With a preliminary August unemployment rate of 5.9% — higher than late 2019 levels, but still lower than a few years earlier — and help wanted signs hanging in many store windows, it would seem that many Coloradans looking for work might be in luck. Around seven in 10 people in the state’s working-age population have a job.
But even though the state’s population is projected to continue to grow, Colorado, and the nation as a whole, faces a slowdown in both population growth rate and labor force participation rate over the next few decades. It’s a trend that, coupled with skills gaps across key industries, will force stiff competition for the right talent.
“No matter what industries we have in the metro Denver region, companies will choose to locate according to a number of reasons,” said Patty Silverstein, president and chief economist of Littleton-based Development Research Partners. “Energy depends on natural resources, aerospace relies partly on geography, but more so on talent. The common thread is going to be talent. Talent drives it all.”
Future of labor
The slowdown in population growth is the result of a few factors – in simple terms, it’s what happens when the population dies more and has fewer babies, due partly to an aging population and increases in contraceptive use. In Colorado, rising home prices could also be deferring people’s plans to move to the state, said state demographer Elizabeth Garner, who forecasts changes in population for government agencies and businesses.
“For other states, slowdown started sooner,” Garner said. “In 48 states, there has been absolute decline. This is going to impact Colorado.”
The state’s population growth rate is expected to continue to grow until around 2028, according to forecasts from the State Demography Office. After that, the growth rate will decline until at least 2050 – meaning the problem of fewer workers has no easy, quick fix.
According to Michael Gifford, president and CEO of Associated General Contractors of Colorado, workforce development is “the single biggest issue that we have facing our industry as far as the eye can see.”
“Going back to 2014, we identified this as the issue of our time on a very long-term basis,” he said. “It’s going to be with us through my career and the person who comes after me at the AGC.”
For the seven-county Denver metro, the data portends drastic drops in the labor force participation rate. By 2040, for every 100 working-age people in the area, only around 65 are expected to be part of the workforce, largely as a result of boomers retiring. In 2010, 73 people in the metro out of 100 were working.
“If people become a constrained resource, the question is how do we do a better job with what we’ve got,” Garner said. “The wild card is international immigration. Over the last five years, we’ve had slow international migration.”
The trends experts predict are being exacerbated by the effects of the coronavirus pandemic – international migration to the United States dropped to basically nothing at the beginning of the pandemic, and many people taking advantage of unemployment benefits haven’t reentered the workforce, leaving many companies short-staffed.
But being short-staffed might not be a temporary problem. The labor force participation rate by the late 2020s is projected to be around 59%, a rate not seen since the 1950s and 1960s, before women began to enter the labor force for the first time in increasing numbers, according to the Bureau of Labor Statistics.
“This is new for Colorado and the United States,” Garner said. “We haven’t been in this position for decades. Since boomers entered the workforce, we’ve had a slush of labor force. Now, with this great big group of boomers leaving, it really is this significant transition.”
The new workforce
Changing demographics and education trends are going to impact companies seeking new talent, and some local leaders see skills-based training as an answer.
The 2020 Census confirmed trends experts have been noting for years – the country is getting more diverse. People of color made up 43% of the country’s total population in 2020, up from 34% in 2010, according to data released in August. The expected trend is no different in Colorado, where in 2010 seven out of every 10 residents were white. By 2050, the State Demography Office predicts that just over half of the state’s population will be white, with the difference largely made up by increases in the Hispanic population.
“The United States is becoming more racially and ethnically diverse,” Garner said. “In most industries, it’s how do I attract a more diverse crowd. If they don’t see themselves in your company, they’ll be less likely to join.”
And as the youngest members of the baby boomer generation reach retirement age in 2019, some industries are worried about what effects generational differences will have on their workforces. The share of the state’s population under 65 is expected to decrease by 2050 according to projections, with about two in every 10 Coloradans over retirement age.
