Colorado Business Climate
Executive Summary
The report assesses Colorado's business climate using objective economic data, benchmarking the state against five peer and competitor states (Arizona, North Carolina, Texas, Utah, and Washington) as well as the national average. It synthesizes nine survey and ranking sources, grouped into three tiers: independent nonpartisan sources (Leeds Business Confidence Index, Kansas City Federal Reserve Bank’s Beige Book and Rocky Mountain Economist), national rankings (CNBC, Chief Executive), and Colorado business-organization surveys.
Three findings hold across sources:
Colorado's structural foundations remain strong, with workforce quality, innovation base, and educational attainment among the best in the nation.
Cost of living, housing, and affordability have measurably worsened, and housing is now the most-cited barrier to attracting talent.
Business confidence has fallen sharply, faster than objective performance data alone would predict. The cause of that decline is contested: nonpartisan sources attribute it mainly to national policy and to downturns in tech and construction, while business-organization surveys point primarily to state regulatory burden.
On the economy, Colorado's real GDP has outpaced the U.S. since 2022 but trailed its peer states. The labor market has softened, with payroll employment slightly below the prior year as of May 2026 and net domestic migration turning negative in 2025, leaving Colorado the only peer state reviewed with out-migration that year. Business formation fell sharply in 2024 (establishment births down 19.7 percent) before rebounding in 2025.
The cost analysis finds a mixed profile. Several major costs sit near national averages, but labor-related pressures are growing. The median wage rose 63 percent from 2010 to 2025 (to $59,800). The overall state and local business tax burden is close to the U.S. average (4.4 percent of the private-sector economy versus 4.5 percent nationally), though business property taxes and sales taxes on inputs run higher while income taxes are more competitive. Affordability is the clearest weakness: the housing premium over the national average widened from roughly 12 percent in 2010 to about 27 percent by 2024.
Health insurance registers as a secondary concern, with premiums tracking the U.S. average and representing a smaller share of compensation because Colorado wages are higher. Public safety ranks mid-tier; crime rose from 2013 to 2022 and has since declined broadly (property crime down 32.5 percent, motor vehicle theft down 59.2 percent from peaks). On regulatory burden, the report covers the minimum wage ($15.16 in 2026, affecting about 9 percent of workers), FAMLI, elevated unemployment insurance premiums (0.71 percent of wages versus 0.38 percent nationally), and the cumulative weight of recent labor, consumer-protection, and environmental requirements.
Introduction
Colorado’s business climate has become a prominent topic in recent legislative sessions and among business advocacy organizations. State lawmakers have considered the business climate in debates over state regulations, tax policy, workforce investment, public safety, and housing affordability while businesses advocates have pointed to a decline in Colorado’s competitive position.
How the Report Is Organized
To understand Colorado's competitive position and overall business climate, this report examines the costs businesses cite as most burdensome using objective economic data. The report includes:
a review of business and economic surveys and reports;
an overview of Colorado’s economy to provide information on how the state has performed relative to peer states and the national average; and
an examination of the costs and operating conditions that business owners have identified as important, including workforce, cost of living, business taxes and fees, health insurance, regulatory burden, and public safety.
Colorado is compared with five peer and competitor states — Arizona, North Carolina, Texas, Utah, and Washington — selected based on their competition with Colorado for talent, investment, and business location decisions, their economic performance, and their regional or industry overlap with Colorado's economy. Among the peer states, North Carolina, Texas, and Utah are consistently cited in business-climate surveys and rankings as having business-friendly policy environments.
This report mostly analyzes Colorado's business climate at the statewide level rather than by region, industry, or business type. Comparing statewide business costs to other states allows for consistent comparisons across time and assessment of the major costs and conditions impacting businesses. However, a statewide analysis is incomplete because it does not capture the particular conditions across the state’s varied businesses, regions, or industries.
Business Climate Reports and Surveys
The surveys and reports examined in this section synthesize concerns over time that have shaped the recent debate over Colorado's business climate and how conditions may have changed. The sources capture how the state's employers view current conditions (see Appendix for more information on the surveys and reports). Some of these concerns reflect structural changes to Colorado's economy since the pandemic, including the spread of remote work, a tighter labor market as net in-migration has slowed to near zero, and added pressure from inflation and new tariffs.
Three findings hold across sources:
Colorado’s structural foundations remain strong. Its workforce, innovation base, and educational attainment remain among the strongest in the nation.
Cost of living, housing, and affordability have measurably worsened. The decline appears in objective rankings, sentiment surveys, and advocacy sources alike. Housing is now the most cited barrier to attracting talent.
Business confidence has fallen sharply. Confidence fell faster than the objective performance data alone would predict. The causes of the decline are contested. Perspectives on the causes of the decline differ; the independent, nonpartisan sources attribute it mainly to national policy and to downturns in the tech and construction sectors, while business organization surveys point primarily to state regulatory burden.
Table 1 groups the nine sources into three categories and shows where they agree. Findings confirmed across all three categories carry the highest confidence. Findings that rest on a single category are labeled accordingly.
| Cross-source Finding | CATEGORY 1: Independent, nonpartisan | CATEGORY 2: Peer-state | CATEGORY 3: Business Orgs | |||
|---|---|---|---|---|---|---|
| LBCI | RME | Beige Book | CNBC | Chief Exec | ||
| Conditions worsened vs. Colorado’s history (2022- 2025) | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ |
| Workforce quality is a top-tier national strength | ✓ | ✓ | n/a | ✓ | ✓ | ✓ |
| Cost of living and housing is the primary weakness | ~ | ✓ | ✓ | ✓ | ✓ | ✓ |
| Labor market materially softened (objective data) | n/a | ✓ | ✓ | ~ | n/a | ✓ |
| Sentiment fell faster than objective conditions | ✓ | ~ | n/a | ✓ | ✓ | ✓ |
| Federal policy is a major driver of weak 2025 sentiment | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ |
Social Housing Program Comparison
| Montgomery County, MD | Atlanta, GA | Chicago, IL | |||||||||||||||||||||||||||||||||||||||||||||
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| Managing Organization | Housing Opportunities Commission | Atlanta Urban Development Corporation which is a subsidiary of Atlanta Housing | The Residential Investment Corporation | ||||||||||||||||||||||||||||||||||||||||||||
| Characteristics |
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