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Consumers spend less, productivity is declining and there are still many job vacancies. Is this why the recession can happen?
But first, let’s get down to business. If you remember last week’s entry into the state’s venture capital agency, Colorado continues to invest in attracting startups and small businesses. This week, the city of Colorado Springs shared its own deal to offer up to $5,000 to new employees hired by new or growing companies in the city.
The city’s agreement foreclosure fund has caveats because, after all, it’s public money. The $3 million fund is administered by the Colorado Springs Chamber and Economic Development Corporation.
“Just as there are state dollars and incentives that can be used when a company is looking to add new jobs or capital investment, the city wants to be proactive in supporting companies with high-paying jobs coming to our region,” he said. “They entrusted us with this to make sure the projects meet the criteria,” said Chamber President and CEO Reeder Kleymeyer.
That measure is similar to the state’s Job Growth Incentive Tax Credit program, which provides tax credits — not cash — to eligible companies that choose Colorado for location or expansion and then continue to hire certain workers. Last year, the state approved 34 awards, or double the number from the previous year.
In both cases, the corporate applicant must create low- and high-paying jobs. Other places outside the region should be considered. And the new jobs must be created within a certain period of time – the city needs seven years, the state needs eight. Both provide the credit or the payment when the companies meet performance goals.
The contract closing fund plans to provide $1,000 to $5,000 for a new full-time job created. Jobs must pay at least the city’s median annual wage of $57,500, according to data from the Bureau of Labor Statistics. And there will be an emphasis on companies in the aerospace and defense, healthcare and medical technology, cyber security and information technology, and manufacturing industries. Applications are now being accepted by the Chamber’s Economic Development Team.
There are at least 10 net new jobs intended to attract small businesses. It’s also exempt from any state incentives, so that could be a deal breaker for companies looking at Colorado and Colorado Springs (but not El Paso County, which “doesn’t participate, and I hope to change that in the future, when we show great success,” Kleimeier said. This is the first corporate offering Colorado Springs has offered. – It is an incentive to travel, she added.
“The point is to support the company when making a competitive decision with another state,” Kleimeyer said. “This front-end money can help them with moving costs or help with expansion costs.”
The money comes from the city’s general fund. It is budgeted annually and may come from a portion of the city’s America’s Savings Plan Act, which is Mayor John Sutters’ choice, city officials said.
“The city plans to fund the first $3 million from the RPA fund, but the general fund may contribute in the future. We have not presented the money to the council yet. ARPA funds do not go into the general fund. They will be handled and reviewed separately,” the city’s chief financial officer, Chare McDaniel, said in an email.
Where do workers come from?
When the pandemic hit in the spring of 2020, Colorado Springs lost 36,100 jobs. But since the recovery began, the city has led the way for job growth in the state. Through July, the city has recovered 126 percent of job losses, or 45,400 jobs.
By comparison, the Denver region has recovered 108% and the state is at 111.6%, according to data from the state Department of Labor and Employment.
In other words, finding enough workers for Colorado Springs is very difficult. So where are all these new workers coming from?
The job market is tight everywhere, according to Cecilia Harry, the chamber’s head of economic development.
“And just because it’s a national trend that affects (Colorado Springs) doesn’t mean we’re going to stop pursuing growth opportunities,” Harry said. “One of the ways to respond long-term to labor needs is to stimulate more innovation and investment in the community by employers, which have the potential to strengthen the pipeline when it comes to degree programs and training opportunities for individuals entering our K through 12 pipeline.”
Colorado Springs’ population continues to grow, growing 16 percent over the past decade, according to the U.S. Census Bureau’s estimate of 483,956 in July 2021. Along the way, Denver was named the ninth most popular destination for college students to commute to, at No. 4), according to research by Axios and Generation Labs. It also made WalletHub’s list of cities to start a business, landing ninth out of the top 100 cities nationally (Denver, again, ranked sixth).
The city is promoting and making the most of it.
“When these companies are able to attract more people to work on this innovation and problem solving, there is a lot of R&D and innovation, quickly providing solutions for commercial and military applications,” Harry said.
