DISPARATE STATE

Utah, New Hampshire, Minnesota, North Dakota and Colorado are the U.S. states where the largest share of ZIP codes rank high on measures of economic prosperity. But below Colorado’s banquet table of prosperity that stretches along the Interstate 70 mountain corridor and up and down the spine of the northern Front Range is a region with some of the most severe economic distress in the country, according to the 2017 Distressed Communities Index from the Economic Innovation Group in Washington, D.C.

“We need to understand why places seem to be passed over by economic growth,” said John Lettieri, senior director for policy and strategy at the Washington,

D.c.-based policy firm. “There are places struggling to keep pace even in Colorado.”

The index weighs the concentration of high school dropouts, the share of adults ages 25-54 who aren’t working, the housing vacancy rate, the poverty rate, relative median incomes, and the growth, or lack of it, in employment and business establishments. Rankings on those items were combined to create a distress score for more than 28,000 ZIP codes, including 390 in Colorado.

About 31 percent of the state’s ZIP codes and 45 percent of the population or 2.37 million people are in areas of the least distress, defined as the top 20 percent, or Tier 1. Just 11 percent of counties are in Tier 5, the lowest, compared with 20 percent nationally, and about one in 14 Coloradans lives in a ZIP code with severe economic distress compared with one in seven nationally.

Pockets of extreme economic stagnation are sprinkled among even prosperous areas such as metro Denver, where Aurora’s 80010 ZIP code ranked in the bottom tier. Greeley and Colorado Springs likewise have struggling areas in their midst, and rural Colorado in the aggregate scores much lower than the northern Front Range, a disparity covered in The Denver Post series Colorado Divide.

Mesa County and northwest Colorado are under pressure, but a revival in commodity prices, especially natural gas, could turn the situation around there. When it comes to concentrated economic distress, the band of counties from Saguache through Pueblo and down the Arkansas River Valley to Prowers is unmatched.

“Distress is contagious, even more so than prosperity is contagious,” said Steven Glickman, executive director of the Economic Innovation Group, who urges policymakers to not give up on those areas that have fallen behind economically.

Tucker Hart Adams, an economist with Summit Economics in Colorado Springs, notes that residents in south-central Colorado and parts of the Western Slope often show a deep loyalty of place. They are less likely to move away, even if economic opportunities are limited. Because their populations are sticky, the unemployment rate and poverty rates can run higher than in rural areas where all the young adults leave for the big city.

The time frame that the index looked at — 2011-15 — overlaps with a severe drought in southeastern Colorado, which may have depressed some of the numbers, given the important role agriculture plays in that region. Also, southeast Colorado is home to several prisons, which skews the employment and income numbers in the worst-performing ZIP codes.

For example, Olney Springs is Colorado’s most distressed ZIP code and near the very bottom nationally with an index score of 99.9 out of 100. Nearly eight in 10 adults are not employed and 45 percent of the population lives in poverty. But there is an explanation. The town is home to the Crowley County Correctional Facility, which has a population that is severalfold larger than the surrounding community.

Another important factor to consider is that the primary economic hub in that region, Pueblo, has roots in heavy industry more so than any other part of Colorado. In that regard, it mimics the pattern seen in the Ohio Valley and other manufacturing hubs that suffered when production and jobs moved overseas.

“We are much like the Rust Belt towns,” said Jeffrey Shaw, president and CEO of the Pueblo Economic Development Corp. “But when we compare ourselves to other steel towns, Pueblo fared very well.”

Shaw argues that things are picking up in Pueblo beyond what the study captured and the small metro area has several advantages helping it draw employers. The city has an abundance of water, more heavy-rail parks than any other area in the state and a citizenry willing to pay a slice of their sales taxes into an economic development incentive fund.

“Things are more vibrant than they have been in ages,” Shaw said. “The unemployment rate is down, the housing supply is short. Things are going in the right direction.”

Pueblo, at one time Colorado’s second-largest city behind Denver, historically relied on heavy industry and continues to host an EVRAZ steel plant, although with a much smaller workforce. It is home to a federal rail-safety testing center and is a national hub for rail equipment manufacturing.

Pueblo also has worked to diversify its manufacturing base. Vestas Wind Systems, the Danish maker of wind turbines, has built a large tower-manufacturing facility in Pueblo, and a handful aerospace companies have located operations there. With the help of the state, the city is making a play for outdoor equipment manufacturing.

The county’s unemployment rate, which reached 11.3 percent in January 2013, was down to 3.6 percent in August. But to be considered unemployed requires actively looking for work. The distress index shows that in Pueblo County’s four ZIP codes in the bottom 20 percent, anywhere from 30 to 53 percent of the prime working age population is disengaged. In the Colorado ZIP codes with the least economic distress, only 21 percent of adults ages 25-54 aren’t employed or running a business.

A common pattern found in distressed areas is a lack of economic diversification, which contributes to weakness in business formations and job creation, said Glickman. As the nation’s economy has shifted more toward tech and knowledge-based companies, a limited number of areas have managed to keep pace.

The state has made a concerted effort to help rural areas via a variety of programs, said Jeff Kraft, director of business funding and incentives with the Colorado Office of Economic Development and International Trade.

“We have a heavy focus and concentration on rural Colorado,” Kraft said. But a resiliency study the state completed last year also showed that engaged communities, including Durango and Salida, fare much better with strong leaders who are able to chart a new and flexible economic course instead of relying solely on what worked in the past.

Kraft also notes it is important to have relief valves across the state that can take the pressure off higher-growth areas such as the northern Front Range. Concentrating even more people between Colorado Springs and Fort Collins isn’t in the state’s best interest.

“Denver would be better off if other parts of the state were attracting population and could provide viable opportunities,” he said.