Colorado unemployment rate returns to pre-pandemic levels

The Colorado Department of Labor and Employment announced Monday that the state’s unemployment rate was 2.8% in January, returning for the first time to pre-pandemic levels.

“With Colorado’s unemployment rate dropping below three percent, it is clear that Colorado is the best place to live, work and do business,” Gov. Jared Polis said in a news release. “As we continue to grow our strong economy, I am committed to saving people money, cutting red tape and expanding opportunities to help support our workforce.”

January’s unemployment rate marks the ninth consecutive month of the unemployment rate below 3%. While those numbers are a strong showing overall, some economists argue that more needs to be done to ease further systemic issues brought on by the pandemic.

“Digging below those top-line numbers, you can see that people who earn the lowest wages and the industries they work in, which were hit hardest by the pandemic, are just now starting to reach pre-pandemic recovery levels,” said Kathy White, executive director of the Colorado Fiscal Institute. “(These numbers) say to me that now is the time Colorado lawmakers should be working to address the inequities revealed by the pandemic and ensuring that the systems we have to ease downturns are better prepared to meet the needs of all Colorado working families.”

One of the most important ways the state can prepare for the next economic downturn is to make sure that systems like unemployment insurance are modernized to serve more low-wage workers, said White.

Colorado had a peak unemployment rate of 11.6% during the pandemic, compared to a national peak of 14.7%, according to the Bureau of Labor Statistics. Today, the national unemployment is also back to pre-pandemic levels at 3.6%. 

Colorado’s labor force participation rate increased to 68.1% last month as well, just below 68.6% at the start of the pandemic. Annually, Colorado had the fourth highest LFPR in 2022 and has outcompeted Georgia and Texas for company expansion across state economies.

“More entrepreneurs are starting businesses in our state and we are outcompeting other states for businesses and jobs,” Polis said in a press release.

“These (unemployment) numbers show that generally, on a broad level, our economy is on the right track,” said Andrea Kuwik, a senior policy analyst at the Bell Policy Center. “But then it’s also important to be thinking about, even if people are employed, are they making enough money to afford rent? Can they afford things like health care or childcare?

“As we start to think about what the elected leaders can do in our state,” she added, “it’s also important to think about how to policies that are being implemented could reduce some of the costs people are experiencing.”