As depicted in the Bureau of Labor Statistics graph below, the Rocky Mountain Region consistently out performs other regions in the nation in terms of GDP growth.
Click on the graph to see the full image
A curious question is why does the unemployment rate in the region, while lower than the nation, seem to be lagging the nation in terms of the degree of improvement (or lack thereof). The key factor centers on employment growth versus population growth. The Rockies continue to attract new households from around the nation, albeit probably at slower rates as migration has slowed in current economic malaise. Since 2000, Colorado has only added 1 new job for every 8 additional people in the state. That compares to a labor force participation rate of 1 job for every 2 person.
With new people comes consumption and investment thereby raising GDP, but not necessarily adding jobs at a rate sufficient to lower the unemployment rate.
Proprietor’s income represents about 9% of personal income nationally. This is the income reported on IRS tax returns under Schedule C. It excludes self employment where individuals work through their corporation or LLC. In many cases it represents supplemental income to households. For instance, when my wife decided to raise Labradoodles, we reported the additional income and expenses on Schedule C. Because of the reporting, the activity shows up as proprietor employment.
From 2001 to 2008 non-farm proprietor’s employment grew 4.7% per annum in Colorado as compared to 1.7% per annum for non-farm employment. This can be seen in the indexed chart which shows that while non-farm wage and salary employment dropped by 1.2% in the 2001 recession, bottoming out in 2003, non-farm proprietor employment never decreased. By 2008, prior to the current downturn, the gap became quite dramatic. Unfortunately there is a significant lag time in the BEA reporting this data and thus we can only speculate what might be occurring in 2010. In the 1991 recession proprietor employment did decline.
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This is part of a long-term trend where the fastest growing source of employment, both in Colorado and nationally is proprietor employment. Over the 30 years from 1977 to 2007, proprietor employment in Colorado tripled while the State’s population almost doubled and Colorado total employment more than doubled. The trend is gaining momentum as the growth rate in proprietor employment is increasing relative to growth rates in total employment and population. The same trends can be seen nationally, albeit at much lower level across the board.
By Tucker Hart-Adams (Originally Prepared for the Colorado Springs Summit on Aging in April, 2010) There are 83 million Baby Boomers (ages 45-63) in the U.S., about one fourth of the population. Never before has such a large portion of the population been approaching retirement. In Colorado in 2010, 25.0% of the population falls in the Baby Boom category, individuals born between 1948 and 1964. In El Paso County, which is slightly younger than the state as a whole, it is 23.9%. There were 149,237 Baby Boomers in El Paso County in 2010, 11.6% of the state total. (See El Paso County Senior Population graph above.)
The Dependency Ratio is defined as the population over 65 divided by the population 20-64, i.e., the ratio of those retired to those working. (See El Paso County Dependency Ratio above.) This means that where in 2000 there were seven people of working age for each person of retirement age, that will drop to five workers per retiree in 2015 and less than three workers per retiree in 2035. The government’s unfunded obligation to give the elderly pension and health care benefits is $483,000 per household (Economist, June 13, 2009, p. 34). There were 19,319 military retirees in El Paso County in 2008, 41% of the state’s total. These military retirees brought benefits in the form of cash payments amounting to $512 million annually (Colorado Springs Chamber of Commerce). Veterans comprised about 36% of El Paso County’s retirees in the 2000 Census. Data from the 2000 Census showed that people over 65 were more likely to move out of Colorado (5.3% of out-migrants) than to move into Colorado (4.7% of in-migrants). This has implications for El Paso County as the Baby Boom begins to age past 65, starting in 2013.