Ski Town Wealth Gap Widens

[Fair Wages]

An interesting article in the Summit Daily yesterday- http://www.summitdaily.com/news/23752694-113/mountain-town-news-wealth-chasm-continues-to-widen

Highlights-
Teton County is the wealthiest in the United States based on per capita income. In 2014, the most recent year available, per capita income was $194,585.
Top 1% earn 213 times the average income of the bottom 99% in Teton County, Wyoming home of Jackson Hole
The bottom 91% earn 11% of all income
It takes 3x the median income to afford to buy the median priced home.
Earlier this summer, there were only 7 homes homes listed below $750 K
Wealthy from across the nation choose to call Jackson home because of no state income tax or estate tax and because Wyoming law allows the wealthy to shield property from FEDERAL estate taxes for up to 1,000 years.
Aspen and Pitkin County have the fourth greatest wealth inequality in the nation

Additional-
The Federal Reserve, who holds an annual meeting in Jackson, has had a low interest rate policy in recent years which has helped push up home values and the price of other assets.

Dick Cheney became a Wyoming resident shortly before he accepted the vice presidential nomination.

The US Forest Service's pro corporate monopoly policies help suppress ski area wages and competition from independent local business while benefiting corporate executives and shareholders who typically live elsewhere.

 

[Philpug]

There was one article that talked about a restaurant having to close because his employees could not afford to live close enough to work there.

 

[scott43]

We have a program up here called the Temporary Foreign Workers program. It allows businesses to bring people in from foreign countries, mostly China and the Phillipines, and pay them very low wages while also limiting them being able to work only for the person that brought them here. It's not quite slavery..but.. The argument was businesses can't afford to pay wages in boom areas where prices are very high, like Fort McMurray. To which my response would be, how is this a labour issue? Raise prices! However, the gov't allowed this program to proceed and it's a terrible distortion of the market. Excessive wage inequality leads to a bad place.

 

[michael]

I've seen the OP's article before and what I've been unable to determine is whether or not the lack of affordable housing is due to an unwillingness to build it or are there other factors at work (e.g. lack of space to build so the natural tendency would be to build something to maximize ROI)? I'm inclined to believe it's an unwillingness to build it as I've seen properties that, being kind, are absolute crapholes listed in excess of $1M which implies to me that it's a money grab and not a longterm vision at work.

Regardless, the Jackson market is already feeling the effects of not having such housing via lack of folks to employ. JHMR, I believe, is offering free skiing to landlords who provide housing to folks working at the resort.

Additional-
The Federal Reserve, who holds an annual meeting in Jackson, has had a low interest rate policy in recent years which has helped push up home values and the price of other assets.

Dick Cheney became a Wyoming resident shortly before he accepted the vice presidential nomination.

I'm unclear on what the aim is for these two items in the OP, but I'm still working on my caffeine fix this morning... The Fed kept their rates low in order to help out "main street" as much as anything else. It may have had some less than awesome results, but I don't believe the goal of the Fed was to drive up housing prices. And the comment about Dick Cheney has me thoroughly puzzled...

 

[scott43]

I'm unclear on what the aim is for these two items in the OP, but I'm still working on my caffeine fix this morning... The Fed kept their rates low in order to help out "main street" as much as anything else. It may have had some less than awesome results, but I don't believe the goal of the Fed was to drive up housing prices. And the comment about Dick Cheney has me thoroughly puzzled...

We're living the dream of low interest rates here. It has arguably created a housing bubble. And I'm not sure how it's helped anyone out at all. Ostensibly it's intended to increase borrowing for investment in business..I don't think this has happened. It's increased balance sheets maybe. And it's punished a lot of people who have savings or expect to get income from investments in retirement. I suppose if you're a boomer and you cash out of your overpriced house it's a good deal. But for others who are trying to get into the market, it's tough.

 

[michael]

We're living the dream of low interest rates here. It has arguably created a housing bubble. And I'm not sure how it's helped anyone out at all. Ostensibly it's intended to increase borrowing for investment in business..I don't think this has happened. It's increased balance sheets maybe. And it's punished a lot of people who have savings or expect to get income from investments in retirement. I suppose if you're a boomer and you cash out of your overpriced house it's a good deal. But for others who are trying to get into the market, it's tough.

This may be something that varies by market, then... my wife and I refinanced our house in Missouri from a 30 year fixed mortgage that we had gotten prior to the economic mess to a 15 year fixed with a much lower interest rate which had a positive impact on our financial situation.

 

[SBrown]

... And the comment about Dick Cheney has me thoroughly puzzled...

Cheney moved back to Wyoming (where he grew up and went to college) because of some electoral stuff about both a Prez and VP being from the same state; he and Bush were in Texas, which doesn't have state income tax, either, btw. So perhaps WY was advantageous financially, but it wasn't totally out of the blue. So, not sure either.

