Southwest Colorado’s unemployment rate has recovered from impacts associated with the COVID-19 pandemic, but the region is now struggling with a labor shortage and a lack of workforce housing.
It is also struggling to employ younger people as a result of a lack of workforce housing. The issues were discussed during last week’s annual Southwest Economic Outlook hosted by Fort Lewis College’s School of Business Administration.
The region’s unemployment rate as of September was at 2.2%, a considerable decrease from the 12.1% in April 2020, according to the 2023 Colorado Business Outlook report.
While the decrease shows a positive trajectory for employment, employers are still facing problems finding employees because of fewer potential employees in the region’s labor pool.
Fort Lewis College Associate Professor of Economics and guest speaker at the event Nate Peach said the labor shortage is puzzling. The country is seeing a higher number of people retiring early, but many of the jobs that need to be filled are entry-level positions. Generally, people who retire earlier tend to be in management or leadership roles that pay better.
His take-away is that there are not enough people in Southwest Colorado to meet the demand of employers. He said workforce housing availability could help recruit more employees for entry-level positions.
“I do think we can incentivize building construction that's high-density,” Peach said.
He added that many of the area’s homes are not for first-time homebuyers and there’s also a lack of apartment complexes.
Instead, many are larger houses that are often bought as second homes. The median price for in-town Durango homes was $725,000 during the third quarter of 2022.
“If you're 20-something and you've graduated college, you probably don't need something that large or are even just looking for a simple apartment,” he said.
Data from Region 9 Economic Develop District used with Peach’s presentation shows the number of single-family building permits increased by nearly 200 from 2020 to 2021, showing a demand for those homes after the pandemic hit.
Peach said there was an uptick in people wanting to live in Durango after the pandemic hit which also put upward pressure on housing prices. Before the pandemic, the appreciation value of a home in La Plata County was 2% and after it grew to 42%. Other areas in Southwest Colorado saw the same type of growth. In Montezuma County, pre-pandemic home appreciation values came in at 5.4% and by the end of COVID-19 they had raised to 25.4%.
However, higher interest rates are likely to cause a slowdown in housing demand in 2023.
“For a family of four, you need about $90,000 as a livable wage. That presents a real challenge for companies and for workers that are early in their career,” Peach said.
Data from the Bureau of Labor Statistics shows health services, retail trade, local government, food services and construction made up 52.1% of the jobs in La Plata County in 2021. However, all of those jobs ranked as either low- or mid-wage jobs. The average salary in La Plata County during 2021 was between $51, 237 and $58,239 per year.
Peach said this is the challenge employers face when trying to find young talent. Many can’t compete when it comes to cost of living and starting salary. While other areas on the Front Range may have similar starting salaries, the lack of available affordable housing in the Southwest Colorado is a deterrence for many younger employees.
With that said, affordability remains a struggle across the state. The number of households having difficulties paying for usual expenses has increased. In a survey administered by the U.S. Census Bureau, about 45% of Colorado households reported struggling to afford everyday expenses, and that number increased to just under 60% in 2022. Usual expenses were defined as rent or mortgage, car payments, medical expenses and student loans.
In regard to the largest economic issue the region is facing in 2023, Peach said figuring out housing solutions would rank at the top.
tbrown@durangoherald
