Rattling the tourism economy
August 20, 2007
Aspen’s labor market has experienced seismic changes in the last decade that signal the fading of the tourism economy and the emergence of a new, real estate-based regime.Lodging, retail shops and restaurants and bars were the bedrock of Pitkin County’s economy for 50 years starting in the mid-1940s. But those sectors of the local economy employed fewer people last year than a decade ago, according to statistics from the Colorado Department of Labor and Employment.Meanwhile, real estate offices, banks, local governments and household services such as landscaping and property maintenance employed greater numbers than ever.Overall employment in Pitkin County increased by 1,944 workers or 13 percent between 1996 and 2006, according to labor department statistics. There were 14,929 employed in 1996 compared to 16,873 last year. Those are annual averages that iron out the peaks and valleys of Aspen’s notoriously seasonal economy.While there was overall growth, some major sectors shrunk. Restaurants and bars as well as tourist accommodations employed about 2,300 workers in each sector in 1996. That fell to about 1,950 workers in each category by 2006.Retail shops added employees up through 2001, then their numbers fell. In 2001, Pitkin County shops employed about 1,800 workers. By last year, the ranks fell to 1,650.The numbers paint a picture of an economy in transition, from a base of tourism and recreation to a base of real estate sales, development and maintenance. Meanwhile, the oil and gas boom in Garfield County continues to generate high-paying jobs, forcing Pitkin County businesses to compete for workers. Aggravating this squeeze is the continuing rise in real estate prices, which makes it harder for workers to make ends meet in the Roaring Fork Valley.
While the number of workers in the old tourism economy have fallen in the last few years, workers in what could be considered Pitkin County’s new economy are climbing.The employment category that includes landscapers, building maintenance and temporary workers grew from 1,016 to 1,711 workers between 2001 and 2006 – an increase of 68 percent.The number of workers in real estate firms jumped 33 percent in just five years. There were 1,024 workers in 2001. That increased to 1,363 last year.Unfortunately, the growth of the construction industry in Pitkin County is difficult to measure. Even though construction activity is plainly booming in the upper Roaring Fork Valley, the state labor department’s data reflects the county where a business is based, not where it has projects. So when a Denver firm lands a big contract in Aspen, its employment statistics are reflected in Denver County not Pitkin County. Downvalley construction firms that build trophy homes in Pitkin County get tallied as Garfield and Eagle County companies and workers.The number of construction firms in Pitkin County dropped in the last decade, perhaps reflecting the ongoing migration of businesses downvalley. In 2006, 237 construction firms called Pitkin County home, employing 1,152 workers. A decade earlier, there were 257 construction firms based in Pitkin County that employed 1,437 people.Although the statistics reflect a loss of 285 workers over the decade, there is clearly more construction occurring.
Mickey Spalding, general manager of Frias Properties , wasn’t surprised by the drop in workers in tourist accommodations. The longtime Aspen businessman said a different type of buyer started acquiring Aspen condominiums in the mid-1990s. They sought real estate investments rather than rental properties and didn’t feel the need to rent them out. So a significant number of short-term rental units were withdrawn from the pool.One condo complex that he managed in the 1980s had all 24 units available for rent. Now that complex has only nine rentals, he said, and that’s not an isolated case. Several small lodges have also been converted to condominiums. Fewer short-term rentals means fewer workers employed in property management.”I think we’ll see it continue to drop,” Spalding said.He isn’t surprised by the decreasing numbers of workers at restaurants and retail shops, either. While walking around town, the loss of businesses from the 1970s and ’80s is striking, he said. He estimated there used to be twice as many restaurants in Aspen and five times as many ski shops.
Lodges, restaurants and shops are also dealing with a chronic Aspen problem – making do with less. Warren Klug, longtime general manager of the Aspen Square Condominiums, said he’s learned to live with fewer workers than he wants. He typically has three full-time reservationists; he’s getting by with two.”Now you put an ad in the paper and you have almost no one showing up,” Klug said.A longtime retail shop manager said her business pays employees significantly more in order to compete in the marketplace and to match the high cost of living. But paying more has forced the store to hire fewer employees to keep payroll under control. Like Klug, the retail manager said it isn’t easy as it once was to find employees. Understaffing is a necessity.Pitkin County’s worker shortage has been exacerbated in recent years by the explosive growth of the economy in Garfield County. Colin Laird, executive director of Healthy Mountain Communities, a nonprofit promoting regional collaboration, said the upper valley’s economy used to rely on two conditions in Garfield County that no longer exist: More workers than jobs and plentiful affordable housing.The number of workers in some sectors of the Pitkin County economy, like lodging and retail, might be dropping simply because workers are no longer available.”Workers could be choosing to work closer to home, especially now that the economies of Basalt and Carbondale have grown over the last decade and there is the current explosion of economic activity in western Garfield County,” Laird said. “We have entered a tug of war over workers and [the state’s data] might be illustrating how the ribbon on the rope has begun to move” in Garfield County’s favor.
