The number of working-age Coloradans in the labor force shrunk last year, and instead of adding jobs, the state lost 11,700 of them, according to revised data released Wednesday by the state Department of Labor and Employment.
It is the first year the state lost jobs since the pandemic. And before the chaos of 2020, Colorado had added jobs every year since 2011.
Economist Tim Wonhof, with the state’s labor department, said that while losing jobs is unusual for Colorado, the state followed national trends last year. As a whole, the U.S. gained 116,000 jobs last year, but that wasn’t much to brag about since it was only a 0.1% increase.
“Colorado lost 11,700 jobs. That’s a negative 0.4% growth rate. But there are 27 other states that also lost jobs,” Wonhof said. “Nine of them lost more jobs than we did. We’re all sitting in pretty flat-growth territory, and that is significant.”
January data, also released Wednesday, continued the downward trend. The labor force shrunk by 5,200 people to 3,258,800. More are unemployed compared to December, up 1,200 to 126,300. And fewer are employed, down 6,400 to 3,122,600 million.
The state’s labor force participation rate dropped to 66.8% in January, from 67.6% a year ago. That means more people appear to be sitting on the sidelines, having left the job market because they stopped looking for work or retired early. Since revisions counted fewer people in the labor force, that led to a lower unemployment rate last year. It was revised to 4% from the initial 4.5%.
“I don’t think it’s a Colorado story, the low-hire, low-fire environment,” Wonhof said. “It stems from the uncertainty (nationally and internationally). Employers are not ready to hire but they don’t want to get rid of people because it’s expensive to actually bring people on. If we had more certainty in the landscape, you’d probably see that trend change.”
However, he did point out that the state has experienced some recovery among tech and professional jobs, after bearing some of the brunt of layoffs by tech employers outside of Colorado.
“They’re not going gangbusters, but they’re positive, whereas the rest of the country doesn’t look as positive,” he said. “That’s a good news story for Colorado.”
Colorado also added 6,600 jobs in January. But January numbers will be revised again and again. The latest benchmarking revisions, which occur regularly as new data is collected by the Bureau of Labor Statistics, resulted in the number of jobs in Colorado being revised downward every month last year.
Something about Colorado?Some of the reasons behind job losses last year are attributed to federal government downsizing, tech industry contraction and high tariffs. But those weren’t specific to Colorado. That had another economist wondering about more local challenges.
“This is the seventh time since 1980 that there has been negative job growth,” Broomfield economist Gary Horvath said in an email. “The change in employment for 2025 was not associated with a recession — the others were. Assuming that NBER (National Bureau of Economic Research) does not call a recession, I think something is happening in Colorado that is different than other states.”
He pointed to unsustainable spending by the state that has led to a $1.5 billion budget shortfall, he said. The state legislature approved $4 million last year to support lawsuits against President Donald Trump’s policies (“I’m not suggesting he is right, but 60+ lawsuits is excessive,” Horvath said).
And there continues to be a large number of new policies proposed.
“I think there are about 600 bills in front of the legislature now,” he said. “Our legislation could be more effective if we allowed fewer bills to be introduced.”
In other words, he said, “I think the state has lost its focus on taking advantage of its assets. As a result, our success is hit and miss.”
Economist Brian Lewandowski, executive director of the University of Colorado’s Business Research Division at the Leeds School of Business, offered a long-term perspective.
The state doesn’t always follow the national trend. It had a slow recovery after the dot-com bust at the turn of the century. But after the Great Recession, Colorado outperformed other states.
“Over 15 years, Colorado was fourth for GDP growth, seventh for employment growth, seventh for population growth, fourth for personal income growth, second for per-capita personal income growth and sixth for home price growth,” Lewandowski said. “If you line us up against all other states, we’re top 10 even including the last couple years — including 2025.”
His team at Leeds was on the fence about whether the state would see job growth in 2025. They had projected 0.4% growth in 2025 and 0.6% in 2026. But with a small margin of error, he said that projection could also be negative, which it ultimately was.
“I think even if we were adding 10,000 jobs, I would still say it’s not great,” Lewandowski said. “If we’re up 10,000 jobs and we compare that over the last 25 years outside of a recession, that would be the slowest growth. If we’re talking minus 7,000, plus 7,000 or plus 10,000, to me it’s still sending the same signal. Colorado is stuck in slow-growth mode, and I’m having a hard time envisioning what will break Colorado out of that and into a growth cycle like what we have seen over the last 15 years.”
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