Higher wages aren’t a silver bullet
Do you hear that?
It’s the sound of Park City renters holding their breath as their lease expires. As the affordable housing worsens, the rental community will wait to see if they can afford to stay in the community or face the dilemma of moving to Salt Lake City or the Heber Valley, requiring them to either commute into Park City or find employment closer to where they live.
As of January, the average rent for a 690-square-foot Park City apartment totals $1,473, according to rentcafe.com, with some properties requiring well above $2,000 per month in rent. Around 30% of Park City residents are paying rent to live here. The question is, how long can they afford to stay?
And for business owners, there’s a pressing follow-up question: What impact will the lack of affordable housing have on the local labor force? The issue is especially urgent given many employers are already suffering from an acute labor shortage.
One business that has found a way to thrive amid the challenges is Red Rock Brewery in Redstone. Sergio Morales, the manager said it’s partly a result of bumping up wages.
“We’ve increased our pay for employees, and we’ve given them employee discounts. Employees are very happy here,” he said, adding that daily sales are up, too.
Raising employee wages is a common response to the area’s labor shortage, and it’s a strategic move to reduce the risk of turnover. The potential downside, however, is that a higher wage sometimes requires businesses to pass those extra expenses onto their customers. That, in turn, starts a vicious cycle, increasing the cost of living and requiring the need for even higher wages.
Jeffrey Jones, economic development and housing director for Summit County, warns that this process of waging prices to absorb higher employee wages is going to cut into everyone’s button line.
“Hopefully consumers are willing to pay those costs,” he said.
John Kenworthy, owner of Flanagan’s on Main in Park City, believes Park City has the right leaders in place to start encouraging change and help businesses in the area overcome the challenges they face.
“I am optimistic that we have the ability to fix the major issues we face. Our new governance is in a position to move the needle, and I want to support them fully,” Kenworthy said. “We now have a very skilled chief executive in Mayor Nann Worel. She is not going to run from difficult tasks. Most importantly she believes that we can solve our critical issues.”
For many, the lack of housing and its impact on the workforce which supports small businesses would be first on the list of critical issues. But the new mayor and City Council — in addition to Summit County officials — face monolith-sized issues and only have limited power over the market forces that are causing the labor shortage.
“I personally think the demographic forces we see are going to be with us for a while,” Jones said. “I don’t think they’re going to be resolved in just a year.”