Colorful Commentary

Pathways to Prosperity Blog Series:  The Importance of Productivity, Wages and Shared Prosperity

Posted November 15, 2017 by Esther Turcios

By Esther Turciosprosperity

At the Colorado Fiscal Institute, we advocate for fiscal and economic policies that promote equity and widespread prosperity in Colorado. It is public investment, funded by sound fiscal policies, that supports economic well-being and thriving communities.

But what do we mean by “widespread prosperity?” Widespread or “shared” prosperity means that everyone has the opportunity to become economically successful. It also means that as Colorado continues to grow, all people are equitably reaping the benefits of economic expansion. Simply put, it means people in every community across the state have access to opportunities to learn, work, and earn a good living to support themselves and their families. When everyone can participate in the economy in a meaningful way, we are all better off.

Unfortunately, in Colorado, like most states, prosperity is not shared in an equitable way across all communities.  Whether it is gaps in income between genders or races, disparity in wages and productivity, or differing achievement levels in education, the divide between those on top and those on the bottom is increasing all the time.

A Lack of Equity in Sharing the Benefits of Increased Productivity 

The unfortunate reality is that even with our recent, rapid economic growth, Colorado is lagging behind in spreading prosperity among all communities.  This is particularly true with how the gains from productivity are shared between employees and corporate shareholders.

Jobs that pay too little for people to get by are growing as a share of Colorado’s economy and the wages those jobs pay are shrinking. That’s not only bad for people in those jobs, it’s detrimental to the economy as a whole.

According to an analysis by CFI, the portion of total jobs that are “low-wage” has been on an upward trend since 2010. This means more Colorado workers are in low-wage jobs. Low-wage jobs are those paying less than what a full-time worker would need to live above the federal poverty line for a family of four. That annual threshold was $24,300 in 2016, which translated to an hourly wage of about $12.48 an hour.  More than 600,000 Coloradans — 25.2 percent of workers — have jobs classified as low-wage by this definition.

We know that a main pathway to shared prosperity is increasing the wages of workers. But despite increasing productivity, worker wages have been stagnant over the past 40 years. According to a report by author and economist Peter Fischer, the stagnation of real wages has left many workers behind. Fischer finds that real wages did not grow at all from 2008 to 2014, and were just 4 percent higher than they were in 1972. Yet, over that same time period, the productivity of American workers nearly doubled. If the minimum wage had grown with productivity, it would be more than double what it is now.

In a functional economy, there is a strong link between greater productivity and higher wages. An increase in productivity and new income generated from said increase should be returned to employees in the form of higher wages. However, this is not what has been occurring and shared prosperity is suffering because of it.

A Lack of Prosperity and the Racial Wealth Divide 

CFI is also seeing a widening gap in wealth between different races in Colorado. Wealthy, white individuals and families are becoming richer while low and moderate-income individuals and families, particularly communities of color, are falling further behind.

In 2016, it was reported that the 400 richest Americans own more wealth than the entire Black population and one- third of the Latino population combined, for a total net worth of $2.34 trillion. This translates to an average household divide of $500,000 between Black and Latino households compared to White households. This divide can be directly attributed to historical policies and practices, such as housing and lending discrimination, that have created barriers for these communities to achieve economic success and widespread prosperity.

We also see this growing racial wealth divide manifesting in Colorado. According to a report from the Colorado Trust, today, 22.9 percent of American Indians have incomes below the federal poverty line, compared to 21.1 percent of Latinos, 20.2 percent of African Americans, and 15.6 percent of Asians. In comparison, only 8.9 percent of White households have incomes below the federal poverty line.

Next Steps 

There are choices we can make and active roles we can take in shaping our public policy to better address this lack of shared prosperity. Public investments in our communities can increase productivity and equitable fiscal policies can result in more broadly shared economic benefit. Colorado must invest in policies that focus on the education and skills of workers, top-notch infrastructure, a healthy workforce, and entrepreneurship and innovation. It’s time we talk about investing our state and local dollars into essential programs that we interact with every day, like our schools and our transportation systems, so we can create more opportunities for all communities to prosper.