“If you think about the baby boomers, who are retiring by the day, [they] as a group are inclined to work with their hands,” Gifford said. “The 80 million millennials are not as inclined to work with their hands as the 70 million boomers going out.”
That may be because of an overemphasis from schools on traditional four-year post-secondary education, according to some.
“Our skilled labor is in its mid-fifties,” said Ted Leighty, president of the Colorado Association of Homebuilders. “Schools have been telling kids, rightly or wrongly, they need to go to college. Part of the work is trying to destigmatize the industry.”
And that has implications for the future of Colorado’s rapidly diversifying younger population, Garner said. Though over the past decade, the share of the state’s population with at least a bachelor’s degree has increased, Colorado ranks 23rd in the nation in terms of educational attainment among people identifying as Hispanic compared to second for the total population.
“There is a difference in educational attainment by race and ethnicity,” she said. “This is a great opportunity for businesses to be engaged with the population, starting in middle school or high school. Most kids like very practical knowledge. It’s not that they want to study for the occupation, but if I’m learning to read Shakespeare, I want to know how that’s going to play a role in my job.”
One organization in Colorado is trying to educate high school students in potential future careers through apprenticeships. CareerWise Colorado, founded in 2016 by Denver manufacturing executive Noel Ginsburg, helps place students in apprenticeships with companies. It’s based on a model used in Switzerland, where 70% of students participate in work-study programs.
“It’s a strategy of options,” said Ginsburg, who also sits on the Colorado Workforce Development Council and is the founder of Denver’s Intertech Plastics. “We’re seeing students of color graduate at a higher rate than white students, in part because white students tend to drop out early and go to college.”
CareerWise has 640 apprentices placed with 125 employers in Colorado, and they’re not all in trades like construction or manufacturing.
“If you expect to have the talent you need delivered on a silver platter, or you think poaching is the best way, you’re doing an injustice to your business and your community,” Ginsburg said. “Lawyers and doctors have apprenticeships; we just don’t think about it that way.”
“No silver bullet”
Workforce issues will continue to dog all industries in Colorado, some more than others, so for employers, it’ll pay to be prepared for future demographic trends. But there’s no one way that will solve all hiring problems. The state’s business community could adapt to the projected drop in workers with several different tactics that are already being implemented – automation, location-neutral hiring and dealing with longer production timelines to name a few.
“There are automation and technological things that make things quicker, faster, smarter, but at the end of the day we can’t outsource our electrical work. We can’t automate it,” said Karla Nugent, chief people officer at Weifield Group, a Centennial-based electrical contractor. Nugent also sits on the Colorado Workforce Development Council.
A number of organizations in Colorado, including AGC, Gifford said, are trying to get ahead of the trend by educating kids from an earlier age about different education and career paths outside of traditional four-year postsecondary options. In AGC’s case, that comes in the form of the Construction Education Foundation, which aims to fill the gap of 47,000 workers needed by 2027 through education and training programs for high schools and adults.
“Companies can get creative where they find those workers,” Silverstein said. “There’s no silver bullet. Savvy companies are working with our educational institutions to get this pipeline with the skills we need early on.”
To that end, in 2019, Gov. Jared Polis signed an executive order establishing the Office of the Future of Work, an organization that intends to raise awareness about and help Colorado prepare for what work will look like down the road.
The office is exploring ways to improve worker protections and benefits, methods to address workforce issues facing underserved populations and planning shifts in economics and needed skills. For example, in August, the Colorado Department of Labor and Employment announced the OFOW would lead the implementation of apprenticeship expansion efforts through a handful of federal grant programs.
“We very much believe the future is skills-based,” said Katherine Keegan, the office’s director. “We encourage employers to think about the skills they need, the skills they have in their talent pipeline and how they can hire people based on skills they can learn on the job.”
But one simple way to attract qualified labor might just be increasing wages and improving benefits, state demographer Garner said.
“It’s going to be more and more competitive,” Garner said. “The worker is going to have more power.”
Ethan Nelson, Data Reporter
Denver Business Journal