Unemployment & Labor Market

Denver's unemployment rate stands at 3.6%, within the healthy range of 3.5–4.5%, indicating a tight labor market. The year-over-year decline of 1.0 percentage points signals an improvement in the labor market, suggesting strong job availability and continued employer demand for workers. This combination points to a resilient local labor market, with low unemployment and a declining trend.

Workforce Supply

The civilian labor force in Denver has contracted by 1.5% year-over-year, indicating a shrinking pool of available workers. This decline is concerning, as it can constrain economic expansion and limit businesses' ability to fill open positions. A smaller workforce may be attributed to demographic trends, outmigration, or declining labor market participation, potentially pressuring employers and dampening long-term growth potential.

Wage Growth

Average hourly earnings in Denver have grown by 6.26% year-over-year, exceeding the 4% threshold. This robust increase likely surpasses inflation, enabling workers to gain real purchasing power and boosting consumer spending capacity. The high wage growth may also reflect competitive hiring conditions in a tight labor market. However, sustained increases at this pace could contribute to inflationary pressures if not matched by productivity gains.

Labor Demand

Denver's labor demand composite score is 4.56, suggesting moderate overall demand. Although the employment growth rate is a low 0.13% year-over-year, indicating minimal net job creation, weekly hours worked have increased slightly by 0.074% above the 12-month baseline. This mixed picture reflects cautious hiring amid broader economic uncertainty, with employers utilizing existing workers slightly more, despite not significantly expanding payrolls.

Cost of Living

The cost of living composite ratio in Denver is 1.37, indicating relatively high housing costs compared to earnings. While affordability is better than in many peer markets, households still face meaningful cost pressure, particularly in housing. Despite strong wage growth, the elevated cost of living may erode some of these gains for residents, with affordability remaining a constraint, especially for lower- and middle-income earners.

Office Economy

Denver's office worker ratio composite is 2.72, a moderate score reflecting a diversified economy with a notable presence of professional and white-collar employment. The city maintains a solid base in services, tech, and business functions, supporting downtown vitality and commercial real estate demand. Although it may lag in high-value knowledge-sector intensity, the level of office density is still notable.

Housing — Construction

Residential building permits in Denver have fallen by 15.96% year-over-year, a sharp decline signaling weakened builder confidence or constrained development activity. This large decline suggests limited new supply is entering the market, potentially exacerbating affordability challenges over time. Reduced construction may be attributed to high financing costs, regulatory hurdles, or softening demand expectations, resulting in a constricted housing supply pipeline.

Housing — Market Velocity

Homes in Denver are taking a median of 38.0 days to sell, with this duration increasing by 8.57% compared to the same period last year. The rise in days on market indicates a cooling housing market, with buyer demand slowing or supply improving relative to demand. Despite still-moderate absolute turnover speed, the year-over-year increase signals a softening trend in homebuyer activity.

Conclusion

Denver's economy exhibits a mix of strengths and vulnerabilities, earning a B+ rating with solid labor market fundamentals but emerging headwinds. The city benefits from low unemployment and robust wage growth, supporting household purchasing power and economic resilience. However, a shrinking labor force, minimal employment growth, and a sharp drop in housing construction point to structural and cyclical challenges. The housing market is cooling, with homes taking longer to sell, while high costs persist relative to incomes. The near-term outlook remains stable but cautious, with growth likely to moderate without a rebound in labor supply and housing investment.