Colorado’s labor force shrinks to lowest since 1979

More Colorado workers left the state’s labor force last month, likely due to retirement, moving away or possibly just giving up the search.

The loss of 3,050 people in a month pulled the state’s labor force participation rate down to 65.2% in September, the lowest since Sept. 3, 1979, according to the state Department of Labor and Employment. There are still about 3.18 million people in the state’s labor force, down 75,000 from a year ago.

And the downward trend is similar to what’s been happening nationwide, said Tim Wonhof, the state’s labor market information director.

“Colorado is currently experiencing historic lows in labor force participation, mirroring a broader national long-term downward trend,” Wonhof said Friday in an email. “As of August, Colorado is still ranked in the top ten relative to other states — we’re ranked #9 for labor force participation.”

The state’s work force is getting older, as folks work past the traditional retirement age of 65. The “55 and older has nearly doubled over the last 25 years,” he added. But the other often cited reason is that fewer people are moving here. 

The declines are impacting all sorts of job data, including the state’s unemployment rate, which increased one-tenth of a point to 4.1% compared with August. Nationwide, the unemployment rate increased at the same rate to 4.2%.

“Unlike previous periods of decline associated with recessions, the more recent shift is driven by a rapidly aging population and declining net migration,” Wonhof said. “This landscape presents unique challenges for the state’s workforce as the demographic makeup of Colorado evolves more quickly than most other regions in the U.S.”

But the declines, including slowing job growth, have been impacting state job data for two years. 

Colorado’s labor force peaked in October 2024 when there were about 95,000 more people and 67.8% of all working-age Coloradans were either employed or looking for work. Age may be the reason, but there’s limited local data to back it up, said Bill Craighead, an economist and program director at the UCCS Economic Forum in Colorado Springs.

“It does feel like the drop we’ve seen this year is steeper (but) we don’t have estimates of the labor force participation rate for people aged 25-54 like we do at the national level — so it is hard to be sure,” Craighead said in an email. “Another thing we don’t have at the state level is the measure of ‘discouraged workers’ we have in the national reports. So, while on the surface, declining labor force participation is worrying, we don’t know how much of it is for negative reasons — i.e., people giving up on finding jobs — versus more benign ones.”

The state does track workers in part-time jobs who’d prefer a full-time role. So far this year, an average of 2.6% of the labor force are considered “involuntary part-time workers,” according to the official term. That’s an improvement from the 5.8% in 2020, and it’s come down from 3.3% in 2025.

Private employers did add more jobs last month, reporting a preliminary increase of 3,000 nonfarm payroll jobs. Industries that gained the most were construction, professional and business services and information. Jobs in the trade, transportation and utility sector lost 1,900 over the month. The number of government jobs declined by 600. 

August job data was revised to show a decline of 300 jobs instead of a decline of 1,400. The state has added 800 jobs a month on average in the past year.

Job numbers get updated regularly, so sometimes it’s challenging to interpret data before revisions are made.

“One thing to be cautious about is that each year they reset the population controls that are used to generate the totals for the household survey numbers like labor force and employment, but they don’t adjust them going back, so there are often these weird jumps in the data in January,” Craighead said. “That’s why it’s often better to look at numbers based on ratios, like the unemployment rate, rather than the raw numbers of employed or labor force.”