 

[Tricia]

Additional-
The Federal Reserve, who holds an annual meeting in Jackson, has had a low interest rate policy in recent years which has helped push up home values and the price of other assets.

Dick Cheney became a Wyoming resident shortly before he accepted the vice presidential nomination.

The US Forest Service's pro corporate monopoly policies help suppress ski area wages and competition from independent local business while benefiting corporate executives and shareholders who typically live elsewhere.

I'm unclear on what the aim is for these two items in the OP, but I'm still working on my caffeine fix this morning... The Fed kept their rates low in order to help out "main street" as much as anything else. It may have had some less than awesome results, but I don't believe the goal of the Fed was to drive up housing prices. And the comment about Dick Cheney has me thoroughly puzzled...

While I can see where low interest rates impact housing, I'm unclear about the intent of those comments in their context
@Fair Wages please understand that we don't have a political area on this site for a reason. Your good content can get blurred when politically charged comments are added. We reserve the right to edit if necessary.

 

[cantunamunch]

<- is really, really, really working hard to not think of Teapot Dome right now.

 

[Fair Wages]

High housing costs definitely have an effect on ski communities.

Maybe Cheney was a poor example but I found it interesting that it was so easy for Cheney to re-establish his Wyoming residency when he had been living/working in Texas and was in the process of pursuing a DC job. Had he not owned a home in Wyoming, this would not have been possible. Some places require you to spend more time there to consider yourself a legal resident. If people had to actually live/work 180+ days/year in their Jackson homes to get the financial benefits of Wyoming residency, then fewer people might be buying these homes. When wealthy people are attracted to an area (for whatever reason), it does tend to put upward pressure on home prices. Check out http://lintonbingle.com/resources/wyoming-residency-requirements to see how Jackson real estates agents use this to sell houses.

Low interest rates are not all bad and have certainly benefited some people. However, they do tend to push up home (and other asset) prices. I don't intend this to be a political statement against low interest rates, just a fact. From a political perspective, I do think we should consider the unintended consequences of various policies and make attempts to balance things out.

 

[scott43]

This may be something that varies by market, then... my wife and I refinanced our house in Missouri from a 30 year fixed mortgage that we had gotten prior to the economic mess to a 15 year fixed with a much lower interest rate which had a positive impact on our financial situation.

For sure it helps some. If you're in a home and staying there, yeah, this is a good time to pay down mortgages. However, most people borrow more and upgrade. Is this a good thing? Dunno. But it can be bad. When house prices start approaching 7x salary, from the long-term trend of 2-3x salary, something is up.

We're sitting watching Vancouver. Gov't there just introduced a 15% foreign owners tax and the prices have tanked. Cause and effect is not proven but we're all watching to see what happens there. Seems Vancouver is partly low interest rates and partly a safety deposit box for foreign money. Is that what is good for Vancouver? Presumably some people have to actually live there.

 

[michael]

High housing costs definitely have an effect on ski communities.

Maybe Cheney was a poor example but I found it interesting that it was so easy for Cheney to re-establish his Wyoming residency when he had been living/working in Texas and was in the process of pursuing a DC job. Had he not owned a home in Wyoming, this would not have been possible. Some places require you to spend more time there to consider yourself a legal resident. If people had to actually live/work 180+ days/year in their Jackson homes to get the financial benefits of Wyoming residency, then fewer people might be buying these homes. When wealthy people are attracted to an area (for whatever reason), it does tend to put upward pressure on home prices.

Low interest rates are not all bad and have certainly benefited some people. However, they do tend to push up home (and other asset) prices. I don't intend this to be a political statement against low interest rates, just a fact. From a political perspective, I do think we should consider the unintended consequences of various policies and make attempts to balance things out.

Agreed, but high value destinations of any sort are going to suffer higher costs of living. Part of the problem with real estate, though, is that it is a market requiring the balance of several forces. Making credit affordable and available is one of those forces and, unfortunately, doing so will have some negative results. But those imbalances can be counteracted elsewhere. For example, my wife and I had a discussion with a mortgage agent earlier this summer and the subject of home appraisals came up... turns out that appraisers in the SLC area were adopting a more hardline stance in an effort to keep home prices from increasing at an artificially boosted rate. The mortgage agent wasn't thrilled by this for obvious reasons, but as a wannabe-homeowner and a student of the mortgage meltdown a decade ago, I was ecstatic.

My hope is that seeing sanity prevail in such a way as noted above will become a popular mode of thought in the real estate industry. Jackson is probably on the forefront of what is likely going to be an ugly battle between building for a seasonal population and having an established and thriving community that represents the best of all of us.

