Colorado’s unemployment rate has surpassed the national average for much of the past year, a development that has occurred only once before in the past fifty years. According to recent analysis, the increase in unemployment in Colorado has been primarily driven by downturns in the technology and construction sectors. Although the state’s unemployment rate has been declining in recent months, labor market conditions in Colorado remain softer than those seen nationally.
Historically, Colorado’s unemployment rate has stayed below the U.S. average, with the state averaging 5.2 percent since the 1970s compared to 6.1 percent for the nation. The last sustained period when Colorado’s unemployment rate exceeded the national average was during the late 1980s, when a decline in oil prices affected the state’s economy, which at that time had a higher concentration of employment in oil and gas.
The current period of elevated unemployment, beginning in early 2024, is marked by weakness in industries where Colorado has greater employment concentration than the U.S. overall. Technology-related unemployment insurance claims in Colorado rose by over 62 percent in 2025 compared to their 2017-2019 average, while construction-related claims increased by 42 percent. In contrast, national figures show a 19 percent rise in technology claims and a decline in construction claims during the same period, according to the Department of Labor.
Colorado’s technology sector accounted for 12.5 percent of employment on average from 2022 to 2024, compared to 8.8 percent nationally. The construction sector made up 6.3 percent of state employment, compared to 5.1 percent for the U.S. Recent declines in both residential and commercial development have contributed to job losses in these industries, impacting overall labor market conditions in Colorado.
Labor market tightness, measured by the ratio of job vacancies to unemployed individuals (V/U), has also declined in Colorado. The V/U ratio in Colorado fell below the national average in late 2024, a reversal from historical trends when Colorado typically experienced tighter labor markets than the rest of the country. Job openings in Colorado dropped by approximately 13 percent through July 2025, compared to a four percent decline nationally, according to Bureau of Labor Statistics data.
Despite these challenges, Colorado’s labor market retains several strengths. The state’s labor force has grown by about 12 percent since 2017, outpacing the national growth rate of seven percent. This expansion is largely attributed to positive net migration, which has brought skilled workers into the state. Additionally, Colorado’s labor force participation rate stands at 67.7 percent, higher than the national rate of 62.4 percent, and the state has fewer discouraged workers than the national average. Educational attainment among Colorado’s workforce also exceeds national levels.
The report concludes, “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.”
