The Blaine County economy is “anemic” due primarily to a labor shortage. A lack of affordable housing may be at the root of the problem.
That was the gist of a presentation by Sun Valley Economic Development Executive Director Harry Griffith on Wednesday to a members-only gathering of the nonprofit organization at the Limelight Hotel in Ketchum.
About 40 business leaders from the real estate, hospitality and service industries were on hand, but no city or county leaders.
Griffith said the $801 million in reported sales in the Blaine County economy (not including real estate sales) grew by 1 percent from 2015 to 2016, adjusted for inflation.
Griffith said SVED members had previously been at odds over target growth rates, but that he preferred 2 percent to the “very modest” 1 percent measured for 2016.
According to Griffith’s data, unemployment was at a “record low” of about 3 percent in 2016, with about 11,900 full-time positions filled, leaving some business owners struggling to find employees.
Safe Haven CEO Scott Burpee said half of his employees in Bellevue commute from Shoshone and Fairfield.
“Labor is limiting everything,” Burpee said, a sentiment also shared by Limelight Hotel General Manager John Curnow and Steve Mills, CEO of Webb Landscape.
Curnow said raising wages has not succeeded in attracting the employees he needs.
“There are just not enough people,” he said. “Without the right employees, our guests are not always getting the awesome Sun Valley experience, and as a result we will lose that guest forever.”
Griffith said data from W2 tax forms show that wages are down from 2015 in an economy that has been “relatively flat” since 2014. His PowerPoint slides showed that wages had dropped in Hailey and Sun Valley, but risen slightly in Ketchum.
Griffith said 1099 tax form totals for self-employment have risen from $184 million in 2010 to $212 million in 2016.
“Does this mean the gig economy is picking up?” he asked.
Business leaders in the room were polled to see how many had seen growth in the last three to four years. Half of the owners said they had seen significant growth. Half said they had experienced only moderate growth.
When polled on how many had suffered from staff shortages due to a lack of housing, all the business owners raised their hands.
Chamber Executive Director Jeff Bacon asked whether AirBnB and other short-term rental services are “killing mountain towns” by depleting rental housing stocks. Several people agreed with him.
Bob Crosby, government affairs director for the Sun Valley Board of Realtors, proposed an alternative view. Citing a consultant for the city of Ketchum, he said 90 percent of short-term rentals in Ketchum and Sun Valley are offered by owners who do not live in the valley and therefore would be expected to live in those units at some point during the year, indicating that the units would not likely be offered as long-term rentals in any case.
Crosby said there is a “large supply” of housing for sale in Ketchum and Sun Valley in the $300,000 to $400,000 range, but real estate agent and developer Jeff Pfaeffle pointed out in an interview that much of the housing is old and unattractive for various reasons.
Griffith said that based on his data, there is “maybe enough” housing in Ketchum and Sun Valley, and “not enough” in Hailey and Bellevue. He said smaller cottage homes in the $300,000 range are “selling like hotcakes.”
Housing construction costs, political challenges to increased housing density and other factors were cited as potential causes for the housing crunch.
Griffith outlined about a dozen policy changes that he said would be promoted at local jurisdictions in coming months, in the hope of increasing the number of building permits for homes under $500,000 in the Wood River Valley, from 50 per year to 100 per year.
“If this all happened tomorrow, the real estate market would suck for about 10 years,” he said.