Two CU-Boulder economists believe while the recovery from the pandemic’s economic crisis won’t take as long as the Great Recession, Boulder faces direct challenges in maintaining employment in some of its largest job clusters.
The panel was led by Richard Wobbekind and Brian Lewandowski, both from the CU-Boulder Business Research Division, during a Wednesday morning session of the Boulder Economic Summit.
Full jobs recovery
Wobbekind and Lewandowski affirmed their previous estimates of Colorado permanently losing on net about 130,000 jobs this year, with hospitality and tourism taking the biggest hits. However, the state is expected to recover from a 14% drop in employment in the spring and early summer to around a 7% drop for the entire year, the job losses at this point are deeper than at any time during the Great Recession.
“Even with this dramatic recovery that we’ve seen so far, we’re still below the lowest point,” Wobbekind said.
They’re more optimistic about the rate of job recovery from the COVID-19 recession compared to the Great Recession, estimating pre-pandemic employment levels to return within the next three to three and a half years.
The duo also noted consensus estimates believe a full recovery of lost GDP could be seen by mid-2022.
However, they also note consensus experts believe the remainder of 2020 has severe downside risk due to the potential for another round of COVID-forced stay-at-home orders and the lack of additional stimulus from Congress.
At the state level, Lewandowski said Colorado was 20th in the nation in terms of job losses, led mainly by accommodation and food service, health-care and social services and recreation sectors in March and April.
While those sectors had strong summer rebounds, he said it wasn’t enough to match pre-pandemic employment.
“I just want to make sure that we don’t lose sight of the hole that was dug during the worst part of the pandemic,” he said.
Boulder’s ambiguous recovery
Boulder as a city and the larger county are outperforming much of the state and nation, with respective August unemployment rates of 5.4% and 5.8%.
However, Lewandowski said Boulder’s unemployment rate is relatively strong because it has a large share of commuters coming in from nearby cities to work each day.
According to the U.S. Bureau of Economic Analysis, about $1 billion flowed out of Boulder County and into nearby counties due to commuters.
“I think this helps explain why Boulder has a lower unemployment rate, but a higher jobless rate than our peers,” Lewandowski said.
The city also may face more unemployment risk in the future if the pandemic drags on because of its high concentration of government jobs attached to CU-Boulder, along with manufacturing, food service and the arts. Lewandowski said all of those sectors are at risk for slow employment recovery.
An unequal recovery
While the economy got somewhat back on its feet, Wobbekind pointed out that the recovery lagged heavily across the country for demographic groups that have long been marginalized, such as women and people of color.
People without advanced degrees lost a larger share of employment during the year, with Lewandowski saying a quarter of jobs paying less than $50,000 annually were furloughed or cut in Colorado in April alone.
Those jobs have recovered to a net loss of 9.1% as of August, far behind the impacts felt by middle and high-wage workers.
“That cohort is carrying the greatest burden,” he said.
However, Wobbekind noted that “middle-wage” jobs held by those with two-year and four-year degrees were starting to be hit in September. Those positions were relatively secure since employees generally could work from home instead of an office.
Most Washington watchers believe an additional stimulus package for the country is unlikely by the election.
Although House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have had stuttering talks about a package north of $1.6 trillion, the two sides remain far apart on provisions such as state and local government aid, child-care, a larger COVID testing strategy, liability shields for businesses and more. Whatever deal may be struck would also certainly face pushback from Republican senators, some left-leaning Democrats in the House and potentially President Donald Trump, who last week said Republicans should stop negotiating on stimulus until after the election. He later reversed course this week, saying a new stimulus is needed and that it should “Go big or go home!!!”
Wobbekind is holding out hope for a stimulus likely after the election and would prefer to see target support for ailing industries rather than a broad infusion of cash.
However, he said any stimulus would come at the expense of a higher national debt, which he believes would slow down future economic growth.
“It’s a long-term trade-off for short-term survival, and most people are voting right now for short term survival,” he said.
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