Additionally, an equitable tax code plays a crucial role in creating widespread prosperity for communities. This is especially important when addressing economic security for communities of color.  Colorado’s flat income tax system sounds equitable because everyone pays the same rate, but it fails to consider that low and middle-income earners spend a much greater share of their income on things that are taxed through sales taxes. When we look at all state and local taxes, we find that the poorest Coloradans pay 8.4 percent of their income in taxes while the wealthiest Coloradans only pay 4.6 percent in taxes.

It’s time for us as a state to start deconstructing the actual barriers that prevent our communities, particularly communities of color, from achieving economic success. Our priorities should focus on promoting productivity, higher wages, and shared prosperity by breaking down barriers to quality public investments and addressing inequitable tax structures.

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Tune into our next blog “How Education & Job Training Boost Productivity”  where we will discuss in greater detail how investments in education and job training increase shared prosperity.

Get Your Tickets to Fiscal Forum 2018 Now!

Posted November 10, 2017 by Kathy White

thomas_frank_2012

Fiscal Forum 2018
Friday, January 12, 2018

CFI is excited to announce that our keynote speaker for the 2018 Fiscal Forum is noted author, political analyst and historian, Thomas Frank. Frank is the author of numerous books, including “Listen Liberal” and “What’s the Matter with Kansas.” A former columnist for the Wall Street Journal and Harper’s, Frank is the founder of The Baffler magazine and today writes for The Guardian.

We’ll also have economists from Colorado Legislative Council Staff and the Governor’s Office of State Planning and Budgeting to give us the lowdown on the state budget and local economy, as well as national experts from the Center on Budget and Policy Priorities to explain what’s happening in Washington D.C. and how it will affect Colorado.

You won’t want to miss this year’s Fiscal Forum. Get your tickets today!

Fiscal Forum
Friday, January 12, 2018
8:30 a.m. – 1:30 p.m.
History Colorado Center
1200 Broadway
Denver, CO 80203

You won’t want to miss this event, RSVP today!

Photo credit: Larry D. Moore CC BY-SA 3.0

How the House Tax Proposal Would Affect Colorado Residents’ Federal Taxes

Posted November 7, 2017 by Carol Hedges

rsz_captureOn Thursday November 2nd the House Ways and Means Committee introduced the Tax Cuts and Jobs Act in the House of Representatives. It contained the same major flaws as prior GOP tax plans and frameworks. The House GOP tax plan prioritizes tax cuts for the wealthiest households and profitable corporations, it would dramatically increase the deficit, which would likely force future budget cuts to programs like Medicaid, Medicare and safety net programas, and it offers no benefits to most low-income working families: instead, it hurts many.

This plan would be detrimental to our nation as a whole and to communities across the states, including Colorado communities. The Institute on Taxation and Economic Policy (ITEP), recently released state specific data that looks at the impacts of this plan on Coloradans. The data includes:

  • The share of tax cuts in Colorado going to each income group in 2018 and 2027.
  • The average tax cut for each income group in those years, in dollar amounts.
  • The average tax cut for each income group in those years as a share of income.
  • The fraction of taxpayers in Colorado who would pay higher taxes under the bill.

Additionally, ITEP released a full report which found that the richest Americans benefit most from the Tax Cuts and Jobs Act.

Click here to read about Colorado specific data.

Click here to read the full report. 

 

 

 

TABOR at 25: An Outdated Artifact for Tomorrow’s Economy

Posted November 3, 2017 by Carol Hedges

by Carol Hedges, Executive Director

Twenty-five years ago today, Colorado voters approved adding Article X Section 20 to the state constitution, known to us as the Taxpayer Bill of Rights (TABOR).  That same year, Motorola introduced one of the first handheld digital mobile phones. 

Motorola International 3200At the time, the phone was an important – and innovative – step for mobile technology. But it was bulky, heavy, and shaped like a brick. It couldn’t send or receive text messages. There was no internet and you couldn’t get directions from Google Maps. Charging the battery took five hours, and it only lasted for an hour or so of talk time.

If you got your hands on one today, that same phone would still work on certain networks. But faced with an option of that over one of today’s smartphones, with all its capabilities built for modern life, what would you choose? What would you want to rely on to communicate and connect with the world today and into the years ahead?

