While there’s been a lot of federal activity to combat economic woes, many states have rolled out their own initiatives to stay at the forefront of economic recovery and inflation mitigation. Michelle Hadwiger, Director of Global Business Development at Colorado’s Office of Economic Development and International Trade (OEDIT), recently joined us to discuss Colorado’s economic future.
What has the state done to mitigate the negative effects of this historic inflation?
HADWIGER: When Governor Jared Polis first took office, he put forward a vision of a state economy that works for everyone. To that effect, one of the original goals of his administration was to reduce costs for Coloradans. Even before the pandemic, Gov. Polis established the Office of Saving People Money on Healthcare and championed a universal preschool program, which became law in April 2022.
In January 2022, Polis challenged the Legislature to identify 50 ways the state could save people money. By June, through cooperation, the Legislature and Administration enacted 100 measures to reduce costs for people around the state. These included the suspension of the new entity filing fee with the Secretary of State, reductions in the assessment rates for business and residential property, tax rebates to individuals, suspension of scheduled increases in driver’s license fees, and expanding exemptions in the state sales tax code. OEDIT is also rolling out a series of state and federally funded access to capital programs for historically under-resourced small businesses such as the Colorado Startup Loan Fund program and credit guarantee programs provided by the Colorado Housing and Finance Authority which will help these businesses gain access to credit on more favorable and lower interest rate terms than would otherwise be available.
How would you describe Colorado’s economic future?
HADWIGER: Bright. We understand that a Fed tightening cycle will, by design, lead to slower growth. Our business of economic development is to bring jobs and growth to the region we serve. Such actions at the federal level counter to that aim: namely, demand reduction and capital restriction. It would not be prudent to expect growth to remain at the break-neck pace that we saw in 2021 and 2022 as the world tried to move beyond COVID-19 restrictions in business and travel.
Nonetheless, the Colorado economy has become a national success story over the last decade with the development of a diverse set of dense and rapidly growing advanced sectors, which create a resilient base together with the state’s traditional industries. Perhaps the most well-known at this point is our top-tier aerospace cluster, which is number one in the nation for per capita employment and has leading capabilities in propulsion and launch solutions, space vehicles, satellite communications and geospatial imaging, among others. We’ve also become a hotbed for renewable energy and clean technology, bioscience and health tech, information technology, electronics, cybersecurity, fintech and quantum.
These are the industries and technologies that will have widespread demand in the future as they have numerous applications for consumers and businesses across industries. They also are likely to be more insulated from negative demand shocks in the short term. Therefore, if we see a real reduction in industries that are quite elastic to consumer spending, say travel and leisure or durable goods manufacturing, we expect that one of our other strong industries will balance its effect, leading to stable economic performance.
The federal government put together enormous aid packages throughout the pandemic and continues to put forth legislation focused on industrial policy for the country, like the CHIPS Act, Inflation Reduction Act, and Infrastructure Investment and Jobs Act. Do you expect Colorado to benefit from these actions?
HADWIGER: Yes, absolutely. The state wasted no time in mobilizing its resources to ensure the effective capture and use of federal resources as they were rolled out to combat the health and economic impacts of the pandemic, from establishing information hot lines educating our companies on applying for Paycheck Protection Program loans to identifying investments that could be funded through the American Rescue Plan Act dollars. We see tremendous opportunities in each of the major legislative packages and are currently assessing and strategizing the ways the state can lead and support so that we can maximize their impact within our borders as well.
The great thing for Colorado is that we already have existing assets and industrial capacity in the sectors that the bills target. Take the most-discussed part of the CHIPS Act: the manufacturing incentives for entities in the semiconductor value chain. According to the Semiconductor Industry Association, we are one of 18 states that have existing semiconductor manufacturing fabs. We have two, which have both recently expanded and upgraded, and we are 13th in the number of establishments in semiconductor manufacturing. Along with these two fabs, we have a vibrant and dense ecosystem in design, testing, and packaging. In fact, Colorado’s employment in the printed circuit assemblies — essentially packages of semiconductor chips designed for specific functions — is over 30% denser than that of the nation and grew by 4% since 2018, while national employment in the industry shrunk by 2%. And Colorado has the only full-size flat panel semiconductor foundry in the U.S., located in Colorado Springs. Its products are essentially flexible glass and plastic panels of chips that are integral to medical imaging, defense and IoT products.
