Does Colorado Have a Good Economy?
With so many spectacular sights, magnificent views, and adventurous attractions, it’s no wonder that Colorado is one of the most popular vacation destinations in the U.S. Whether you want to conquer a peak, swim with some crocodiles, or just want to unplug from the hustle and bustle of everyday life, Colorado has a lot to offer. But beyond the extraordinary geography and breathtaking landscapes, is the economy of Colorado good? Is it a place you would prefer to call home?
A Growing Economy
The last few years have seen an incredible bounce back for the economy of Colorado. Thanks in large part to tourism and recreation–which contribute over a billion dollars to the state’s GDP–the unemployment rate has steadily declined, falling to 4.8% in 2018, the lowest it’s been in over a decade. What’s more, the number of people filing for unemployment benefits has also declined by 16% from its peak in April 2020. According to the U.S. Bureau of Labor Statistics, there are currently over 75,000 jobs available in the state.
Along with an improving labor market, the number of people moving to the state has also increased. Between 2010 and 2018, the population of Colorado increased by 11.2%, from 2.96 million to 3.41 million. If recent trends continue, the state could see another 1 million people moving there by the year 2050.
A Sign Of Stability?
While the economy of Colorado is undoubtedly vibrant, there is still plenty of room for growth. With a still-growing population and a steadily improving job market, it’s imperative that the state makes the most out of its human and physical capital. One area where the state could grow its economy is technology, specifically in the cloud computing and internet services industries. As more and more people become reliant on the cloud for essential services like banking and personal information storage, businesses operating online will likely have a significant impact on the economy of Colorado.
More Than Meets The Eye
One of the most significant impacts that the economy of Colorado is experiencing at present is the rise of the “gig economy.” Thanks to companies like Uber and Lyft, along with the increased reliance on freelance work that they embody, more and more people are being defined by their professional connections rather than their demographic background. While this may seem like a positive development, the gig economy is a double-edged sword, especially for older workers. If you rely on your income from one source, you’re putting your job security and the security of your retirement in the hands of one company. What’s more, as more and more businesses turn to online marketplaces for labor, there is the danger of employees getting pigeonholed by their role at one company and unable to transition to another. Even worse, in a time of uncertainty, employees may choose to take the job security that these platforms provide rather than put their trust in a small business that they know nothing about.
Ultimately, the future of work in the U.S. is somewhat uncertain at present, and it’s likely that we’ll see more and more people moving towards self-employment and independent contracting as a result. One place where this trend is already prevalent is the ghost marketing and copywriting industry. An increase in online shopping has led to a rise in online-only businesses, which are defined as those that exist solely online as opposed to those that have a physical presence as well. According to the U.S. Commerce Department, around 20.9 million U.S. businesses were considered online-only as of 2019, and are projected to represent nearly 29.5% of all U.S. businesses by 2023.
The trend is being driven by a combination of factors, including the increasing accessibility of the internet, increased smartphone usage, and the subsequent decrease in the need for people to visit physical locations for shopping. It’s also being fueled by a rise in the number of ‘mom and pop’ stores, as well as independent contractors who want to be their own boss and avoid relying on anyone else for earnings. This last point is significant because it reveals a shift away from employee-centric to customer-centric thinking, something that businesses and employers should be wary of.
Pricing And The Evolution Of Luxury
The cost of living in Colorado will surprise you, especially if you’re not used to paying so much for relatively simple commodities. In fact, according to a 2019 report from Numbeo, a cost-of-living comparison website, the price of living in Colorado is 27% higher than the national average. What’s more, according to the U.S. Census Bureau, the cost of living in Colorado is 28% higher than the cost of living in San Francisco.
The reason behind this is the relatively high cost of real estate and travel in the state. For example, hotel rooms and restaurant checks are considerably more expensive in Colorado than the rest of the country, as are retail store prices. What’s more, tourism-related industries like food and beverage service, lodging, and recreation (including attendance at sporting events) all contribute significantly to the state’s GDP. In 2018, these industries generated over 2.7 million jobs and $26.8 billion in wages and salaries.
The state of Colorado is very much a ‘pay as you go’ state. This means that income taxes are high and corporate taxes are relatively low. In 2018, Colorado had one of the least generous tax codes in the country, with sales tax rates as high as 7% and an income tax rate that ranged from \x34.28% to \x44%. Additionally, the cost of living in the state is relatively high, with rental properties, for example, costing an average of $16,000 a month.
However, in an effort to curb its rising budget deficit and encourage businesses to relocate there, the state government implemented a number of income tax cuts in 2019, primarily affecting low-income and middle-class families.