Forecast 2007

For the third straight year, Northern Colorado’s job growth outpaced that of both Colorado and the nation as a whole – good news for employees and businesses alike.

Employment numbers act as both a reactive and a proactive indicator of the health of the local economy, according to Martin Shields, regional economist and associate professor at Colorado State University. More people employed tends to indicate that businesses are doing well. Higher employment translates into increased business activity, while low unemployment rates can mean trouble for expanding companies looking for quality workers and for economic development agencies trying to attract primary employers to the region.

The region welcomed 5,643 jobs between the first quarters of 2005 and 2006  for a 2.9 percent increase. The top growth sectors were in accommodations and food services with 883 new jobs, finance and insurance with 640 new jobs, health care and social assistance with 625 new jobs, retail trade with 624 new jobs and construction with 618 new jobs.

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Growth has been slower in 2006 than previous years, but Shields predicts a pickup in 2007.

“The Northern Front Range is expected to rebound in 2007 with 2.8 percent employment growth,” Shields said. “This will be the fastest growth this region has experienced since the recession of 2001.”

Shields crunched the region’s employment numbers and looked at Larimer and Weld counties’ statistics separately.

 “There are some substantial differences between what’s happening in Larimer and Weld counties,” he said.

Prior to the recession, in which the tech sector took a dive, Larimer County was adding many more jobs than Weld County. Since the recovery, Weld County is making leaps.

“They’re growing a lot faster now,” he said.

Larimer County added 2,457 jobs between the first quarters of 2005 and 2006 – a 2 percent increase. During the same period, Weld County added 3,185 jobs representing a 4.2 percent increase.

Shields attributed some of the differences to the booming oil and gas sector in Weld, where the population continues to grow at record rates, supporting increased employment in the service sector. Meanwhile, the sectors that were booming in the 1990s in Larimer County are no longer growing.

Wages, unemployment low

The employment numbers may have rebounded, but wage rates haven’t followed suit.

“That’s the troubling difference about the growth in the ’90s and the growth in the 2000s,” he said. “We’ve lost a lot of good jobs.”

Wage stagnation has been the state of affairs for Northern Colorado for the past five years. However, the average earnings per worker made some progress from the first quarter of 2005 to 2006 with an 8.4 percent increase to $36,217.

The loss of thousands of technology and manufacturing jobs meant the loss of high-paying jobs. Now, much of the growth is in sectors where wages aren’t quite on par, such as services and accommodations.

Regardless, 2007’s expected growth should keep economic watchers on their toes.

“It will be an interesting ride next year,” Shields said.

The region’s low unemployment is already proving interesting for many employers. The preliminary data for October put Larimer’s unemployment at 3.6 percent and Weld’s at 4 percent.

“What we’re seeing trend-wise with the incredibly low unemployment numbers is that the pool of skilled workers is diminished,´ said Mary Lichter, a direct hire consultant with SOS Staffing Service. “On the professional side, companies are acutely aware that there’s a limited number of skilled workers available.”

SOS Staffing has operated as a traditional staffing agency, providing temporary and temp-to-hire services to Northern Colorado businesses. Last June, the company began dedicating resources to a professional recruiting division, which has become very popular.

“We have since opened a complete new branch in Greeley,” Lichter said, adding that the staff for its professional placement service has grown from one to three.

Need for skilled professionals

The addition is a testament to the growing need for professional placement services.

“You can’t just throw an ad in the paper anymore,” Lichter said.

Lichter said that in addition to a great demand for professionals, SOS Staffing is seeing a need for individuals with a commercial drivers license – now called professional drivers – and anyone with skills in the oil and gas industry.

“It is an employee market right now,” she said, adding that everyone from professionals to laborers is finding that they possess bargaining power. “The good employees are demanding more money and getting it.”

This is likely to ring true, as most sectors are expected to add jobs in 2007.

The region’s construction industry, a bellwether for employment growth, has been adding jobs by the hundreds during 2005 and, with many company executives predicting new revenue records in 2007, the trend will continue.

By Shields’ estimation, the employment sector that includes construction, natural resources and mining will add 742 jobs in Northern Colorado in 2007 – a 3.3 percent increase.

David Neenan, founder and CEO of Neenan Cos., Fort Collins’ largest construction firm, said his company will add employees during 2007 just as surely as it did during the past year.

“We’ve been hiring people, to the tune of maybe 50 last year, and we’ll be adding more,” Neenan said. “The unemployment rate for people who are talented is zero.”

Other contractors were optimistic about employment prospects, not just for their own businesses but for their clients’ as well. Two of the hottest project sectors for commercial builders these days are office and industrial buildings, a harbinger that jobs are sure to follow.

