Colorado’s high unemployment rate flatlines, but economist says the state has a ‘healthy market for labor’

Colorado’s unemployment rate has stalled for a second month in a row, which economists say could be signaling positive movement in the job market.

The state unemployment rate has sat at 4.8% from March to May 2025, its highest rate since September 2021 and over half a percent higher than the 4.1% rate businesses were reporting in May 2024.

Colorado’s job growth, however, seems to be on the mend. May’s estimates mark the first time this year that the number of unemployed residents went down — decreasing by 100 from April to May.

The creation of new jobs has also pushed Colorado’s rate of job growth over the past year to 0.7%, notably higher than March’s 0.1% rate but lower than the U.S. rate of 1.1%. Employers gained 3,400 nonfarm payroll jobs from April to May, according to the survey of business establishments. Private sector payroll jobs increased by 3,700, while the government lost 300 jobs.

When divided further based on region, the Western Slope fared better in job creation than other parts of the state. Among Colorado’s seven metropolitan statistical areas, the Grand Junction area had the highest growth rate: 2.1%. In comparison, Denver’s job growth rate was 0.5% for the month of May.

Support Local Journalism

Donate

Even so, May’s numbers are only a small part of the bigger picture.

As of June 24, Colorado has the seventh highest unemployment rate out of all 50 states, with four other states matching its 4.8% rate according to data from the U.S. Bureau of Labor Statistics.

The 4.2% national unemployment rate also remained unchanged from April to May, though still notably beneath what economists consider to be the cap for full-time employment. Colorado, on the other hand, only seemed to be inching closer until it plateaued in March.

Labor and employment experts say there is nothing unusual about current changes to Colorado’s unemployment rate — or lack thereof.

“The unemployment rate is one of many measures of economic health. It tends to move slowly over time,” Colorado Department of Labor and Employment Economist Tim Wonhof said in an email. “The unemployment rate for both Colorado and the United States has been gradually rising since the middle of 2022. There is nothing unusual about the current movements.”

Although the share of Coloradans participating in the labor force went down to 67.7% in May, and the U.S. labor force participation rate went down two-tenths of a percentage point to 62.4%, those metrics are still considered to be within a healthy range for the state.

“Colorado ranks sixth and seventh in the country for the Labor Force Participation Rate and the Employment to Population Ratio (64.5%). … In short, Colorado has a healthy market for labor,” Wonhof said.

The gradual increase of Colorado’s unemployment rate since the middle of 2022 is also notable for a few reasons, one of them being that Colorado has historically stayed below the national average.

Colorado’s position of trailing behind the national average could suggest that external challenges like demographic factors, weakened sectors, and federal layoffs could be influencing the job market.

A rising unemployment rate, however, could also be explained by a growing workforce as more people migrate to the state.

“New entrants to the workforce are often unemployed when they enter the labor force; therefore, a growing labor force can lead to higher levels of unemployment until these labor force participants find jobs,” Wonhof said.

Still, the state’s use of labor data over time to assess job market trends has not raised any alarms or signaled anything out of the ordinary, the department said.

“Labor markets move like cruise ships, not speed boats, which is to say that they change course over long periods of time,” Wonhof said. “We examine the market for labor using averages over time because doing so lets us identify broader trends.

“I don’t view the present labor market as a new normal,” he added. “It is simply the labor market.”