Colorado is facing a similar predicament when it comes to TABOR – an outdated idea that’s outlasted its questionable usefulness. Twenty-five years after its passage. TABOR remains a dominant influence in Colorado’s fiscal landscape. But is it really the governing policy that we want to move forward with into the next twenty-five years?

Over the last two and a half decades, we’ve talked a lot about TABOR – how it severely limits Colorado’s ability to invest in ourselves or benefit from economic growth, how it’s made our economy easier to bust when recessions hit and harder to boom when they end, and how it provides an easy avenue for elected officials to abdicate their responsibility to make decisions about investing in schools, roads, health care, and jobs.

Many who live in Colorado today – which is nearly 2 million more than in 1992 – may not be familiar with all the ramifications of the controversial constitutional amendment that barely passed on its third trip to the ballot. But understanding the last 25 years of fiscal policy in Colorado is not nearly as important as looking ahead to the next 25 and figuring out what kind of state we want and how we’re going to support that endeavor.

As we look ahead and try to sort out how to best keep Colorado awesome, we need to have honest debates about changing technology, an evolving economy and dramatic growth if we are to develop better systems and structures that can help our state and everyone in it thrive in the decades to come.

The Colorado of the future needs fiscal policy that actually supports our way of life in Colorado, by making sure we don’t keep kicking costs for things like infrastructure down the road, by making sure we’re actually paying for ourselves as we see waves of new population growth, and by making sure we can shift and adapt in smart ways as the economy evolves.

Between now and 2040, another 2 million people are estimated to move to our state. That’s a staggering number to think about when we’re not even keeping up with the demands of our growth now. How can we realistically expect to do so going forward, without some significant changes?

Over the coming weeks, CFI will be publishing a series of blog posts that explore details on how TABOR constrains our ability to adapt to economic and cultural changes that threaten our future.

The 25th anniversary of the passage of TABOR is not a cause for celebration, it is a call for a smarter, better way forward in the next 25 years.

We better make sure we have a phone that works.

Outdated Tax Laws Could Hurt Colorado’s Amazon Chances

Posted October 30, 2017 by Elizabeth Cheever

By CFI Economic Policy Analyst Elizabeth Cheever

Who else is sick of hearing about this

Who else is sick of hearing about this

You may have heard that tech giant Amazon is seeking a home for its second headquarters (HQ2). The online retailer promises 50,000 highly-paid jobs and solicited bids from cities across North America; 238 proposals were submittedCities have scrambled to offer creative incentives and attention-grabbing stunts, like a large cactus, giant Amazon boxes, and $7 billion dollars in tax breaks.

Tax incentives have become common practice in state efforts to lure employers. But as the trend grows, economists and researchers have pushed back against the notion that companies relocate because of tax breaks alone. Analysis shows investment in public goods like schools and transit are what make skilled workers and their employers want to put down roots. For evidence, look no further than the RFP released by Amazon in September.

 

Denver and Amazon: is it a match?

Denver and Amazon: is it a match?

On Amazon’s wish list? A host of traits that require public investment:

  • A location with the potential to attract and retain strong technical talent.
  • Proximity to an international airport.
  • Proximity to major highways. 
  • Access to mass transit.
  • Cultural fit, including a diverse population and excellent institutions of higher education
  • Community/Quality of Life: We want to invest in a community where our employees will enjoy living, recreational opportunities, educational opportunities, and an overall high quality of life.”

Denver has an international airport, several universities, and it’s a beautiful place to live. But from a fiscal perspective, Colorado’s antiquated tax laws could make Denver a poor candidate for Amazon’s HQ2. The issue is not that Colorado can’t top New Jersey’s $7 billion offer. Amazon wants a community with strong public investments, and there is no way to hide Colorado’s dismal numbers.

If Amazon’s HQ2 team looks at the data, they’ll find Colorado ranks 42nd in the U.S. in per-pupil spending on K-12 education. That’s down from 26th in the nation in 1991, the year before TABOR passed and restricted the state’s ability to fund crucial public investments. Setting up shop near some of the country’s most inadequately-funded schools could put a serious damper on Amazon’s ability to recruit top talent. Higher education budgets in Colorado are routinely slashed because the state lacks revenue, which deprives our public universities of competitive resources and makes tuition prohibitively expensive.

