Colorado’s health-care service economy is booming. But at what cost?

Is it too early to roll out the next iteration of the Colorado ‘brand’? A just-released economic report from CSU’s Regional Economics Institute provides some direction.

‘Colorado: Sick and Getting Sicker. And Older’, doesn’t have quite the same ring as ‘It’s our Nature’, but since the Great Recession, Colorado’s ‘Health-care and Social Assistance’ service sector has added more jobs than any in the state. By a lot.

The Regional Economics Institute’s report quantified the trend:

‘Health care and social assistance is the state’s largest sector and has steadily added jobs over the past decade.

Since the start of the millennium the nation’s job growth has been driven largely by the expanding health care sector and Colorado is no different. In the third quarter of 2013 Health care and social assistance was the state’s largest sector in terms of employment, with more than 286,400 workers.’

And in the past five years, the sector’s taken on a life of it’s own.

‘Health care and social assistance added more than 50,200 jobs over the timeframe, more than the combined total of the next two largest growth sectors (Professional and technical services and Accommodation and food services).’

Of course we’re not that sick. But the data tell a story of how rising insurance premiums, medical fees and prescription drug prices aren’t just funding our care but a significant expansion of the health-service complex. We’re building a private-sector behemoth to maintain and monitor our health. The business of social assistance is booming.

The downsides seem straightforward enough. Our care hasn’t improved to the degree our rates have risen the past decade or so. And consumers should prepare to pay more. It will be increasingly hard to roll back fees or slow down a service sector that’s creating new ways to generate revenue. For Coloradans who live the healthy lifestyle that was in part invented here, it’s an especially tough pill to swallow.

Service jobs including those in health-care also pay less than those they’re replacing. As a result household wages continue to fall from their pre-recession highs. As the reports states:

‘…although the state is adding jobs, much of the growth is concentrated in industries with average wages below the state average.’

REI’s report does shed some positive light on job growth:

‘The Great Recession was hard on Colorado, wiping out more than 146,000 jobs in 18 months. Since bottoming out in 2010, the state’s employment totals have steadily grown, and today Colorado has more jobs than ever before.’

Unemployment remains stubbornly high, though, and a recovery varies greatly from metro area to metro area. Grand Junction and Colorado Springs, for example, haven’t added jobs at the same rate northern Colorado, or the Denver Metro area have.

But Colorado’s labor force is growing and sectors that would diversify the economy and pay higher wages have huge potential here. The state continues to churn out or attract an educated, risk-taking workforce. And companies and eco-devo entities are powering a regional surge in entrepreneurship.

But how to support these sectors – including manufacturing – is a challenge. CSU’s news release promoting the report summed it up this way:

“The varied economic progress across Colorado shows the diversity of the state’s economy. Yet it also highlights the need for more geographically targeted economic development policy. What works in one region will not necessarily work elsewhere.”

We’ll explore Colorado’s regional economic realities as reported by REI, and the diverse set of economic development needs, in the coming weeks.