Originally published in The Denver Post
By Patrick Sobers
The presence of two Coloradans in the presidential race helped shine a national spotlight on the mountain state’s enviable economic record.
Both former Gov. John Hickenlooper and Sen. Michael Bennet pointed to nation-leading growth, falling unemployment, and an increasingly resilient economy when they went up against fellow Democratic contenders. Hickenlooper dropped out of the presidential race a few weeks ago and soon after announced he was running for the U.S. Senate.
The state added more than 65,000 jobs last year, with particularly strong growth in higher-paying roles, as the economy hummed along at a pace of 3.5 percent. Unemployment has steadily fallen to 3 percent compared to a national rate of 3.8 percent.
Colorado’s population has been expanding at an annual rate of 1.4 percent, adding 80,000 people just last year. That is nearly double the U.S. population growth rate, and largely due to strong net migration into the state.
This is an economic story that is worth bragging about, and it shows few signs of fizzling. There are also lessons for other states and leaders in how we got here.
For starters, Colorado is lucky. The state is blessed with a rare geography and climate that attracts recreational visitors all year round (skiing in the winter, river rafting and hiking in the summer), while making it a desirable place to live and work. The outdoor recreation industry in Colorado alone is worth $65 billion, supporting more than 500,000 jobs..
But, the state’s success is mostly a result of far-sighted policies implemented over the last two decades by leaders of all political stripes. These have made the state one of the most attractive places to live and do business.
A prime example of Colorado’s prescient moves was the decision to build a world-class international airport for Denver just over two decades ago. The city probably didn’t need an airport of that size back then, but now the fifth busiest U.S. airport is an essential part of the city and state’s appeal, accommodating the huge flow of business visitors and tourists.
The Wall Street Journal last year named it the best U.S. airport, citing its reliability, value and convenience. Even the airport’s location on the outskirts of Denver was a smart move, meaning there is room for further expansion as it prepares to handle 80 million passengers a year by 2025, up from 64.5 million last year.
Whatever your personal views on the subject, the 2014 legalization of marijuana and the industry’s subsequent growth has been a revenue boon for the state. Regulated pot sales have now topped $6 billion since legalization, generating more than $1 billion in state revenues. Aside from the direct economic boost in terms of jobs and income, legalization is an undeniable lifestyle selling point for the younger generation of workers and for tourists. A quarter of people who visited the state between 2013 and 2018 listed marijuana as a reason.
The fast-growing tech industry around Denver and Boulder is another example of the state’s ability to embrace new industries. Much like Austin, Nashville, Salt Lake City and Indianapolis, tech companies and entrepreneurs have been flocking to the area, attracted by the Denver-Boulder network of higher education institutions, business-friendly regulations, collaborative culture, recreational options, and relatively affordable lifestyle. Denver has more affordable rent than 21 major U.S. markets and has the second-most residents with a bachelor’s degree, according to CBRE’s 2018 Colorado tech report.
The state has helped foster the growth of the tech scene and other businesses through its relatively low tax burden, as well as special tax credits for job creation and business development in enterprise zones or economically disadvantaged areas.
These policies have helped turn Colorado into a cradle for business development. Restaurant chains like Chipotle and Smashburger, retailer Dick’s Sporting Goods and marketing tech firm SendGrid are among the best known companies that were incubated in the state.
Gone are the days when the state’s economy rose and fell with the fortunes of the oil industry. The state’s economy barely skipped a beat after energy prices plunged in 2014-15. Office vacancy rates stayed low as new businesses moved in and workers transitioned to new industries.
Sam Bailey, vice president for economic development at the Denver Metro Chamber of Commerce, points to three other key developments in the last decade that help set Colorado on this course:
The development of a $4.7 billion rail system that added 122 miles of commuter, light rail and bus rapid transit since winning taxpayer approval from city and suburban voters in 2004. It makes getting in and out of the central business district much easier. And while ridership is not nearly in line with projections, new arrivals to the metro area think it’s great, Bailey said.
The state’s strong push to expand broadband to every part of Colorado. By 2021, nearly all of the state will have this technology, an important consideration for new residents and a magnet for businesses, as well.
Between 2011 and 2018, the state cut 11,000 regulations that saved $8 million a year and cut 2 million hours in unnecessary work by employees and businesses.
To be sure, the state’s success has put more pressure on infrastructure, especially the road network. Traffic jams on the I-25 near Denver aren’t yet in the same league as Boston or San Francisco, but they are getting significantly worse.
Rapidly rising house prices, and especially how that is affecting the affordability of entry-level homes, is another trend that bears watching in the coming years.
But these are all surmountable problems, and Colorado’s positioning suggests it can remain an attractive model for other states and cities for many years to come.
Patrick Sobers is NBH Bank executive vice president, business and consumer banking, and president, Community Banks of Colorado.