On the surface, Colorado wages may seem rosy, but a closer look at the numbers shows there’s a lot more work to do. 

Colorado’s employers added 8,600 non-farm jobs in February 2018, bringing the unemployment rate to 3.0 percent, close to the record 2.3 percent low it hit last June. The same report shows the average hourly wage grew by 3.2 percent, following a 3 percent increase in January. These increases prompted many to assert Colorado wages are finally starting to rise in response to tight labor conditions.  

Related: What Happened to Colorado’s Middle Class?

The increase in average hourly wages from $27.44 per hour to $28.32 per hour between February 2017 and February 2018 is welcome news for many Colorado workers, but we should consider the effects of inflation and the likelihood of future wage increases before declaring our battle with stagnating wages won.  

Inflation in Colorado is growing faster than it is nationally, principally due to the increase in housing costs. In 2017, Colorado’s inflation rate was 3.7 percent, 3.4 percent if you don’t count highly volatile food and energy costs. While inflation for the nation is calculated each month, the rate for Colorado (Denver-Boulder-Greeley, CPI-U) is posted only every June and December. This mismatch in timing makes adjusting for inflation tricky. 

If we look at the 4.3 percent increase in wages from December 2016 through December 2017 — the same period as the inflation calculation — we find Colorado wages grew by 0.6 percent when adjusted for inflation. A small increase, but welcome given the flat wages we’ve seen since 2000.

Related: Forget “Middle Class” — $63,000 for a Denver Family to Just Subsist

But if we assume that Colorado’s inflation rate in January and February 2018 remained the same as for all of 2017, then rather than growing by 3.0 percent in January and 3.2 percent in February, wages did not keep pace with inflation, falling by -0.7 percent and -0.5 percent, respectively.

Increases in Colorado Wages, Compared to Inflation
(CPI-U for Denver-Boulder-Greeley)
 

Other data continue to show, for many jobs, average wages are flat or down. The most recent Quarterly Survey of Wages for Colorado shows average weekly wages for all industries grew by only 0.5 percent between the third quarter of 2016 and the third quarter of 2017, before adjusting for inflation. Average wages declined in eight of Colorado’s 21 industries accounting for 37 percent of all jobs. Another four industries, accounting for 28 percent of jobs in Colorado, had average wage increases of less than 0.3 percent. 

Related: Highlights from Beyond the Boom

Given how low our unemployment rate is and the difficulty employers report in finding workers to fill open positions, we would expect to see more and larger wage increases. The next round of data to be reported later this year will shed more light on whether wages are truly breaking out of their over 15-year funk.