The good news is Colorado’s unemployment rate is 8.5%. The bad news is Colorado’s unemployment rate is 8.5%. Lame joke, I know, but it is true. The unemployment rate is essentially unchanged from July 2010 to July2011, but the factors impacting unemployment are not promising.
Predictions are that Colorado will add about 10,000 jobs in 2011. In order to get Colorado back to where we were before the recession began, we need to add 150,000 jobs. With the addition of those jobs, Colorado could achieve a 4.5% unemployment rate in four years, which is considered “full employment.”
During July 2011, Colorado’s private sector jobs increased by 4,200, but government jobs decreased by 900. We can expect government jobs to continue to slide as governments balance their budgets and increasingly pursue austerity programs. While the Tea Party will cheer smaller government, as evidenced by fewer jobs in the public sector, the individuals losing those jobs are homeowners and parents who will require assistance to survive.
Who are those people losing jobs in the public sector? We can certainly expect some of them to be school teachers. Mill levies, which are a major component in school finance, are based on the value of local real estate. As real estate values decline, the taxes collected on the property also decline. There is a lag time between the decline in value and the decline in tax revenue. Mill levies are reevaluated, based on an 18 month period of sales of comparable properties, or a five year period if properties are so unusual that comparable sales are not frequently occurring events. Right now the assessor’s office is using data from January 1, 2009 to June 30, 2010 to decide current mill levies.
There were 1,290 foreclosure filings in 2009. There were 767 foreclosure filings in the first two quarters of 2010. Each foreclosure carries its own lag time. Homeowners have the right to redeem their property out of foreclosure, which seldom happens. But the grace period means that it is at least one quarter from the date of a foreclosure filing to the time that there is a foreclosure sale.
It is the sale that determines the new property value, and the mill levy on that piece of real estate. In hard economic times, the only buyers at foreclosure sales are the lender trying to get access to their collateral, or bottom feeders looking to make a quick buck when the market turns around. Even bottom feeders stay out of the market if economic recovery is uncertain. The net result is that the value of the property almost always drops in a foreclosure.
All of these foreclosures mean that the school district is going to have less revenue. Less revenue for the school district means they will have to cut expenses, and salaries are a very big piece of school budgets. That means that some teachers will lose their jobs. Teachers who lose their jobs may find it impossible to pay their mortgages. Thus continues the downward spiral of job losses resulting in foreclosures, resulting in fewer people buying things from local retailers, resulting in fewer sales for wholesalers and manufacturers, resulting in private sector layoffs, resulting in foreclosures…
There is nothing in plans promoted by Republicans that will change this dynamic. Regulations do not change mill levies. Regulations do not change local government’s requirement to balance their budgets. Scott Tipton’s plan to change how banks account for loan losses will not change foreclosure rates. Passing trade agreements and improving patent protection will not change foreclosure rates. Nothing will change foreclosure rates until workers find jobs and have enough confidence to buy things. FDR had it right--create a public works program. Governments should be spending money now, not giving tax breaks to the people who least need government help.
Republican policies are increasing the gap between the haves and the have-nots. We are heading into a new feudal era where the wealthy will gobble up properties in foreclosure. Workers will have to pay them rent in order to live indoors. The choke-hold on workers will solidify with high rents and low or no wages. If current trends continue, workers will become slaves to the property owners with no way out.
Homework
Colorado Jobs
Everything You Never Wanted to Know About Real Estate Assessments in Mesa County
Foreclosures in Mesa County
Feudal Society
Predictions are that Colorado will add about 10,000 jobs in 2011. In order to get Colorado back to where we were before the recession began, we need to add 150,000 jobs. With the addition of those jobs, Colorado could achieve a 4.5% unemployment rate in four years, which is considered “full employment.”
During July 2011, Colorado’s private sector jobs increased by 4,200, but government jobs decreased by 900. We can expect government jobs to continue to slide as governments balance their budgets and increasingly pursue austerity programs. While the Tea Party will cheer smaller government, as evidenced by fewer jobs in the public sector, the individuals losing those jobs are homeowners and parents who will require assistance to survive.
Who are those people losing jobs in the public sector? We can certainly expect some of them to be school teachers. Mill levies, which are a major component in school finance, are based on the value of local real estate. As real estate values decline, the taxes collected on the property also decline. There is a lag time between the decline in value and the decline in tax revenue. Mill levies are reevaluated, based on an 18 month period of sales of comparable properties, or a five year period if properties are so unusual that comparable sales are not frequently occurring events. Right now the assessor’s office is using data from January 1, 2009 to June 30, 2010 to decide current mill levies.
There were 1,290 foreclosure filings in 2009. There were 767 foreclosure filings in the first two quarters of 2010. Each foreclosure carries its own lag time. Homeowners have the right to redeem their property out of foreclosure, which seldom happens. But the grace period means that it is at least one quarter from the date of a foreclosure filing to the time that there is a foreclosure sale.
It is the sale that determines the new property value, and the mill levy on that piece of real estate. In hard economic times, the only buyers at foreclosure sales are the lender trying to get access to their collateral, or bottom feeders looking to make a quick buck when the market turns around. Even bottom feeders stay out of the market if economic recovery is uncertain. The net result is that the value of the property almost always drops in a foreclosure.
All of these foreclosures mean that the school district is going to have less revenue. Less revenue for the school district means they will have to cut expenses, and salaries are a very big piece of school budgets. That means that some teachers will lose their jobs. Teachers who lose their jobs may find it impossible to pay their mortgages. Thus continues the downward spiral of job losses resulting in foreclosures, resulting in fewer people buying things from local retailers, resulting in fewer sales for wholesalers and manufacturers, resulting in private sector layoffs, resulting in foreclosures…
There is nothing in plans promoted by Republicans that will change this dynamic. Regulations do not change mill levies. Regulations do not change local government’s requirement to balance their budgets. Scott Tipton’s plan to change how banks account for loan losses will not change foreclosure rates. Passing trade agreements and improving patent protection will not change foreclosure rates. Nothing will change foreclosure rates until workers find jobs and have enough confidence to buy things. FDR had it right--create a public works program. Governments should be spending money now, not giving tax breaks to the people who least need government help.
Republican policies are increasing the gap between the haves and the have-nots. We are heading into a new feudal era where the wealthy will gobble up properties in foreclosure. Workers will have to pay them rent in order to live indoors. The choke-hold on workers will solidify with high rents and low or no wages. If current trends continue, workers will become slaves to the property owners with no way out.
Homework
Colorado Jobs
Everything You Never Wanted to Know About Real Estate Assessments in Mesa County
Foreclosures in Mesa County
Feudal Society
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