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Because the legislature can’t raise revenue, Colorado also lags behind in transit funding: 70% of the roads in our state are in poor or mediocre condition, which costs drivers more than $1 billion in extra repairs and maintenance each year. Colorado’s population is ten times the size of Wyoming’s, but we spend only twice as much on transportation. Front Range residents who want to take advantage of Colorado’s natural beauty usually find themselves stuck in trafficand lack of funding means Colorado can’t keep up with transit needs.

Colorado’s tax laws are antiquated, and they may make our state less appealing to employers like Amazon. What’s more, TABOR’s outdated restrictions limit the benefits of an Amazon move to Colorado. Amazon claims to have invested $38 billion in Seattle between 2010 and 2016. That pitch is exciting for prospective HQ2 cities because it means more jobs and highly paid workers, but also more revenue for the city itself. That means more revenue to fund stronger public investment: better roads, good schools, higher pay for teachers and firefighters. Yet, in Colorado, those benefits are cappedliterallyby TABOR. You can read more about why TABOR’s economic growth formula is a bad one here, but the bottom line is that only a small slice of Amazon revenue could be used for public investment. Much of it would be refunded to taxpayers, and chances are those TABOR rebates won’t even cover the extra $287 Colorado motorists sink into vehicle maintenance every year because of poor road conditions. 

Post-Amazon plan to afford Denver housing: rent this tiny home with 6 of your closest friends

Post-Amazon plan to afford Denver housing: rent this tiny home with six of your closest friends

Amazon also promises to create 50,000 jobs with an average salary of $100,000. To the increasing number of people concerned about housing affordability, that sounds less like a sunny prediction and more like a threat. Colorado is already the 11th most expensive state for housing, and Denver is in the midst of a housing crisis. The most recent analysis shows Metro Denver’s vacancy rate is at 5.7%, compared to 7% nationally. Average rent in Denver is $1,382/month. Denver residents must earn at least $25/hour to afford a two bedroom apartment, meaning minimum wage workers need the equivalent of three full time jobs. Amazon’s presence would put further pressure on the Denver housing market, but Colorado still won’t have the funds for effective affordable housing programs.

We love living in Colorado, and we can’t blame people for wanting to move here. But our outdated tax laws keep us from being able to share resources, prosperity, and opportunity among all Coloradans. TABOR restricts Colorado’s ability to be competitive and invest in projects that benefit everyone. Amazon is just one of many examples. Maybe we’ll have a shot at HQ3?

New report: Trickle-down Dries Up

Posted October 26, 2017 by Ali Mickelson

By Ali Mickelson

“Trickle-down” economics is an archaic theory that suggests that providing tax cuts for the wealthy eventually seeps down to middle-class Americans and creates jobs, raises wages and increases economic development. Despite extensive evidence that this type of tax policy is unsuccessful, conservative lawmakers are still advocating for the elimination or reduction in income individual income taxes as a way to spur economic growth.

The most recent and visible example of the failure of trickle-down policies occurred in the Kansas, where Governor Sam Brownback dramatically reduced personal income tax rates, claiming that these changes would “act like a shot of adrenaline into the heart of the Kansas economy.”

Unfortunately, the opposite was true. Promises of immediate economic improvement failed to materialize and state revenues plummeted, resulting in cuts to services, delays to road projects, and underfunding in schools. Recognizing that the tax cuts had created a financial and budget crisis, a group of bipartisan lawmakers reversed the tax cuts earlier this year.

A new analysis by the Institute on Taxation and Economic Policy (ITEP) further proves that tax cuts aren’t the solution to thriving economies. The report, titled “Trickle-Down Dries Up” finds that states with the highest income tax rates actually experience higher economic growth than states without individual income taxes. Furthermore, states with higher individual income tax rates have higher income growth rates, increased employment and fairer tax systems.

ITEP picture 1The study looks at the nine states with the highest top marginal income tax rates and compares them to the states with no personal income taxes. Examining ten years of data shows that states levying the nation’s highest income tax rates performed better in economic growth rates, per capita and disposable income growth and employment than states without an income tax.

