Colorado business leaders are losing optimism about the economy – but 55% expect to raise wages anyway
No surprise here. Global unrest with Russia’s invasion of Ukraine and continued and rising inflation has made Colorado business leaders less optimistic about the economy this year than last, according to a new survey.
But has it changed the way they run their business?
According to new analysis from Leeds Business Confidence Index, 55% of 195 local business leaders surveyed said they plan to raise wages, while only 8% plan to cut staff and 1% plan to cut hours . Nearly half, or 46%, will raise prices or pass the costs on to consumers due to inflation.
“They’re pessimistic about the (economic) backdrop,” said Rich Wobbekind, senior economist and faculty director of the Leeds Business Research Division at the University of Colorado. “But in their own responses, they say in the next three and six months we’re going to hire more people, we’re going to invest in more capital. So they are still in expansion mode even though they are concerned about the economy in general.
Incidentally, inflation in Colorado is expected to rise to 7.3% this year and slow to 2.8% next year.
The index measures the optimism of business leaders and above 50 is considered positive. And while most categories are still above 50, including what leaders think about Colorado’s economy, worries about world events and inflation caused the Leeds index to drop to 40, 4 for the national economy in the second quarter of 2022.
Brian Lewandowski, the division’s executive director, said business leaders tend to be more optimistic about the state’s economy than the country’s. It’s because they live here and work here, so what’s happening out of state isn’t as tangible.
“The only thing I would add,” he said, “inflation expectations are almost as bad as actual inflation. is about business confidence. So it’s still positive right now, which is a good signal. But if business leaders are pessimistic about the future, if they expect the future is worse than it is today, this could impact how they invest, hire and try to grow their business, so it is a concern when it drops below 50 . »
→ See Q2 Leeds Business Confidence Index Report >> REPORT
Colorado hospitality workers had the highest rate of job quits
Colorado workers could finally get the jobs they want — or at least employers are doing their best to keep them — as the national job quit rate fell in March and leveled off in Colorado , according to new data from Gusto, a Denver-headquartered payroll and benefits services company.
Colorado’s dropout rate in March was 3.01%, down from 3.03% in February, and nearly half of August’s high of 5.04%. The national average was 2.85% in March, compared to 3.09% in February and 4.94% in August.
But there is something else happening in accommodation, which is basically the hospitality industry. This part of the economy had a 10% dropout rate in March, according to Gusto, who can analyze its own customer data to see trends before the national report is released. Other service industries — including retail and food and beverage — also saw rates above Colorado’s overall quit rate of 3.01% and the US rate of 2.85%.
Gusto’s senior economist, Luke Pardue, theorizes that this type of worker can find another job fairly easily these days. Companies from Amazon to United Airlines are all looking for workers who, at a minimum, are nice to customers and show up on time.
“These industries where we see the highest quit rates, we also see the highest hiring rates,” Pardue said. “It’s a sign that workers are really changing jobs within industries for higher pay, better conditions or better benefits.”
However, he added, “a 10% quit rate in housing is not something we have seen (since) quit rates hit 10% in August 2021 as many workers have left seasonal positions at the end of the summer. Also, a 10% dropout rate is not something we have seen in other sub-sectors lately. »
As hotels prepare for warmer weather and more visitors, they are again in competition with each other as well as the rest of the hospitality, travel and restaurant industries which are preparing also for what they hope will be a more fortuitous season.
The cost of benefits
Scrolling through help ads, it’s hard to find work in a hotel without some sort of incentive beyond a paycheck.
The Sheraton Denver Downtown Hotel is offering a $1,000 signing bonus for experienced cooks (the gig pays $22 an hour and includes health and retirement plans). Springhill Suites in Denver offered medical and retirement benefits, an RTD pass, and a $750 hiring bonus for a room attendant (although that position appears to be filled).
The key here may be to offer benefits in the first place. And they might not be as important as an employer assumes. According to Gallup poll data, replacing a worker costs half to twice the former worker’s salary.
Pardue calculated the cost of replacement versus the retirement benefit offer, based on data from Gusto and the Bureau of Labor Statistics:
- Retirement benefits reduced quit rates by 1.3 percentage points, or 15.6% for 12 months.
- A company with 25 workers and a 15.6% lower quit rate loses 3.9 fewer workers per year.
- With an annual salary of $30,000, these 3.9 jobs cost, at the very least, $58,500 to replace.
- The BLS estimates that retirement benefits cost an employer 3.5% of a worker’s salary. For 25 employees, it’s $26,250 a year.
So that pays $26,250 per year versus $58,500.
“Based on our bottom-of-the-envelope calculation, the return is more than double the cost of a pension plan. So one thing they can actually do is offer these low-cost or free benefits that aren’t necessarily as expensive as, say, health insurance, but have the benefit of retaining and attracting talent,” he said. “Providing, for example, retirement benefits may seem like an upfront cost, but it has these returns that more than pay off.”
>> Learn more about Gusto’s benefit analysis
→ Colorado Employers: did you do something differently to retain workers? Or, if you are an employee, what is holding you back in your current company? Share your story with me at [email protected]
A real job fair: United Airlines
After writing about unemployment, jobs, and Colorado’s pandemic economy for two years, I finally had the chance to stop by a real live job fair. Those in-person career events aren’t fully back, but at the invitation of United Airlines, I stopped by their event at the United Club at Empower Field at Mile High Stadium on Tuesday.
The airline desperately needs workers, and I’ve mentioned how they’ve changed their benefits in previous columns, including bonuses of up to $10,000 and rolling out new starting salaries of $19.64 l hour for baggage handlers and customer service representatives.
At the end of the day, 970 people stopped by for the event and 350 left with a job offer, United spokesman Russell Carlton told me. Of those offers, he said, “over 200 were for customer service, just over 100 were for ramp agents and over 20 were for positions within our technical operations division.”
United plans to hire another 3,000 workers by 2026, but that’s not just to get back to pre-pandemic levels. This is a major expansion underway in Denver. The company has committed to adding 200 more daily flights and 20 more gates at Denver International Airport. Read more about investment and jobs in my previous story: “United Airlines needs more workers as it undergoes one of its biggest expansions in Denver in years”
Other work bits
SUPPORT FOR SMALL BUSINESS: Energize Colorado, the organization that helped disburse some federal pandemic funds to small businesses, is back with the Energize Community Program. It targets communities on East Colfax Avenue, southwest Denver and Pueblo. In addition, there is a program around childcare. The idea is to offer “financing readiness workshops” as well as low-interest loans of up to $20,000. Kick-off is April 5 at 4 p.m. online. >> REGISTER
SPACE OPERATIONS: Northrop Grumman Corp. opened a new research facility at Longbow Park in Boulder for its space infrared systems and “specialty warfare development” for the US Space Force and Missile Defense Agency. And guess what? They are hiring! There are approximately 100 positions to be filled by the end of the year. This will bring the company’s workforce in Boulder to 500 and its team in Colorado to 2,200. >> APPLY
APPRENTICESHIP GRANTS: The Colorado Office of the Future of Work accepts applications from companies that are building or expanding their own formal apprenticeship program. What’s Working wrote about this topic last week (read that here). >> APPLY
*Do you have any advice or something to add? E-mail [email protected]
Thanks for waiting another week. If you came across this column online, you can get it delivered to your inbox every Saturday by signing up at coloradosun.com/getww. Be careful! ~Tamara