While Pitkin County has experienced a 13 percent gain in workers over the last decade, Garfield County has soared 64 percent over that same period. Businesses based in Garfield County employed 15,487 people in 1996. The number of workers vaulted to 25,473 last year.The construction industry and oil and gas climbed dramatically, to no one’s surprise. In 1996, there were 16 firms in Garfield County engaged in mining activity, the state’s category that includes oil and gas well drilling. In 2006, there were 79 firms employing 2,172 workers.The natural-gas boom has stoked the home-building industry as well. There were 1,961 construction workers in Garfield County in 1996. Last year there was an annual average of 4,163.There is, however, an unavoidable flaw in the labor department’s employment data. The numbers are based on unemployment insurance paid by business owners. Workers who are self-employed and those working “off the books” aren’t counted. It’s impossible to tell how many illegal immigrants are working construction or cleaning rooms for cash.Despite some minor flaws, however, the labor department’s data paints a compelling picture of labor trends in the valley. The 2006 population of Pitkin County was estimated at 14,798. The total civilian labor force in Pitkin County for July 2007 was 11,761.But Pitkin County had 16,873 jobs on an annual average in 2006. In other words, Pitkin County has at least a third more peak-season jobs than it has available workers within its borders. That requires it to import a huge portion of its workers.
Good pay and the allure of the ski-bum lifestyle allowed Pitkin County to attract many of the workers it needed over the years, said Joe Winter, a senior economist with the state labor department. Young men and women used to bunch up in apartments and fill critical jobs in return for decent pay and a ski pass.Now the pinch is on because of the growth in Garfield County and the shortage of affordable housing in the upper valley.”There is a new economic base downvalley in what has traditionally been the bed base for the Pitkin County work force,” Winter said. “The guys in Rifle and Silt that used to drive up Highway 82 are now working across the street.”Winter said development in Aspen and Snowmass Village will continue to add positions. He questioned if businesses will be able to fill those positions given the valley’s dynamics.”You’ve had a chronic problem getting worse over the years,” Winter said.The only relief he foresees is when the drilling of new gas wells slows in Garfield County and the emphasis is on production rather than exploration. At that point, the oil and gas industry will employ fewer workers and people who remain in western Garfield County will look elsewhere again for jobs.
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Paul Menter, city of Aspen finance director, envisions Pitkin County’s demand for workers surging in the next few years, based on where the upper valley economy has been and where it is going.It came as no surprise to him that the number of workers dropped in key tourism sectors of the economy between 1996 and 2006. The local economy’s retail revenues didn’t keep up with inflation until recently, he said. “We didn’t see real growth until 2004.”So, even though the city’s sales tax revenues generally increased each year, they didn’t rise faster than the rate of inflation.There has been no significant increase in restaurant capacity for years, so the number of workers has been static over the last decade, Menter said. Ditto retail.The city’s lodging tax revenues are up 12 percent this year through June, but that is a reflection of high occupancy and high room rates rather than more rooms, Menter said.He anticipates economic changes within the next few years that will boost demand for the number of workers in the tourist accommodations, food and retail industries.Base Village’s completion alone will “dwarf” the former economic capacity of Snowmass Village, he said. Base Village is a 1-million-square-foot development at the foot of Snowmass Ski Area. Significant redevelopment of lodges in Aspen is also occurring.”I think what we’re going through is a growth spurt in our capacity,” Menter said.
Aspen Mayor Mick Ireland, a well-known local statistics junkie, said trends with baby boomers will have a major effect on Pitkin County’s employment picture in the next few years.Many Aspen-area baby boomers are retiring, selling their homes and either moving away or into different housing in the Roaring Fork Valley. Ireland said 600 properties recently transferred from local ownership to non-local ownership in Pitkin County.In many cases, sellers are retiring from the workplace and their residences no longer house local workers. At the same time, second-home owners are buying property and creating additional demand for services – thus fueling the need for more workers, from landscapers to pool cleaners to housekeepers.”It’s a double-edge sword,” Ireland said of the retiring workers and newcomers’ demands for greater services.If Pitkin County filled all jobs the economy is creating, it would have to build the equivalent of the Burlingame affordable housing project every year for about 300 employees, he said. Obviously, that won’t happen. Instead, Ireland suspects many new jobs will go unfilled.”I think what you’re going to see is reduced services,” Ireland said.Scott Condon’s e-mail address is email@example.com.