The analysis also shows that states without personal income taxes rely more heavily on revenue from regressive sales and excise taxes, which has resulted in higher tax rates for low-income families, and lower overall tax rates on the wealthy.

ITEP notes that while tax policies contribute to economic growth, states also need tax revenue to provide good public schools and to support public health, public safety and infrastructure. All of these things fuel economic growth. Cutting personal income taxes is an ineffective and single-minded approach to a complex issue.

Carl Davis, director of research and author of the report summarizes the findings, stating “while proponents of income tax cuts often point to the states without personal income taxes as a model to strive for, these states have actually been less successful in fostering economic growth than states with relatively high-income taxes. The track record of states not levying income taxes suggests that the rhetoric of economy-boosting income tax cuts does not match the reality.”

For more information and to read the full report, click here: https://itep.org/trickle-down-dries-up/

Poverty, Race, and Population Boom: 5 Census Takeaways for Colorado

Posted October 25, 2017 by Caitlin Schneider

By Elizabeth Cheever and Michael Wu

The Census Bureau released state-level economic and poverty numbers for 2016 last month. Colorado’s data follow the trends seen nationwide: increases in household income, decreases in poverty, and more people with health insurance. At CFI, we can’t let a juicy set of numbers go by without crunching them, so here are five takeaways from the latest Colorado Census data.

This analysis includes a sample of counties across Colorado. These counties were selected to show a broad range of economic and demographic factors.

1. The basics have improved since the recession, but too many people still live in poverty.

In 2016, median household income in Colorado was $65,685. The overall poverty rate in the state is 11%, and the child poverty rate in Colorado is 13.1%. Broadly speaking, that means Colorado is doing better than it was before the great recession. In 2007, the overall poverty rate was 12% and the child poverty rate was 15.9%. Below you’ll see it’s a little more complicated than that: counties along the Front Range and I-70 corridor have bounced back, but many rural areas are struggling. And let’s not forget: the 2016 poverty rate means nearly 600,000 state residents – including 162,000 children – live below the poverty line in our state.

 

2. The Affordable Care Act (ACA) and Medicaid expansion have helped thousands of Coloradans get health care.

The numbers speak for themselves: expanding Medicaid in 2014 made it possible for hundreds of thousands of Coloradans to get access to health care. Nearly 1.4 million people in our state are covered by Medicaid, and 40% of children in Colorado rely on Medicaid for medical care.

Health Coverage #2

People in counties with high median incomes are still more likely to be insured, but the ACA has helped shrink that gap. Living in poverty means basic needs often go unmet. Under the ACA, health insurance is one less thing struggling families need to worry about.

 

3.  A population boom and a more diverse state affect who thrives in our economy.

Colorado’s population rose by more than half a million, or 14%, between 2007 and 2016. Along with the major population influx, our state’s racial makeup continues to diversify—a trend that is expected to continue. White Coloradans made up 70% of the population in 2016 (compared to 72% in 2007) and Latinos are 22% of Coloradans in the most recent census, up from 20%. More than ever, it is crucial that our economy works for everyone. The children in Colorado’s schools today will be the workers and taxpayers supporting our aging population in the future. Investing in children of color, making sure they have access to quality education and economic opportunity, is an investment in prosperity across the state.

Boom in Population #3

4.  Colorado’s county poverty numbers tell a more complex story.

Comparing poverty rates among counties reveals significant differences in prosperity and economic well-being across Colorado. Examining county-level data is important, because state totals can obscure the struggles of rural communities. All Coloradans have an interest in seeing statewide economic prosperity, not just concentrated wealth in certain areas.

#4

5.  Racial inequality persists throughout the state.

#5a

The census data show stark racial inequality in Colorado. People of color face significant barriers on the road to economic security. Latinos in our state are more than twice as likely as whites to be poor, and nearly a quarter of Native Americans live below the poverty line. When opportunity is limited for any Coloradan, our state economy misses out on prosperity, innovation, and growth.