Michelle Hadwiger is Director of Global Business Development at Colorado’s Office of Economic Development and International Trade.
But we are also well-set to capture the funding streams of Division B, which includes the lesser-known provisions of CHIPS. These provide additional authorizations to the National Science Foundation, Department of Energy, and National Institute of Standards and Technology for a broad array of science-related programs, like expanding and updating National Labs and establishing new centers of research and national networks. We have 33 federally-funded labs in the state, including celebrated facilities of all three of these institutions, like the DOE National Renewable Energy Laboratory, NIST Boulder Microfabrication Facility — where researchers design and test microelectronics — and the NSF National Ecological Observatory Network. These facilities often work in collaboration with our top-tier university system and innovative companies, forming partnerships and consortia like the Cooperative Institute for Research in Environmental Sciences, the Laboratory for Atmospheric and Space Physics, and the Renewable and Sustainable Energy Institute.
It sounds like Colorado has had a fair bit of success nationally. Nonetheless, it is situated near the geographic center of the U.S. and far from internationally known destinations like the Bay Area and New York City. That must make it difficult to recruit foreign companies to the state.
HADWIGER: That may have been the case 10 years ago, but Colorado continues to gain global recognition. Companies are increasingly looking past the crowded coasts for other areas to set up operations where they can generate revenue without exorbitant costs or taxes that erode profits. Colorado has been able to deliver on that value proposition, and word has gotten out.
Also, through Denver International Airport (DEN), which became the third busiest in the world in 2021, executives can reach any major U.S. city in four hours. If I were an executive based in New York City, it would take me six and a half hours to get to San Francisco. DEN also has direct routes to 28 international destinations in 12 countries, including Europe, Asia and the Americas.
All of this is not just speculation; our numbers speak for themselves. By our estimates, which we know are incomplete, there are currently 264 foreign multinational enterprises in Colorado employing over 130,000 of our residents. They come from all over the world, with some of our top connections coming from the UK, Germany, the Netherlands, France, Switzerland, Austria, Japan, South Korea, India, Australia and New Zealand. Panasonic, Siemens, Thyssenkrupp, BAE Systems, Reaction Engines, Surrey Satellites, Terumo, and AGC Biologics are just a few with broad name recognition.
Colorado has for some time now sat at or near the top of workforce rankings in publications by Forbes, CNBC, and U.S. News & World Report. What is going on there?
HADWIGER: We simply have one of the best talent pools in the nation, which is highly educated, skilled and productive. For education, 44% of our population 25 years and older holds a bachelor’s or more advanced degree, which is the third highest share in the U.S. Over 7% of the workforce is employed in STEM occupations. That’s fifth in the U.S. Engineers, physical scientists, software developers and business operations specialists are particularly dense in Colorado. For motivation, the labor force participation rate in October 2022 was over 69% and second in the U.S. Colorado was one of three states that had a higher labor force participation rate in October 2022 than October 2019, the equivalent month pre-pandemic. And this talent pool has been growing for some time due to an influx of professionals and recent graduates. Prior to the pandemic, between 2010 and 2019, Colorado averaged an additional 46,000 residents through net migration annually. Many of those coming in were young professionals seeking employment and holding advanced degrees. The university system in Colorado confers over 50,000 advanced degrees each year, with a much higher share going to graduates in STEM programs than in the nation as a whole. These mechanics helped Colorado experience the third fastest growth in the nation in both population and employment from 2010 to 2019, which increased by 14% and 22%, respectively.
Does everyone thrive in Colorado?
HADWIGER: Generally, yes. We can see this through our minority business population. Colorado recently ranked No. 1 for female entrepreneurship in Fit Small Business and Merchant Maverick. In the latter, the state ranked in the top five in component rankings for the share of employer firms owned by women, share of women self-employed in their own business, and the total venture capital invested in women-led startups. The share of Colorado businesses owned by those of Hispanic descent is also ninth highest in the nation, at 6%. Ownership among other racial minorities, at almost 13%, is in the middle of the pack, but much higher than our neighboring states like Utah, Kansas and Wyoming, which are all in the single digits and near the bottom of the distribution. All of these groups saw strong growth pre-pandemic, at rates well above the growth in all firms and non-minority firms.
The NIST-F1 Cesium Fountain Atomic Clock, located in Boulder, maintains the primary time and frequency standard for the U.S.