Ag, health care labor shortage

With the natural resources sector facing employment increases, agricultural producers are facing a possibly trying year. With new, increasingly rigid immigration laws targeting the employer, many producers might find themselves in need of affordable labor.

“There is great concern about it,´ said Dawn Thilmany, professor of agricultural economics at Colorado State University. “The problem is, again, that people are trying to change things piecemeal without thought to the secondary benefits.”

The biggest issue for agricultural producers is the shift from lax to rigid enforcement without a transition period. Thilmany points out that producers are not taking issue with the rules against hiring workers without legal employment status but with the changes in which documents are needed for hiring.

Thilmany feels the uncertainty of how things will play out.

“There’s a very high likelihood that there will be a labor shortage,” she said. “I don’t think it’s the end of the world, but I do think it will have a significant impact.”

Another sector that is facing job shortages is health services. The private education and health services sector – which is dominated by health care in Northern Colorado – is expected to add more than 1,000 jobs in 2007.

With a number of large projects on the horizon, health care’s 4.4 percent job growth need is sure to be met with some supply issues.

The only sector not expected to grow is manufacturing. A loss of 188 jobs is expected in 2007. Non-computer and electronics related manufacturing is actually expected to see some job growth, but not enough to counteract the losses in tech manufacturing.

While manufacturing in the tech sector is continuing to take some hits, there seems to be a silver lining in the tech cloud.

Doug Johnson, cofounder of the NoCo Net, said the appearance of several new technology companies in the last year has been encouraging.

“One of the trends that you can’t help but see is all the integrated circuit design (in the region),” he said, citing Intel, Advanced Micro Devices, Avago and LSI Logic. “Now these companies are coming to town and employing in a really big way.”

The NoCo Net was formed to provide a forum for laid-off technology workers. The group now attracts people from all sectors and provides networking and job search assistance.

Johnson said technology companies that have recently moved or spun out in the region have drained NoCo Net’s talent pool of people with circuit design skills. Those with training in product management and business development also are getting hired more quickly.

Agilent Technologies Inc. and Hewlett-Packard Co. have dominated the major private-sector employment scene, but growth by other companies is making for a more diversified economy.

Major employers eye region

Commercial real estate brokers say they see signs that major employers are eyeing the region in greater numbers than in the past few years.

“I see Fort Collins, especially, as being on the map for primary employers, most of whom are in a one- to five-year site selection process,´ said Larry Stroud, a broker with Realtec Commercial Real Estate Services in Fort Collins. “I know it’s coming.”

That sentiment is shared by the region’s economic development agencies, which are charged with improving the primary employment landscape.

Larry Burkhardt, president and CEO of Upstate Colorado, said in addition to beefing up Weld County’s economic development agency’s retention efforts, the organization is looking at opportunities for the region’s organizations to work together.

In the past year, Upstate Colorado and Larimer’s Northern Colorado Economic Development Corp. have made steps toward cooperation, including a new regional marketing campaign. The groups are currently spearheading an effort to study the region’s underemployment issue.

“The underemployment data is what is more attractive (to site selectors),” Burkhardt explained, contrasting it to unemployment numbers.

Primary employers are more likely to be looking for good workers who are employed but willing to upgrade, rather than those currently unemployed. Burkhardt said an underemployment report would be a unique tool for Northern Colorado, one that would set the region apart for site selectors.

Enterprise zones grow

But the region could be facing some other labor force issues.

“I think it’s a mixed bag,´ said Lew Wymisner, assistant director of the Larimer County Workforce Center.

Wymisner said much of the labor shortage in Larimer County now is actually a skill shortage. He predicts there will be shortages in a number of professions, including professional and technical services, medical, accounting, civil engineering and janitorial.

“Some of the shortages are due to low wages, and some are due to the skills not being there,” he said.

In addition to his basic responsibilities at the center, Wymisner is also charged with administering Larimer County’s enterprise zones. Established in 1993, Colorado created the enterprise zone program to encourage development and job growth in economically blighted areas. The program offers tax incentives to businesses that make improvements and provide job growth in enterprise zone-designated areas.

Enterprise zones are yet another tool for attracting primary employers. This last year, Larimer County saw the most expansion in its enterprise zone since Loveland’s first zone was created in 1997 and Wellington’s zone three years ago.

Wymisner helped to facilitate expansions to both enterprise zones in Wellington and Loveland. In the case of Loveland, he said, the goal is to replace the 400 to 700 jobs lost by Agilent and Waterpik in the southern part of the city.

Overall, the employment outlook hasn’t really looked more positive since the pre-recession years. While there are still some obstacles with underemployment and possible labor shortages, the region seems to be in for a bright year.