#5b

Forecast Five: September 2017 Revenue Estimates

Posted September 20, 2017 by Chris Stiffler

1. The devil is in the details

The budget that legislators will begin writing this January (FY2018-19) is projected to be $666 million (or 6 percent) larger than this year’s budget (FY2017-19).  Not all the increased revenue is from economic growth, as $116 million comes from accounting adjustments in this year’s budget, resulting in more money in carryover from FY 16-17.  About $350 million of the increase will be needed to keep pace with growth in students and growth in mandated Medicaid expenses.

giphy-downsized

 

 

 

 

 

 

 

2. SB17-267 created some flexibility for the General Fund

SB17-267, which exempted the Hospital Provider Fee revenue from the TABOR revenue cap, reduced the FY 2018-19 TABOR rebate obligation by $180 million making that money available for General Fund investments. With the passage of SB17-267, there are no TABOR rebates projected though FY2019-20.

3. Colorado’s tax code is amplifying the urban-rural divide

Many rural areas in Colorado aren’t benefiting from the same rapid growth happening in the Front Range. Rural districts have a harder time funding local governments and schools because their property value isn’t growing like it is in the metro area. The Gallagher amendment, a constitutional component of our tax code, aggravated the problem by requiring an automatic drop in the state residential assessment rate (the portion of housing property that is subject to property tax) from 7.96% to the 7.2%.  The rapid growth in property value around Denver is constraining local governments whose area hasn’t seen the same growth.

4. Colorado’s economy is booming, but wage growth hasn’t kept up

Unemployment in Colorado is 2.4 percent—2 percent lower than the national average and a clear sign of our state’s strong labor market. Colorado workers are in high demand, but salaries and wages aren’t growing as expected. Employers have not yet started to increase wages, despite huge gains in profit. Corporate profits in the U.S. are at historic highs while employee compensation as a portion of the economy is at a historic low. Jobs are more readily available than ever in the Front Range, but a high cost of living and stagnant wages mean making ends meet is still a challenge for many Coloradans.

 

5. The aging population continues to have a larger and larger impact on the state budget

200w_dAs more Baby Boomers continue to age and leave the workforce, Colorado’s budgetary and employment landscapes change. The Medicaid caseload increases, which means more spending just to maintain current levels of service. Costs associated with an aging population mean more state revenue is spoken for, and that $666 million shrinks. The cost of Colorado’s homestead property tax exemption alone, a property tax break to seniors, is growing at 8.5% from FY 17-18 to FY 18-19, creating a General Fund obligation of $145 million for next year. Aging demographics may also explain some of the sluggish wage growth in Colorado. Older, higher-paid employees are leaving the workforce and being replaced by an influx of younger, lower-wage workers. This trend can contribute to lower average wages and constrain growth.

New Blog Series: The Real Path to State Prosperity

Posted September 11, 2017 by Esther Turcios

prosperity

Business rankings have long been used as a method to examine which states are implementing policies that court and help thriving businesses and ultimately the state’s overall economic prosperity. Chambers of Commerce, elected offiicials, and economic development agencies often use such rankings to tout their states. But do these rankings truly reflect what helps workers, business, and state economies flourish? We’re not so sure.

Two large proponents of these rankings are the Tax Foundation and the American Legislative Exchange Council (ALEC). For example, ALEC’s Rich States, Poor States is an economic outlook ranking that ranks states based on 15 state policy variables. The overall argument in their reports is that states that tax and spend less see higher growth rates than do states that tax and spend more. However, relying solely on a state’s tax system is a poor indicator of whether or not businesses will locate in a specific state and will therefore help a state’s economy prosper. In fact, evidence shows productivity of workers and local economies, investments in human and physical capital, and many other factors play a much bigger role in leading states to a prosperous economy.

A well known example of a tax cut experiment gone wrong came out of our neighboring state, Kansas. In 2012, Governor Sam Brownback signed legislation which sharply cut income taxes across the board that leaned towards the wealthy, and that ultimately cut the state budget by 13 percent. The Brownback administration, much like ALEC members, believed that drastic cuts to state income taxes would generate thousands of jobs and encourage the growth of small businesses. However, not only did Kansas not see a growth in its economy, but its bond rating went down and they cut funding for vital services and programs including education.  Five years later, the experiment proved to be such a failure that the Republican-lead Kansas legislature voted to raise taxes overriding a Governor veto. Kansas has since served as a prime example of the negative effects of supply-side tax cuts as a method for measuring economic prosperity for the rest of the nation.

