The good news for Colorado’s small businesses is that the state’s jobless rate is down to 4.7 percent – but that’s also the bad news.
Strong employment gains mean rising incomes and more spending at small businesses, according to Vectra Bank economist Jeff Thredgold.
But, Thredgold also said that when unemployment numbers drop, it usually means workers leave small businesses for jobs with larger companies, lured away by higher salaries and better benefits.
It’s a scenario Tony Gagliardi, Colorado’s director for the National Federation of Independent Businesses, knows well.
“When the job market tightens up it promotes predatory stealing of employees,” he said. “They’ll jump ship for 50 cents more an hour.”
Pay hikes aside, Gagliardi said, employees often leave for better benefits.
“That’s why small businesses have to offer competitive health care benefits,” Gagliardi said. “That’s the NFIB’s No. 1 issue.”
Even though Colorado’s job growth lags behind Arizona, Idaho, Nevada and Utah, its unemployment rate is still down from 5.2 percent a year ago.
Colorado’s job growth has been on the upswing for the past 18 to 24 months, said Thredgold, citing numbers from Vectra Bank’s most recent Small Business Index.
Colorado’s estimated unemployment rate was down 0.1 percentage points from January and 0.5 percentage points from a year ago, and total employment rose by 55,000 jobs during the past 12 months.
The monthly index measures business conditions from the viewpoint of the Colorado small-business owner or manager and assigns a ranking according to how favorable statistics show conditions should be.
A lower unemployment rate always translates into a lower index ranking, simply because it indicates small business have less access to labor.
The Vectra Bank Small Business Index for Colorado was 102.2 during February, the most recent number available. In January, the index was 101.6.
The U.S. Small Business Index leapt to 95.6 in February from 90.1 in January, according to Thredgold.
It’s estimated that the U.S. economy added 243,000 new jobs in February. The unemployment rate rose to 4.8 percent.
Industries that produce goods experienced a 45,000 increase of jobs in February, with a decline of 1,000 manufacturing jobs.
Construction added an estimated 41,000 jobs last month; the service sector added 198,000 jobs. About 47,000 jobs were added in health care and education, and the professional and business services sector added 39,000 new jobs in February.
“That’s what I would expect to see,” said Gagliardi, “more jobs being added to other sectors.”