Photo by Geoffrey Wheeler courtesy of NIST
Obviously, no place is without its issues, and we know that these populations were especially vulnerable to the impacts of the pandemic. The Office of Economic Development and International Trade works to support these and all types of businesses through our various divisions and programs. The Minority Business Office, Employee Ownership Office, Small Business Development Centers, Advanced Industries Accelerator Program and Job Growth Incentive Tax Credits are just a few ways that we try to bolster the Colorado business community and foster a vibrant local economy for everyone.
What is the one thing that would surprise most people about Colorado?
HADWIGER: Just how much their daily lives depend on innovation from the people who live here and the companies that operate here. The prime example is GPS. About two-thirds of the current satellite constellation that enables GPS was built by Lockheed Martin Space in Littleton, Colorado, and launched by United Launch Alliance, headquartered in Centennial, Colorado. All GPS satellites are controlled by the U.S. Space Force from Schriever Air Force Base in Colorado Springs. And the satellites for the newest generation, GPS III, are currently in production at the Lockheed Martin Waterton Canyon campus in Littleton, while their ground-based control system is being developed by Raytheon in Aurora. We all know that GPS is great for navigation, but it also provides location and timing signals that are integral to global supply chain logistics, wireless networks, land surveying and financial transactions, just to name a few. The world that we live in every day would simply not exist without it.
The dense R&D ecosystem in the state, of which I spoke earlier, is constantly producing deeper scientific insights and advanced equipment that allow us a better understanding of our universe. For example, we are the home to the NIST-F1 Cesium Fountain Atomic Clock, which is one of the most accurate clocks in the world and the primary time and frequency standard for the U.S. It coordinates with a group of international atomic clocks that together define the world’s Coordinated Universal Time system. So, every time you check the time on your phone, Colorado played a part.
There are hundreds of other less dramatic examples, like recyclable aluminum cans, Crocs, and F1. But I’ll let our readers do the research to discover the connections. Other examples are almost as ubiquitous, if not quite so dramatic. We house the headquarters, and thus the leadership, of some of the largest companies in the U.S. and the world, including Arrow Electronics; Ball Corp., which gave the world the recyclable aluminum can; Liberty Group, which owns F1, the Atlanta Braves, Sirius XM Radio, Virgin Media, Vodafone and many more recognizable brands; VF Corp., most well-known for brands The North Face, Vans, and Timberland; and Western Union. Coors, Otterbox, Jolly Ranchers and Crocs were all invented in the state, as were rodeos, Christmas lights, cheeseburgers, and root beer floats. We’re also fifth in crude oil production and 10th in the number of cattle and calves.
What about the Colorado lifestyle — the image of a skier cruising down a steep slope through knee-high powder as the sun shines bright in a deep blue sky in the background. Is that still part of modern Colorado, or a relic of the past?
HADWIGER: Skiing — and, more broadly, outdoor recreation — is very much still a part of Colorado’s identity. What is sometimes misunderstood is the diversity of experiences available to residents and visitors. Yes, we have 26 ski resorts, including some of the most celebrated in the U.S. and world: Vail, Breckenridge, Steamboat, Crested Butte.
But we also have some of the largest shares of land dedicated to various forms of recreation through the National Park System, National Forest Service, Bureau of Land Management and Colorado State Park System. This allows for hiking, camping, climbing, hunting, fishing, kayaking, rafting, cycling and innumerable other outdoor activities.
I would also point out that our quality of life is not solely derived from being outdoors. We have several urban centers that provide all the amenities typical to big cities, such as highly rated restaurants, museums, concert venues, professional sports and symphonies. Colorado’s brewery culture is one of the strongest in the nation, and we have several areas where full-service casinos are legal. Cultural experiences are also available throughout the state, like the National Western Stock Show and the Mesa Verde Cliff Dwellings of the Pueblo Tribe.
This really is a testament to a prevailing belief among our residents in the value of natural and cultural experiences and the need for stewardship and conservation to keep them available for future generations. Colorado even has a special tax district that was created and repeatedly renewed in seven counties in the Denver Metro region that is used to fund organizations working in these spaces: the Scientific and Cultural Facilities District. It is now the second largest cultural funding mechanism in the U.S. and distributes about $60 million annually to 300 organizations along the Front Range.