Metro Denver managing up when it comes to higher-paying jobs, leaving service workers on hold

A mystery of metro Denver’s runaway housing market is who can afford to buy all those $1 million-plus homes and pay $3,000 or more a month in rent for a luxury apartment. A recent study from the research arm of ADP, the nation’s largest payroll services provider, offers some possible insights into what might be happening.

“It is harder to sustain any work in Denver that doesn’t pay enough to meet the cost of living there,” said Issi Romem, an economist and research fellow with ADPRI. And there has been a fundament shift in the mix of high-paying vs. low-paying jobs in popular metro areas like Denver.

ADP studied the concentration of executive and management positions to customer service center jobs and how that ratio changed between 2005 to 2021. Both occupational categories tend to be mobile, in that a CEO doesn’t have to necessarily live where a company’s operations are located and call centers regularly relocate if a location gets too expensive or nearby workers become too hard to recruit.

Places like Washington, D.C., and New York City have long represented what Romem calls “command and control” cities with a lopsided concentration of management and executive positions. They also rank among the nation’s more expensive cities, the kind of places that call center companies avoid if they can.

In 2005, Denver wasn’t a command and control city yet, with a ratio that skewed 10% below the national average. Englewood-based TTEC Holdings, formerly known as Teletech, was celebrated as one of the state’s largest public companies and an operator of call centers around the globe.

Denver ranked 28th out of 56 cities with a population of 1 million or more people included in the study with an executive-to-customer service-worker ratio of 90 between 2005 and 2009, meaning it was still 10% below the U.S. average and more skewed toward customer-service jobs.

But the ratio averaged 124 between 2017 and 2021, or 24% above the U.S. ratio of 100, enough to rank metro Denver eighth overall in its executive concentration — behind Boston and just ahead of Birmingham, Ala. Washington, D.C., led the country with a ratio of 174, followed by San Jose, Calif., at 167 and New York at 164.

Austin, Texas, and Denver were leading metros last decade when it came to attracting young workers, and recruiting higher-paying jobs, as well as for their escalating housing costs. And those higher housing costs weren’t just a case of developers being blindly biased toward the high-end.

The two metros had the two biggest increases in their concentration of higher-paid executives and managers vs. customer service workers. Austin moved up 34 spots in its ranking to 10th, while Denver moved up 20 places to eighth.

Customer-service representatives had median earnings of $45,130 nationally in 2022, while corporate suite executives pull down $201,622, according to ADP. Executives had the income to buy those high-end homes and rent those luxury apartments.

Romem said soaring housing costs and declining affordability are keeping low-wage workers from moving to certain cities, and if they are already there, it is forcing them to move farther out in the suburbs or to leave entirely. That in turn is causing companies to rethink how and where work is performed.

He dubs the shift “domestic offshoring,” which is part of a larger, decades-long shift that resulted from the opening up of global trade, which resulted in low-skilled jobs being exported. The pandemic has only accelerated the trend through a greater acceptance of remote work arrangements.