Shrinking wages, workforce are indicators of local economic prospects on a plateau
The recession took a $91 million annual bite out of the Mesa County economy and killed more than 600 businesses, state figures show.
A slowing economy also took the wind out of the sails of population growth, slowing a two-decade trend of 2.6 percent annual population growth.
Mesa County remains likely to grow, though at a rate of less than 1 percent through 2014, and by 2015 see growth of just under 2 percent, according to projections by the Colorado State Demographer’s Office.
Most troubling of the various factors associated with the downturn, however, is the reduction in the labor force since 2009, said Sue Tuffin, director of the Mesa County Workforce Center.
In January 2009, Mesa County had a labor force of 83,080. As of January 2014, the labor force had shrunk to 75,907, a drop of 8.6 percent
“It not jobs” plaguing the county economy, Tuffin said. “I’m talking loss of bodies.”
The bodies that remain in the county also are earning less.
Mesa County ended 2008 with $698 million in total wages and ended 2012 with $607 million in total wages, according to labor-market index statistics compiled by the Colorado Department of Labor.
Wage earners in all of Colorado’s major counties saw growth in their weekly wages over the 2008-2012 period, except in Mesa County, where weekly wages dropped from $820 to $798.
Statewide, the average weekly wage grew from $932 to $1,032 over that same time period, according to the labor-market index.
Even as the labor force and wages shrunk, the county’s unemployment rate has risen. Since January 2009, the county’s unemployment rate rose from 6.4 percent to 8.3 percent, two percentage points above that of the state’s 6.3 percent rate.
The picture, said Kelly Flenniken, director of the Grand Junction Economic Partnership, is bleak, but not without an occasional bright spot.
“There are still positive things happening in the economy,” Flenniken said.
To be sure, much of the decline can be attributed to the slowdown in exploration for natural gas in the Piceance Basin, but mining remains a bright spot, Flenniken said.
The economic sector that absorbed the biggest hit was construction and it wasn’t just those businesses that worked in the gas patch.
“It was also general business construction,” Flenniken said. “There are just not a whole lot of new buildings” going up.
One phenomenon buoying the Grand Valley economy is a slew of oil-patch commuters, people who followed energy-industry work out of western Colorado to North Dakota, Pennsylvania, Texas and elsewhere, but whose homes and families remain in the Grand Valley.
Commuting, however, can only last so long. “Then, when things didn’t pick up here after a period of time, they moved to where the jobs were,” said Diane Schwenke, president of the Grand Junction Area Chamber of Commerce.
It’s true that people follow jobs, but a lot of jobs go where the people are, “so we have this little vicious circle thing that’s not helping in terms of us trying to recover economically,” Schwenke said.
Many in the energy business point to new regulations as making it difficult to keep drilling companies and their related service businesses in town.
Mesa County already has lost two oil-patch giants in the form of Schlumberger and Weatherford.
Smaller businesses were leaving before those two large employers left, noted Gerald Daub, a Grand Junction geologist who last year coordinated the drilling of India’s first well to be hydraulically fractured.
“I know there are quite a number of local people who have to travel back and forth to North Dakota and the Front Range where there is more active oil and gas drilling, exploration, development and production-type work ongoing,” Daub said in an email. “A number of energy-related service companies have recently pulled out of the Grand Valley due to a lack of local energy-related projects in the area.”
That’s similar to the experience of Grand Junction-based EIS Solutions, said company President Wade Haerle.
“We used to have nine people in the Grand Junction office and three in Denver,” Haerle said. “Now it’s the opposite.”
Energy companies seek out EIS’ services to help navigate the federal environmental-review process, but there are fewer companies doing that now west of the Continental Divide and east of Utah.
“If it’s hard (to get permits), you need me,” Haerle said. “If it’s impossible, you don’t try.”
While Mesa County and western Colorado remains stagnant, Haerle said, the economy just to the west is growing.
“Vernal (Utah) is blowing and going,” Haerle said. “The product is no different. The only difference is an artificial line” separating Utah and Colorado.
Resource West, based in Grand Junction, manufactures mining and drilling components and is set to grow to meet demands from a global, but not regional market, said company President Jack Hays.
“Virtually none of my business is done locally,” Hays said.
Observers of the economy had few illusions when the 2008 recession took hold, Flenniken said.
“We were late going into the recession, so we all knew we would be late coming out of it,” she said, but it doesn’t lessen the sting to know that the economy on the other side of the Continental Divide “three hours away, is booming.”