Looking at economic realities in a tourism economy
Economic challenges in a rural resort economy such as ours are incredibly complex.
Key among these challenges is workforce housing. Vail Valley Partnership’s recent workforce study shows that business owner and operator frustration with housing has grown in 2014-15, with opinions about housing being more negative than ever found in the history of the survey. The majority of respondents feel that the housing situation negatively impacts their ability to hire and retain employees, and this issue was mentioned frequently when asked about additional resources that are needed.
According to the American Community Survey, 45 percent of Eagle County families are “cost burdened,” meaning they pay more than 30 percent of their income for housing. And the rental market is tight — Eagle County’s Housing Department reports vacancy rates of under 5 percent in the valley. We’re not unique — similar housing shortages exist in many of Colorado’s resort communities. There is a well-documented market failure when it comes to meeting the needs of workforce housing in resort communities.
A bit of background on the structure and composition of our local economy helps provide context to our workforce housing challenges:
Eagle County’s average weekly wages are $281 per week less than the statewide average. This fact leaves many local workers challenged to afford housing in our communities. But comparing our average weekly wage number across the whole economy doesn’t tell the whole story.
Much of this discrepancy is driven by the current structure of our economy. Namely, that the Accommodations & Food Service sector, a relatively “low-skilled” sector, comprises 25 percent of local employment. Unfortunately, low-skilled jobs can only command so much in wages because unique creativity and applied skills produce value and uncommon value generation drives higher wages. Even so, service-sector jobs here in Eagle County pay significantly higher wages than state averages in these particular sectors.
According to the Bureau of Labor Statistics, Eagle County’s Accommodations & Food Services sector in 2012 paid average weekly wages 56 percent higher ($552/week vs. $354/week) than the Colorado average for that sector. Since then that number has been steadily growing: Eagle County’s for the sector were 57 percent higher in 2013, and preliminary 2014 data shows our local average weekly wages outpacing the statewide average for the sector by 59 percent ($593/week vs. $374/week).
Eagle County’s next two largest sectors, Arts, Entertainment & Recreation, and Retail Trade, also pay average weekly wages that exceed Colorado’s statewide average for these particular sectors. Wages in the Arts, Entertainment & Recreation sector in Eagle County are 12 percent higher, and Retail Trade wages in Eagle County are 23 percent higher than Colorado’s statewide average.
The data shows that our local employers in these sectors are not, as occasionally portrayed, nefarious and out to undercut low-skilled workers, compensate them unfairly and suppress wages. Rather, the fact is that employment in Eagle County is overly dependent on a tourism industry that produces many so-called low-skilled jobs with little ability to drive wages due to an abundance of people willing to take these jobs. From a workforce-housing standpoint, the local cost of living is driven by a global demand for real estate and housing in Eagle County and other resort towns that is unheard of in non-resort communities. This exacerbates the problem.
Real change to this dynamic will only be seen as we develop new economic opportunities in this county that drive higher skilled jobs that produce more value and command higher wages. Tourism is a boon for Eagle County communities and we should not characterize it otherwise. A tourism-dependent economy generates certain types of employment. In order to create systemic change to this wage dynamic, we need to continue to focus on the importance of economic diversification and workforce and skills training to drive new economic opportunities.
Our valley is blessed to be home to a number of high-quality resources that support businesses and entrepreneurs. We’ll explore some of the business support programs in place to help entrepreneurs succeed here, and explore the growing momentum occurring in our local economy, in upcoming columns.
An intentional and thoughtful economic development effort, aiming to both strengthen and diversify our economy, is one step to help solve some of the very real challenges that exist. Tourism-related service jobs simply don’t produce the types of wages and career opportunities that a county with a major high-skilled industry such as aerospace or technology might be able to. That said, tourism makes everything possible in our valley and we wouldn’t be what we are without it.
Chris Romer is president and CEO of Vail Valley Partnership
No vacancy: Deed restrictions are the weapon of choice for governments in the fight against vacant homes
But their terms and definitions could come to define their effectiveness in the gig economy.