Looking back at the Colorado Springs economy at the beginning of the 1990's shows us how rapid the pace of change has been in our community. The issues of yesterday were how to improve our local economy through job growth and stronger housing demand.
Today, the themes sounded by residents and leaders of Colorado Springs are very different - housing affordability, traffic congestion, and preserving our quality of life in the face of growth. How did so many changes occur in the last few years? Can we learn from them in ways that will help us have a strong local economy inanother ten years?
In the early 1990's, the primary goal in our community was attracting jobs to Colorado Springs - jobs at almost any cost. Our economy was in the doldrums. Housing values were recovering from their crash in the late 1980's but many apartment complexes advertised the third months' rent free to fill excess capacity. Unemployment rates were substantially higher here than nationally or in the Boulder-Denver area -- and wages were substantially lower. The reasoning in economic development policy was that even if new jobs went to new residents rather than existing ones, housing prices would be bid up and the glut of surplus apartment and office space absorbed. And as newcomers spent their monthly checks the retail sector would recover along with housing since more spending creates new opportunities for businesses and new jobs.
Between 1990 and 1998, El Paso County population grew by over 93,000 -- the largest growth of any Colorado county. Our town, used to depending on tourism and the military, broadened its economic base to include high tech manufacturing and then, with MCI and a host of smaller new employers, the higher end high tech jobs. Efforts to attract more nonprofit headquarters were also highly successful, bringing annual job growth to levels not seen since the mid 1980's. Formerly depressed median family incomes and home prices rose to above the national average at a time when both were booming nationally. Unemployment rates fell to below national averages, although still remaining above the Colorado and Denver metro averages.
Today the question is where our economy is headed in terms of risks and opportunities for the next ten years. While national trends and international economic fluctuations beyond our control will determine part of the answer, choices we make here in Colorado Springs today are a big part of the picture. In El Paso County and in Colorado business people, state and local policymakers, and private citizens will have a major impact on the quality of our standard of living years down the road. During our economic good times, we need to think carefully about the quality of jobs we want to attract to our community and the kinds of public investments we are willing to make.
Despite the fact that we have a well-educated population by both state and national standards, many are underemployed. This means lower family incomes and less spending power per person than the same educational levels produce in other communities. These in turn affect the kind of retail businesses which can be supported in our community. They affect the number of children coming to school ready to learn and the kinds of health care coverage people have - things we all pay for on a public level through taxes.
Good quality jobs pay enough to support the cost of living (housing in particular) and provide adequate health care coverage. Without this coverage, new workers simply become a burden on existing citizens who must subsidize the care through higher taxes or hospital charges. Good jobs provide on-the-job training or support for continuing formal education, facilitating career advancement.
High quality graduate and undergraduate education attracts and keeps innovators in our community. A vibrant small business sector is one of the greatest stabilizing forces a local economy can have. Entrepreneurs with a personal investment in the community are much less prone to move a factory than is a branch of a multinational. As their businesses grow and prosper, local entrepreneurs contribute to the cultural and educational resources of the area.
One of the benefits of economic growth is that it expands our choices, making it easier to invest long-term without eroding our current standard of living. One of the negatives of economic growth is that many are lulled into believing that it will continue without interruption. This hurts our ability to invest for the future. Postponing investments in infrastructure or education is like putting off fixing a leaky roof. It makes sense to put off only if we are confident in a greater ability to spend higher in the future than now.
The problem is that although our economy seems to have changed in some very fundamental ways, it's a far stretch to believe that we have repealed the business cycle. Recessions will continue to occur in the United States and Colorado may well repeat its' "boom and bust" cycle once again.
Since the passage of TABOR (the 1992 tax and spending limitation amendment to the Colorado Constitution), infrastructure decisions are decided more and more by the citizenry rather than elected officials. Voters decide whether surplus tax revenues will be returned through temporary refunds, permanent tax cuts, or spent on infrastructure and capital construction.
Bringing in businesses that contribute to the tax base used to be an important goal to policymakers. However, with TABOR in place, economic growth which produces additional tax revenues -- above and beyond the allowed TABOR formula of population growth plus inflation - results in tax refunds rather than increased ability to pay for public infrastructure. Economic growth can make people better off in the private portion of their life, but it is much more difficult to use it to pay for the amenities a more affluent society demands from local governments.
Whether we repeat the boom and bust cycle of the past, or continue on a more balanced growth path in the future, depends in part on the choices we make now. More selectivity in the kinds of jobs we want to attract, along with a willingness to invest in the transportation, quality of life, and educational infrastructure that supports these jobs, are two good choices we can make today.
Daphne Greenwood is Professor of Economics and Director of the new Center for Colorado Policy Studies at CU-Colorado Springs. She earned a Ph. d. in Economics at the University of Oklahoma, and has worked as a corporate economist and with the U. S. Treasury Department, in addition to serving in the Colorado legislature in the early 1990's.