Joshua Polson, The Greeley Tribune via AP Christine Taylor smiles as she assembles a burrito for a customer last year at the Qdoba off of 11th Avenue in Greeley.
Metro Denver employers plan to award average pay raises of 3.1 percent next year, the biggest hikes they have offered since 2008, according to an annual compensation survey from the Mountain States Employers Council.
“It is the the first time that the average projections have been above 3 percent since the recession,” said Sue Wolf, director of surveys at the MSEC, whose members include employers large and small across the state.
From 1977 through 2001, metro Denver employers consistently passed on wage increases of 4 percent or higher every year with the exception of 1995, when increases averaged 3.9 percent. After the tech bust in 2001, increases slowed but were consistently above 3 percent.
That all changed after the financial crisis in the fall of 2008, which sent the global economy into a tailspin. From 2009 on, pay raises have remained under 3 percent, although in 2016 they reached 2.9 percent, the amount of increase expected for 2017, up from an initial forecast last year of 2.8 percent.
This survey of 491 employers covering nearly 50,000 workers across the state found a statewide average increase of 3 percent projected for 2018. Fort Collins and Greeley employers are forecasting a 3.2 percent increase, the same that resort employers are expecting to provide. Western Slope employers are expecting to pass on a 2.4 percent increase, while those in southern Colorado are looking at 3 percent.
Pay increases since the recession have usually tracked with inflation, in part because employers had to divert more resources toward benefits to cope with rising health care premiums. Last year, the average pay increase in metro Denver came in at 2.9 percent, while the Denver-Boulder-Greeley Consumer Price Index rose 2.8 percent.
What makes the 3.1 percent increase projected for 2018 different is that it represents a big premium above the 2.6 percent rate of inflation that the Colorado Legislative Council is forecasting.
Wolf said rising housing costs are an issue employers are closely tracking, especially those with lower wage workers, and so is the tight labor market. Not only do high housing costs stress overstretched workers, they make it harder to recruit people to the region to fill open jobs. Colorado the past two months has posted the lowest unemployment rate of any U.S. state at 2.3 percent, and metro Denver has the lowest unemployment rate of any major metro area.
The percentage of employers statewide reporting that workers in the skilled trades and manufacturing production were the most difficult to retain or recruit — 26 percent — exceeded the 21 percent who described professional technical positions as the most difficult to retain or recruit for, the survey found. Among sectors in metro Denver where workers can expect bigger pay bumps next year are retail and wholesale trade, at 3.9 percent, and construction, at 3.5 percent.