Economy & Economic Development  March 26, 2010

Ongoing labor shortage dominated news in 1997

Oh what a difference a few years can make.

It was only 13 years ago, in 1997, when the economic landscape looked almost completely opposite of that we see today.

The national, state and local economies were still booming in 1997, although at a somewhat slower pace than in the previous few years. New residents were continuing to flow into Northern Colorado and the housing construction industry, although cooling slightly, was still in high gear.

Even the now-moribund commercial construction sector was thriving, with 1.3 million square feet of new space proposed for the year.

The number of banks was also expanding, a sure sign that the region’s economy was continuing its ongoing good health and prosperity. But one of the biggest stories of the year was an acute labor shortage, a situation that was resulting in companies having to compete for talented workers.

And not just skilled workers. With the local unemployment rate dipping below 3 percent at one point during the year, simply finding any reasonably qualified applicants for open positions was hampering business expansion.

“There’s just not a labor market out there,´ said Carl Maxey in a story that appeared in the August issue of the Business Report. Maxey was lamenting the fact that his Fort Collins-based manufacturing company was turning down production jobs because of a lack of workers to hire.

Ann Garrison, an associate professor of economic at the University of Northern Colorado, predicted in the Business Report’s January issue that a “labor crunch” seen in 1996 was expected to continue in 1997. “Throughout Northern Colorado, there are shortages of labor,” Garrison said. “The service sector has grown so very rapidly that the demand is over the supply.”

Unemployment since tripled

Today, the employment picture in Northern Colorado looks dramatically different. In March 2010, the region’s unemployment has soared to more than 8 percent – still lower than the 10 percent national level but almost three times higher than in 1997.

Local economist John Green said low unemployment is obviously better than high unemployment for a region’s economic health. “If good times continue forever, all the overbuilding to meet that low unemployment level does no harm,” he said. “But when the unemployment rate approaches 10 percent, there’s no houses being built and stores close down.”

However, Green noted that an extremely low unemployment rate, as that seen in 1997, also has an economic downside. “Five percent unemployment is generally considered full employment,” he said. “Anything under that says you’re overheated.”

And while long lists of job openings are a good thing for applicants, such a scenario can be hard on employers and worrisome for the general economy.

“When you get down that low, people are jumping back and forth between jobs and employers are paying higher wages to keep people,” he said. “Wages go up and people buy more stuff and we get inflation.”

In a time of so many unfilled jobs throughout the nation, welfare reform advocates under the Clinton administration were looking to take advantage of the situation and put welfare recipients to work in 1997. Colorado and other states responded to the challenge by channeling welfare recipients toward a vast array of open positions, but some resistance was still mounted by some business groups.

Sandra Hagen Potter, spokeswoman for the Northern Colorado Legislative Alliance then and today as Sandra Hagen Solin, said in 1997’s job-rich economy that business should not be expected to create jobs for welfare recipients. The NCLA represents business interests in the region.

“Government cannot mandate job creation,” Solin said in a January Business Report story. “We can train all of these people on welfare, require them to work, but if the jobs are not available then we have accomplished nothing.”

Oh, hindsight

But too many jobs and not enough workers continued to be the theme throughout 1997. The Business Report did a special report in August that included a story on Fort Collins-based Advanced Energy considering busing workers in from Wyoming to help fill more than 100 open manufacturing positions.

And Editor Christopher Wood opined in an editorial in the same issue that the region needed to address what looked to be a long-term problem. “Some economists are predicting that the present labor shortage will last until the year 2010 or 2020,” Wood wrote.

The 1997 labor shortage in Northern Colorado even brought about some rare cross-community cooperation in trying to find ways to cope with it. A story in the November issue of the Business Report said four Front Range communities – Fort Collins, Loveland, Greeley and Longmont – were banding together to address the shortage and had commissioned a Denver firm to study the region’s strengths, weaknesses and educational needs.

While Northern Colorado’s overall unemployment rate finished 1997 at 3.45 percent – the national rate was 4.7 percent – more good times still lay in store for the next few years as it sank to 3.27 percent in 1999 and hit an almost unthinkable low of 2.56 percent in 2000, more than a full percent lower than the rest of the country.

But the unbridled optimism of the late 1990s and early 2000s was not to last, of course. Another mini-recession struck following the terrorist attacks of 2001 and, after recovering in 2006 and 2007, the bottom fell out again in late 2008, this time due to the implosion of under-regulated financial markets and high-risk home loans.

High unemployment remains the main obstacle to an economic recovery in 2010, and many economists are predicting a slow but gradual lowering of the unemployment rate as the year unfolds.

Still, Green said employment’s rise and fall should be no surprise when it comes to the  ever-swinging economic pendulum.

“It’s a normal economic kind of thing,” he said. “That’s a normal kind of up-and-down swing.”

Oh what a difference a few years can make.

It was only 13 years ago, in 1997, when the economic landscape looked almost completely opposite of that we see today.

The national, state and local economies were still booming in 1997, although at a somewhat slower pace than in the previous few years. New residents were continuing to flow into Northern Colorado and the housing construction industry, although cooling slightly, was still in high gear.

Even the now-moribund commercial construction sector was thriving, with 1.3 million square feet of new space proposed for the year.

The number of banks was also…

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