Colorado has experienced a higher unemployment rate than the national average over the past year, a rare occurrence that has happened only once before in the last five decades. According to a recent analysis, the increase in unemployment was primarily due to downturns in the technology and construction sectors, industries where Colorado has a higher concentration of workers compared to the rest of the United States.
“Colorado’s unemployment rate surpassed the national average by a notable margin in recent quarters, which hasn’t occurred since the late 1980’s (Chart 1). Starting in early 2024, Colorado’s unemployment rate (blue) ticked above the national average (purple). Colorado’s unemployment rate historically remained below the U.S. – averaging 5.2 percent since the 1970’s compared to 6.1 percent for the U.S. – and the state’s unemployment rate only persistently exceeded the national average one other time in the last half century. In the late 1980’s (1986 -1989), Colorado’s economy was hit hard by an oil price downturn at a time when state employment was more highly concentrated in the oil and gas industry. Notably, that heightened unemployment episode in Colorado occurred outside of a recession (grey bars) when the U.S. economy was growing at a healthy pace.”
Recent data show that unemployment insurance claims in Colorado’s technology sector increased by more than 60 percent in 2025 compared to the 2017-2019 average, while construction claims rose by over 40 percent. In contrast, the national rise in technology claims was less pronounced, and construction claims actually declined across the U.S. Colorado’s higher share of employment in these sectors—12.5 percent in technology and 6.3 percent in construction—has made its labor market more vulnerable to sector-specific downturns.
“Like the 1980’s, the recent episode of heightened unemployment (2024 to present) is also marked by a downturn in key industries where Colorado is more concentrated. Colorado’s relatively higher unemployment rate was driven primarily by a downturn in the technology and construction industries. Unemployment insurance claims in these sectors rose meaningfully in Colorado over the last several years, causing softer labor market conditions in the state compared to the U.S. (Chart 2 – Panels A and B). Technology-related unemployment insurance claims in the state were up over 62 percent in 2025 relative to their 2017-19 average and construction claims rose 42 percent. Over the same period, the U.S. saw a more modest rise of 19 percent for technology and a decline in construction related claims (Department of Labor).”
Labor market tightness in Colorado has also declined. The ratio of job vacancies to unemployed persons—a common measure of labor market strength—fell below the national average in late 2024. This shift indicates that job seekers in Colorado may now face more difficulty finding employment than in previous years. Job openings in the state dropped by about 13 percent through July 2025, compared to a roughly four percent decline nationally.
“While the years following the pandemic were marked by historically tight labor conditions (high V/U) both in Colorado and in the U.S., labor market tightness relaxed during the last couple years (lower V/U). The unemployment rate in Colorado trended downward in recent months (Chart 1) – a sign of improving labor market conditions – but the V/U ratio continued moving lower (Chart 3), signaling slackening labor conditions. Job openings in Colorado fell by roughly 13 percent this year (through July) compared to a roughly four percent decline for the U.S., suggesting softer labor demand in the state compared to the nation (BLS 2025b). This atypical decline in Colorado’s V/U ratio below the national average indicates the state now has more slack labor conditions than the nation and unemployed workers may face greater difficulty in finding employment locally than in years past.”
Despite these challenges, Colorado’s labor force remains robust. The state’s labor force grew by about 12 percent since 2017, outpacing the national growth rate of approximately seven percent. This expansion is attributed to positive net migration and a high labor force participation rate—67.7 percent in Colorado compared to 62.4 percent nationally in 2025. Additionally, Colorado’s workforce is characterized by higher educational attainment than the national average.
“While industry-specific job losses contributed to Colorado’s recent rise in unemployment, it is important to place the state’s current conditions in the context of several strong features of its labor market structure. Colorado has a growing, highly engaged, and educated labor force. Colorado’s labor force grew by roughly 12 percent since 2017 compared to roughly seven percent for the U.S. over the same period (Chart 4), an indicator of growing labor capacity and a contributing factor to economic growth in recent years. The growing labor force is largely driven by historically positive net-migration, adding skilled employees to the state’s workforce (Colorado Demography Office; Felix 2018). Additionally, Colorado has a significantly higher labor force participation rate than the national average – 67.7 percent for Colorado compared to 62.4 percent for the U.S. in 2025 (BLS 2025c). This means the state has a higher fraction of state population working or actively seeking work. The state typically has fewer discouraged workers – those who are not employed and not actively looking for work – than the national average, contributing to the state’s high labor force participation (BLS 2025d). Lastly, Colorado’s workforce has above average education attainment, raising the skill level of workers in the state (Census 2024). Not only does Colorado have growing labor capacity, but also a highly engaged and skilled labor force.”
In summary, while Colorado’s unemployment rate has recently exceeded that of the nation due to specific sectoral challenges, its labor force characteristics may position it for recovery if conditions improve in technology and construction.
“Colorado’s unemployment rate surpassed the U.S. in the last year, which only happened one other time in the last 50 years. Recent weakness in Colorado’s labor market can be attributed to a downturn in the technology and construction industries. While Colorado’s unemployment rate is trending downward in recent months, the state continues to face softer labor conditions than the national average. Despite relatively soft labor market conditions, Colorado’s highly engaged labor force may place the state at a longer-term advantage, positioning the state for growth if economic conditions in the challenged sectors of Colorado’s economy were to improve.”