As Colorado enters its third longest economic expansion since 1900 and our unemployment rate – 2.3% – is at an all-time low (the lowest in the country to be exact), it is a good time to talk about what has really led our state to this time of economic prosperity. In particular, what strategies have worked, what policies have been passed, and/or what programs have been implemented that have allowed Colorado’s economy to continue to grow since 2009.

That is why we are creating a new blog series titled the “Real Path to State Prosperity.”  This six part series, beginning in October, will focus on six distinct areas that create long term shared prosperity, not just in Colorado but in all states. Within each blog we will highlight our work, as well as the work of our partner organizations whose commitment to economic prosperity has created a thriving Colorado.

Using framework from Peter Fisher’s, Grading the States, Business Climate Ranking and the Real Path to Prosperity, which is dedicated to explaining how states can truly promote long term growth and broadly shared prosperity, we will focus on the following topics:

  1. The Importance of Productivity, Wages, and Shared Prosperity
  2. How Education & Job Training Boost Productivity
  3. Investments in Infrastructure Bring High Returns
  4. Healthy Workers Are More Productive
  5. Innovation and Entrepreneurial Activity are Key to Economic Growth
  6. Making Sure Productivity Gains Lead to Higher Wages

It is our hope that the “Real Path to State Prosperity” blog series will provide us an opportunity to rexamine and redefine what investments in our communities actually lead to thriving businesses and broadly shared economic prosperity for all Coloradans, as well highlight the progress we’ve made in Colorado.

Stay tuned for our first report coming in October.  Follow us on Facebook or subscribe to our email list to receive updates about the blog as soon as it becomes available.

A Look at Low-Wage Employment in Colorado

Posted September 4, 2017 by Caitlin Schneider

As Colorado celebrates Labor Day and the important progress made over time for working families here and throughout the country, it’s worth taking a fresh look at a central factor in employment growth and the economic well-being of workers: wages. More specifically, there’s a persistent need to examine the share of low-wage jobs in our economy, who holds those jobs, how Colorado compares to other states, and how low-wage employment affects workers’ ability to afford basic needs like housing.

As economic policy discussions inevitably turn to job and wage growth, this type of analysis can shed light on what trends are actually emerging with employment, what communities are most affected by low wages, and what that might mean over time for economic growth and equality. Rather than rely on assumptions, myths, and stereotypes to inform policy, we look to the data and facts.

In Colorado, the data and facts point to a few key insights. The first is that low-wage earners have regained some of what was lost since the Great Recession. However, these gains are a fraction of what the wealthiest 1% gained since then. The second is that women, Hispanics, and African-Americans are likelier to hold low-wage jobs, which reinforces the need to address systemic barriers such as racial discrimination, gender bias, and persistent pay gaps when considering economic and wage policies. The third is that while the portion of low-wage jobs is smaller in Colorado than in other states, the share of low-wage jobs has grown over the last 15 years. And the fourth is that stagnation in low-wage job is putting Colorado workers at a severe disadvantage when it comes to affordability of basic needs like housing.

While workers have made considerable progress over time across many indicators, the facts and data around low-wage jobs are essential to understand and critical in shaping policy decisions going forward. Because, while it’s important to celebrate past progress, there is no guarantee of future success without a fuller comprehension of how we got here.

Key Findings

  • The bottom 20 percent of wage earners have seen their wages rebound in the last two years, regaining the loss from the Great Recession, though these gains are far outpaced by income growth for the richest 1%.
  • Women, Hispanics, and African-Americans are likelier to hold low-wage jobs than other demographic groups.
  • The portion of Colorado’s total jobs that are classified as “low wage” is smaller than most states, particularly when comparing cost of living and wages across states.
  • For some of the largest low wage jobs, the cost of housing consumes more than half of the paycheck of those workers particularly in the Denver Metro Area and resort communities.

Read CFI’s full report here

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