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Newsletter — Issue 32 — Thursday, July 23, 2026
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This newsletter has been published by Engage Colorado.
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The Drivers Series — Category 3 · Factor 3b
The Cost Gap Colorado Cannot Close Without Changing Policy
This Engage Colorado Newsletter reflects the personal opinions of Dan Caruso, written with the support of the Caruso Ventures team. The Ensuring Colorado's Innovation Future Coalition did not review and has not endorsed this Engage Colorado Newsletter.
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Denver's cost of living runs 13.5% above the national average. Boulder's runs 41% above. Housing in the Destination Geographies — the states capital is fleeing to — runs 40–60% lower.
Cost of living is a critical metric that founders use to decide where to relocate — and where to hire.
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We are continuing the walk through Category 3 — The Cost of Doing Business — from The Honest Assessment. This issue covers 3b — Cost of Living, Housing, and Operating Expenses. The next issue will cover 3c — The Forward Spending Trajectory.
As with the broader Innovation Vision and The Honest Assessment, I led the preparation of this section and it reflects only my views.
A reminder before you dive in: we cannot address what we have not diagnosed. That is why this series exists. And as I said in “Take a Deep Breath, Colorado” — please don't beat up the messenger.
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Factor 3b
What Cost of Living, Housing, and Operating Expenses Actually Means
Category 3b of The Honest Assessment is cost of living, housing, and operating expenses — the composite of housing costs, commercial rents, insurance premiums, and the overall price level of a geography.
Housing is the largest single driver, and it is a talent-recruitment issue as much as a cost issue. Technology companies rely on the availability and affordability of market-rate housing for their workforce — employees who overwhelmingly live in market-rate units, not subsidized housing.
Where a state's housing supply is constrained by zoning restrictions, slow permitting, or regulatory requirements that increase the cost of market-rate development, talent recruitment gets harder and more expensive. Companies then either raise compensation to offset the cost gap — raising their total cost structure — or relocate to somewhere the cost gap does not exist.
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The Scoring
Factor 3b · scores are out of 5 · current → trajectory
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Destination Geographies
Substantially lower cost of living — the states capital is fleeing to.
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▼ 4.0 → 3.5
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Departure Geographies
High cost of living, structurally entrenched.
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▼ 1.5 → 1.3
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Colorado
Better than Departures today (3.0) — but its 2.2 trajectory heads toward them, not the Destinations.
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▼ 3.0 → 2.2
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Colorado's 3.0 current position is better than the Departure average (1.5), but well below the Destination average (4.0). And Colorado's trajectory of 2.2 is downward — moving toward the Departure cluster, not the Destinations.
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Where Colorado's Cost Problem Is Coming From
Three specific dynamics drive Colorado's cost-of-living position:
1. Housing. Colorado's Front Range has abundant land within the corridor where the workforce concentrates. That is a structural advantage. But Colorado has not used it — permitting timelines, zoning restrictions, and development regulation have grown faster than housing supply. The result is that Denver's cost of living runs 13.5% above the national average and Boulder's runs 41% above — while housing in the states Colorado is losing companies to runs 40–60% lower.
2. Insurance premiums. Colorado's average insurance premiums have nearly doubled since 2020 — driven by wildfire risk, hail damage, and reinsurance-market pressures. Every dollar Colorado employees pay in insurance premiums is a dollar Colorado employers must offset in compensation to stay competitive with employers in lower-insurance-cost states.
3. Regulatory-driven cost pressure on operating expenses. Colorado's FAMLI Act (0.88% payroll premium), commercial energy regulations, and operating-license compliance costs all add to what companies must pay to operate in Colorado. These are not marginal costs — over a decade, they compound.
The CNBC 2026 ranking placed Colorado at 47th out of 50 states on cost of living — third-worst in the country. This is not a temporary distortion. It is a durable structural feature.
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What This Means for Colorado — On Cost
Cost is the single most-cited factor when Colorado companies say they are considering relocation. It also drives which talent Colorado can attract. A senior engineer in Silicon Valley considering a move to Denver or Boulder does the math on housing, cost of living, and taxes — and increasingly, the math points toward Austin, Nashville, Raleigh, or Salt Lake City instead.
Reversing this trend requires Colorado's political leadership to focus policy on expanding the supply of market-rate housing, addressing the insurance-cost crisis, and holding the line on new operating-expense mandates. That means:
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• Housing supply reform — zoning flexibility, faster permitting, and removal of the regulatory friction and cost-adding building requirements that constrain market-rate development.
• Insurance market intervention — state-level action on reinsurance, wildfire mitigation incentives, and market-competitiveness measures.
• A halt to new operating-expense mandates that raise the cost of doing business in Colorado.
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Colorado political leaders are talking about affordability. But their policies are producing the opposite outcome. If they want Colorado to once again be a mecca for tech and innovation, they need to evolve from talking about affordability to enacting the policies that would deliver it.
And if they do, it will be to the benefit of every Coloradan.
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What Comes Next
The next issue in this series covers 3c:
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Factor 3c — The Forward Spending Trajectory
Whether Colorado's state government has the fiscal discipline to keep its cost structure competitive over the coming decade.
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If We Work Together, We Can Reverse This Trend
But first, we have to diagnose the source of the problem — which is why this information is being shared.
If Colorado takes the appropriate steps, Colorado can be the most attractive innovation ecosystem in the world — and every Coloradan will share in the economic and cultural prosperity that leadership creates. This is the Innovation Vision for Colorado.
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