This appeared in the May 26 edition of the Denver Business Journal
As a third-generation Coloradan, I wake up every morning feeling blessed to live and raise my family in such an amazing state. Recently, however, those blessings have been turning into anxiety.
Colorado is one of the fastest growing states in the country. Remarkably, even with over 500,000 new residents, Colorado’s unemployment rate reached 2.3 percent last month, the lowest in the nation for the second month in a row and the lowest in Colorado since 1976.
At first blush, you’d think it would be time break out the champagne, but in fact, there’s trouble in those numbers. Colorado’s business and policy leaders would be well-advised to listen to the anxious conversations around Colorado’s dinner tables (and on social media) as they paint a more realistic response to what unemployment statistics really mean.
Here’s the problem: Low unemployment in a high-cost, low-wage state is unsustainable.
I regularly consult with professionals who are managing their careers, but to consider the future of Colorado, it’s important to look at the particular challenges of young professionals.
On my job board, entry-level salaries typically range from $35,000 – $40,000 – about the same when I graduated from CU in 1989. When you add the skyrocketing costs of housing, transportation, health insurance, student loans, cell phones and monthly internet, it’s easy to understand why young professionals are struggling. Living with your parents or shacking up with three roommates is the norm. Driving for Uber on your off hours is a practical lifesaver for many.
Many employers perpetuate the negative myth of the ‘entitled millennial.’ One recruiter told me recently, “There’s an expectation from young professionals that they have to be promoted quickly. I thought your 20s was the time when you paid your dues.” Millennials don’t mind paying their dues, but they also have to pay their rent! If they work hard and can’t get a couple of job titles under their belt with an increase in pay, they’ll bounce to a better paying job!
And who can blame them? In the not-too-recent past, college graduates were on the fast track of the American dream: you graduated college with the promise of a decent entry-level job. Through your 20s you learned your craft and slowly but steadily saw increased pay and responsibility. By your 30s you were on your way to starting a family, your school loans were paid off, you were stashing a bit away for retirement, maybe a college fund for your kids and bought a house. Into your 40s and 50s you moved up the ranks, made a dent in your mortgage and saw retirement and empty-nester freedom in your future!
But consider this: In 2017, tuition, books, room and board at CU Boulder are about $28,000 per year and are rising about 7 percent annually. If you had a child today, by the time they’re 18, four years at CU Boulder will cost about $417,000. According to CollegeInvest, Colorado’s 529 College Savings Plan, families will need to save about $1,000 per month for 18 years for one child to attend CU Boulder.
Looking to save for a down payment on a home in Colorado? It’s hard when 40 percent of Colorado renters pay more than 30 percent of their monthly income to their landlord each month and 25 percent pay above 50 percent of their paycheck for rent. Even those Coloradans lucky enough to save for a down payment should expect to pay 25 percent of their household income to a mortgage – way about the national average of 14.6 percent.
Who can afford this?
And the wage issue is not just for young professionals. I regularly see job postings with a requirement of an MBA and 10-15 years of experience that offer salaries in the mid 50s.
To date, local and state leaders have been unable (or unwilling) to come to grips with draconian policy handcuffs such as TABOR, Amendment 23 and Gallagher which severely limit solutions to (among other things) education and rising housing costs. While Denver Mayor Michael Hancock nobly established a $150 million housing fund to build 6,000 units of affordable housing, even he would admit it’s a Band-Aid solution.
With low wages and higher expenses, it will be a tough sell to get Coloradans on board for any major tax increase for major infrastructure priorities; a choice between potholes and highways is a distant competitor to rent, retirement and raising a family.
I hope our 2018 gubernatorial candidates are prepared to lay out their solutions as this thunderstorm is clearly starting to turn into a tornado.
Andrew Hudson is the founder of Andrew Hudson’s Jobs List (ahjobslist.com). He can be reached at 720-289-5877.