 

[scott43]

Here..have a look at what $1million buys you in Vancouver..
http://www.theglobeandmail.com/real...m-and-only-have-one-bathroom/article31689777/

 

[Fair Wages]

We have a program up here called the Temporary Foreign Workers program. It allows businesses to bring people in from foreign countries, mostly China and the Phillipines, and pay them very low wages while also limiting them being able to work only for the person that brought them here. It's not quite slavery..but.. The argument was businesses can't afford to pay wages in boom areas where prices are very high, like Fort McMurray. To which my response would be, how is this a labour issue? Raise prices! However, the gov't allowed this program to proceed and it's a terrible distortion of the market. Excessive wage inequality leads to a bad place.

This program helps many ski resorts, including Vail, Beaver Creek, Breckenridge and Keystone fill jobs. From a personal perspective, I like meeting and chatting a bit with some of the young foreign workers- some take advantage of the opportunity and improve their English, but many do get stuck living with a dozen or more roommates and have managers who don't want to give them time off because they have been short staffed in recent years. Amazing how few I actually see on the ski slopes. I was surprised last season how early some Vail dining options closed (including parts of mid-Vail) when it was time for these temp workers to go home.

I should add that programs like these tend to suppress wages AND put less pressure on the company town employers to solve the housing issue (although they do put some effort into this)

 

[scott43]

The problem, as I see it, is exploitation. The workers that get here are denied some rights such as moving jobs or locations. If we need more workers, increase immigration. The problem isn't lack of workers, the problem is lack of workers who will take $8/hr in a place where rent is $1500/mth for a bachelor apartment. It's become a business model, maximizing profit at the expense of basic rights. Are we saying that Vail or Beaver Creek or Aspen can't afford more for wages?

 

[michael]

The problem, as I see it, is exploitation. The workers that get here are denied some rights such as moving jobs or locations. If we need more workers, increase immigration. The problem isn't lack of workers, the problem is lack of workers who will take $8/hr in a place where rent is $1500/mth for a bachelor apartment. It's become a business model, maximizing profit at the expense of basic rights. Are we saying that Vail or Beaver Creek or Aspen can't afford more for wages?

I absolutely agree that it's exploitation, but I would argue against increased immigration to offset the shortage. The US allows additional visas to fill IT positions because there is a shortage of people going into IT (which are careers with solid wages). And I am okay with that. But that is not the situation in the ski industry and I am definitely NOT okay with any program that encourages companies to pay wages that are not balanced against the local economy.

 

[TheBestSkier]

During my time working for the Vail Resorts I got to witness a lot of indentured servitude. They were under contract to live and work for the Vail. $8/hr was the wage for most F&B employees. Most of their earnings went to pay for "housing" that was in such poor shape people were always sick. The rest of the money was spent around the resort with employee discounts that brought the cost down 25% (25% off at a ski resort doesn't quite get it down to a normal price). If they didn't go along with everything they could get written up, fired and then deported. Most were here from South America where they lived with their parents. It was their first job and they just wanted to get away and party. By January most of them resented the resort because they knew how bad they were getting screwed. They would finish their contract and never return. Don't worry new ones always show up.

I do know a guy who has bettered his life through this program but it's only because he was able to get jobs at the Silverthorne outlets. He's been coming here every winter and working 3 jobs to pay for his college in Lima, Peru. So it's not all bad but a lot of people are getting taken advantage of.

 

[Monique]

Is there anywhere where this problem is solved? Europe maybe? Because it seems pretty clear that a high-demand location will have prices sky rocket. If most of the jobs available are either in high demand or do not require specialized skills, wages will be low. It's not clear to me that minimum wages have the long-term desired effects, but even if they did, minimum pay is not going to get you good housing in a destination resort. It doesn't even get people good housing in regions without those pressures.

The only thing I can think of is for there to be an outside influence, like the town mandating that taxes on vacation homes will subsidize X number of residences reserved for employees. Or of course mandates for some massive pay hikes for cafeteria workers etc. Neither of which sit very well with me.

 

[steamboat1]

I believe you are talking about the H-1b visa program. Although it's still used here in the east I've noticed more locals being hired lately. Housing is probably more affordable near eastern ski areas as opposed western mega resorts.

 

[scott43]

Is there anywhere where this problem is solved? Europe maybe? Because it seems pretty clear that a high-demand location will have prices sky rocket. If most of the jobs available are either in high demand or do not require specialized skills, wages will be low. It's not clear to me that minimum wages have the long-term desired effects, but even if they did, minimum pay is not going to get you good housing in a destination resort. It doesn't even get people good housing in regions without those pressures.

The only thing I can think of is for there to be an outside influence, like the town mandating that taxes on vacation homes will subsidize X number of residences reserved for employees. Or of course mandates for some massive pay hikes for cafeteria workers etc. Neither of which sit very well with me.

The market is being distorted by these programs. The market says, you need x dollars to live here. But we pay x-75%. Therefore, we get no workers. Option 1: lobby government to allow very low wage foreign workers with few rights to fill those spots. Option 2: pay higher wages. It's not that complicated except that businesses don't want to pay more. There is, I would think, zero chance that Starbucks is going to close stores in Aspen if they had to pay their workers 50% more money.