county for work, compared to only 10% of workers in Larimer County and 8% in El Paso County. But the pandemic caused the rate of cross-county commuters to drop to 36%, said Cindy DeGroen, a senior demographer at the Colorado State Demography Office.
Weaker population growth also reflects the big run-up in home prices and rents. The areas with the biggest increases in housing costs are much more vulnerable to an exodus as the economy tries to work toward an “equalization” or rebalancing in real estate values, Ozimek said.
“The urbanization of the last few decades has driven up the cost of living. Those are the places where people feel the most pressure to leave,” he said.
Colorado’s growth relative to other states has been slowing for years, even before the pandemic, said state demographer Elizabeth Garner, and she isn’t in the camp of those saying Denver is out for the count.
“I think it is too early to say whether Denver has lost its draw. This year we will see so many new housing units coming online in Denver proper that Denver could see more growth,” she said.
Broomfield economist Gary Horvath said there are still anomalies caused by the timing of the recovery from COVID policy, remote working, commuting patterns, and the uncertainty of a recession. But he doesn’t see the state or metro Denver recapturing the draw they had before the pandemic.
“Despite the state’s many assets, Denver and Colorado have lost their appeal. There are many reasons for this decline, ranging from policy and social issues to housing issues,” he said.
Where are the hot spots now?
So if metro Denver and the northern Front Range are moving further down the road from hot to not, what regions are seeing their rates of population growth accelerate? Another EIG study gets at that question.
Florida saw its population growth rate jump from 3.2% in the 2017 to 2019 time frame to 4.8% from 2020 to 2022. The South Atlantic region, a stretch of coastal counties from Wilmington, N.C., down to Jacksonville, Fla., has seen population growth accelerate from 3.5% to 4.6%. The southern triangle region, which covers the interior counties of the two Carolinas, the northern parts of Alabama and Georgia, and Tennessee, went from 2.6% to 3.1% in its population growth.
East Texas, hot before the pandemic, got even hotter during it, with an average annual population growth rate that kicked up from 3.3% to 4.3%. The spillover is giving several Oklahoma counties and up into the Ozark region of Arkansas a boost as well. That region has seen population growth fire up from 1.4% to 2.4%.
Those accelerations are happening as the U.S. population overall grew by only 1.8 million people between April 2020 and July 2022, down from 3.3 million people between 2017 to 2019. Looking at just Colorado, the average annual population growth rate went from 1.5% in 2017 to 2019 to 0.5% a year in the 2020 to 2022 stretch.
“At times the discussion about which drives the economy — population growth or job growth — is a chicken and egg argument. In a state with aggressive economic development, the jobs drive the net migration,” Horvath said.
But the pandemic has distorted even that link. Weld County offers an interesting case study. No large Colorado county did better than Weld in adding population during the pandemic. Its 2.8% growth rate matched the pace from 2019 to 2019, ranking best in Colorado and third-best in the five-state region among large counties, according to EIG. And yet, no large Colorado has performed as badly as Weld in restoring the jobs lost during the pandemic.
Weld County needs to add another 13,100 jobs just to get back to where it was in February 2020, according to the U.S. Bureau of Labor Statistics. The state as a whole had recovered pre-pandemic job counts 14 months ago, and most large metro counties before that.
Migration needed even with no new jobs
As long as the state continues to add jobs, then workers chasing those openings should continue to move here, Garner and other economists have argued. And to the degree housing affordability is an issue, they will locate farther out, assuming remote work remains an option. But weakness is emerging on the job growth front as well, although it is hard to tell right now how much of that is statical noise versus the start of a trend.
In February, Colorado ranked 45th among U.S. states with an annual nonfarm job growth rate of 1.6%, which came in below Wisconsin and ahead of Iowa. But the Colorado Department of Labor and Employment released revised numbers on Monday which corrected a material undercount it said coincided with an upgrade in its system during a benchmarking process.
Rather than adding 46,700 jobs in the past year, the new estimates put the gain at 61,200, boosting the state’s annual growth rate to 2.2%. That put Colorado in a tie with Kentucky and Vermont for 33rd place, assuming other states don’t make an adjustment. As recently as September, Colorado was adding nonfarm jobs at a robust 3.8% pace, according to the revisions. Growth is slowing and compared to other states, Colorado is lagging behind, even with upward adjustments.
“We will have a fairly decent idea of where we are in terms of actual job growth in early June. But there will be some phases to this in terms of us being able to understand what is going on and being able to explain it,” said Ryan Gedney, a senior economist with the CDLE on a press call on March 24.
It is important to note that thousands of workers are needed just to replace those retiring in the coming years even if the state stops adding new jobs, and a significant share will need to come from out-of-state.
“Our office has projected 40,000 retirements per year over the next five years in Colorado, assuming increased labor force participation for everyone ages 55 and over, which will result in additional job opportunities relative to job growth alone,” DeGroen said. “We are assuming both job growth and the need for replacement workers for retiring workers will result in higher levels of net migration over the next five years as compared to the last few years in Colorado.”
Get more business news by signing up for our Economy Now newsletter.
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.
