Colorado’s businesses are at risk of losing their competitive edge to companies in other states and it comes down to whether people can afford to live here, according to a report from the Romer Institute of Evidence-based Policy.
The reasons behind the state’s economic headwinds are multifaceted, but one thing is clear. The housing crunch is making it harder to recruit workers, the report found.
The analysis looks at Colorado’s economy relative to Arizona, North Carolina, Texas, Utah and Washington. The states were chosen because they overlap Colorado’s economy based on region or industry, and they compete for talent, investment and business location decisions, according to the Denver-based nonprofit policy group that bears the name of former Colorado Gov. Roy Romer.
Colorado’s economy has been slowing for several years following a surge in growth as the U.S. emerged from the pandemic recession. Since 2022, Colorado has had slower job growth than all its peer states and the national average, according to the report. Last year, Colorado lost jobs for the first time since 2010, excluding COVID-19 job losses.
Colorado’s business climate is currently a prominent topic among legislators and business advocacy groups, according to the report. The vibe, though, is not good. The authors note a sharp decline in business confidence around the state.
“Confidence fell faster than objective performance data alone would predict,” according to the report.
Different constituencies point to different reasons for the pessimistic outlook. For instance, the Kansas City Federal Reserve Bank highlights downturns in the technology and construction sectors. Business organizations are more likely to blame the state’s regulatory burdens.
But, according to the Romer Institute, affordability is the clearest weakness. The cost of living – and, more specifically, the cost of housing – has gotten measurably worse in recent years. Housing is now the most-cited barrier to attracting workers, the report found.
The housing premium over the national average was 27% in 2024. That means a home in Colorado costs 27% more than the typical U.S. home. In 2010, the Colorado premium was 12%.
Right now, the median home price in Denver, Colorado’s biggest housing market, is roughly $616,000.
Housing costs could be pushing people to leave the state, or discouraging people from moving to Colorado. Colorado’s net domestic migration turned negative in 2023. It was the only state among its peers with out-migration that year.
One of Colorado’s key advantages is a highly educated workforce. But that could start to change if people don’t want to move to Colorado. Roughly 75% of college educated adults in Colorado weren’t born in the state.
“Because the state’s workforce advantage depends on continued in-migration, sustained affordability pressure poses a longer term risk to one of Colorado core competitive strengths,” according to the report.
Labor costs are high in Colorado, which makes hiring and retaining workers more expensive, the report found. Colorado’s median annual wage jumped 63% to $59,800 between 2010 and 2025. The state’s wages are consistently higher than other peer states with the exception of Washington. The higher wages are in part a reflection of a highly educated workforce and higher cost of living.
Trade associations that represent labor-intensive industries such as accommodation, food service and retail cited the minimum wage as a significant cost in Colorado.
Other workforce issues frequently flagged by employers include regulatory requirements such as FAMLI, paid sick leave and wage-transparency rules.
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