The impending “shallow” collapse
Longtime Colorado economist Gary Horvath shares his analysis of the state and national economy, and despite the impressive job growth the state has seen, we’re headed for a recession that could hit late this year or early next year.
But it will be shallow, Horvath said, per CBER.co. That means not everyone will see it.
“Everybody is affected by inflation, but I don’t think it is equally. Low-wage earners will suffer the most,” he said. “The epidemic was blue-collar failure. White-collar workers kept their jobs during the pandemic. They went over well. … It was a struggle for everyone else.”
The epidemic widened the gap between low- and high-income earners. Even with gas prices reaching $5 a gallon this summer, white-collar workers may skip the commute. Many blue-collar workers could not.
So when a shallow recession occurs, it affects people in different ways.
“I have to think people are spending less money,” Horvath said. “You can only spend so much money on food. Let’s say I spend 20% of my income on food. If you were Elon Musk, who is much richer than me, he wouldn’t spend 20% of his income on food because that’s too much food,” he said.
The hope is that the Federal Reserve’s interest rate hikes will keep consumer prices in check. The government and the country are still facing labor shortages, which is a positive economic sign that we are not headed into a recession.
While Colorado lost about 370,000 jobs in the first two months of the pandemic, they’ve all since come back and then some, as noted in the Colorado Springs section above. According to BLS data, Colorado has added 475,701 jobs since the outbreak subsided in April 2020.
But he said strong job growth is unlikely to continue.
“We’ve added a gazillion jobs,” he said. “We cannot continue at that rate. And we can’t continue at this rate because our current unemployment rate is 3.3%. Where do we find the people who work?
Blame it on last year’s epidemic of workers — or at least researchers — announcing the Great Resignation, a term used to describe people who quit their jobs to find something that pays more or is more fulfilling. That has turned into the current trend of “quiet quits” for employees who can’t quit but don’t do less than the job demands. This can lead to a decrease in productivity.
“You have the boomers who are retiring, the quiet ones, who are like, wow, that’s a different perspective on things. You have remote workers. Everything is different now,” Horvath said. “What we don’t see is strong GDP growth, we don’t see strong job growth. We may add 25,000 to 30,000 jobs next year, which is positive, but that’s about half of normal.
Horvath’s forecast for real GDP growth this year is 2.6%, compared to last year’s 5.8%.
>> See CBER’s outlook on the Colorado economy
Other work units
Speaking of jobs, the state job board had 123,535 job openings listed as of Friday. That’s down from 151,320 on Aug. 11. But in April 2021, almost double the number opened.
Any big changes in the last two weeks? The number of computer and accounting jobs fell 60% to 14,861, while building cleaning and maintenance jobs fell 20% to 3,007. >> ConnectColorado.com
→ CDOT Vocational Trainings:- The Colorado Department of Transportation has been hosting job fairs throughout the summer. Now he is hoping to attract more trainees to fill the vacancies. A two-year training program in a public safety job that pays $16 an hour, offers full benefits including 11 paid holidays, paid vacation and a retirement package. >> Apply (Type “Intern” in the search bar)
→ Looking for tools for your small business? The US Small Business Administration has many resources to support small companies in America. And now has a webinar series called “The Bottom Line” to better highlight and connect with local businesses. >> Register
→ Who qualifies for the Biden Student Loan Forgiveness Plan? The New York Times has a primer. >> Read
More economic news from the Colorado Sun
→ Subsidized Health Care Tuition in Colorado: Sun reporter Erica Brenlin Care Forward Colorado reports on a new program that pays for two years of tuition to find jobs like nursing aides, emergency medical technicians and more. >> Read
→ West Slope Real Estate Growth Continues: A fair transfer tax adopted before the passage of the Taxpayer Bill of Rights has resulted in an 84 percent increase in revenue for 12 Colorado communities, reports Jason Blevins. >> Read
→ Thrift stores are flooding in: When the plague hit, people were upset. Now, people are trying to save a dollar. Correspondent Kevin Simpson explores the economics of thrift shopping. >> Read
Share your two cents on how the economy is hurting or helping you at cosun.co/heyww. See you next week! ~ Tamara
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