In Growth Begets Growth: Jackson Hole’s Evolving Taxable Economy in the Era of COVID, I draw four basic conclusions and identify two major challenges facing the community.
The four basic conclusions are:
- Economically, the pandemic is no longer a significant issue for Jackson Hole.
- Tourism is no longer driving Jackson Hole’s economic growth. Instead, growth itself is driving growth – not just in Jackson Hole, but across the greater Tetons region.
- Economics is dividing Jackson Hole into three increasingly incompatible tribes.
- Summer 2021 and beyond will place extraordinary growth-related stresses on not just Jackson Hole’s economy, but the community as a whole.
The two major challenges are:
- Maintaining the community’s character in the face of a rapidly-evolving economy.
- Preserving and protecting the area’s ecosystem
Each is explored below.
Conclusion #1: Economically, the pandemic is behind us
To be clear about what’s truly important, the COVID-19 pandemic has taken a horrible toll on individuals, families, the nation, and the world. It’s wreaked havoc on not just the economy, but our communities, our physical and mental health, and pretty much every aspect of life. Very little of this has been good, or even neutral.
We must also recognize the pandemic is still raging. While the rapid growth in vaccinations is providing hope, COVID-19 is still sickening and killing people, still disrupting lives, and still threatening to come roaring back should we prematurely let down our guard.
All of this noted and honored, Jackson Hole’s overall economy hit its pandemic-driven nadir in mid-summer 2020, and by October was exceeding its 2019 pre-pandemic levels. Most notably, since bottoming out in September, taxable sales have regained 60% of their losses. At current growth rates, total taxable sales could be back at their pre-pandemic peak by mid-summer.
And it’s not just taxable sales. Graph 2 combines a variety of economic and tourism metrics, showing monthly changes in each between 2019 and 2020. By June every metric was improving; in each of 2020’s three final months, essentially every metric save commercial airline enplanements was ahead of its 2019 level.
Critically, while Jackson Hole’s collective economy is well on the way to recovery, many businesses and individuals are still struggling. At a minimum, they need our sympathy and concern; ideally they need our support.
Conclusion #2: Growth is driving our growth
While tourism remains the most important piece of Jackson Hole’s taxable economy, its relative importance has been waning for several years. In its place, economic growth is being driven by Build & Equip-related sales (i.e., residential development and its attendant purchases).
This is why, during 2002’s nine months of “pure pandemic” (i.e., April-December), Teton County’s taxable sales fell only 7%. Break the data into Tourism-related purchases versus Build & Equip-related purchases, and during those same nine months Tourism-related purchases fell 23%, while Build & Equip-related purchases rose 20%.
Taking a longer-term look, during the six years from 2013-2019 – i.e., before the pandemic – Tourism-related sales grew at a compounded annual rate of 8.8%, while Build & Equip sales grew at 12.0% per year. Expand the time frame to include the pandemic – i.e. from 2013-2020 – and the seven year compounded annual growth rate for Tourism falls to 4.0%, while the Build & Equip rate grows to 13.1%.
The fact that $1.8 billion worth of property was sold in Jackson Hole in 2020 suggests the growth in Build & Equip will not abate, but instead almost surely accelerate – the COVID migrants buying vacant lots will want to build on them, and the folks spending millions on new homes will want to furnish, refurbish or remodel them. And since money won’t be an object for many of these folks, all the pieces seem to be there for a continuing Build & Equip boom.
Two other factors will also likely to contribute to Build & Equip becoming increasingly important to the local economy. One is that like attracts like – the more COVID migrants and other well-to-do folks who move to Jackson Hole, the more attractive it will become to like-minded people.
The other factor is that most new Jackson Hole residents have no direct economic connection to Jackson Hole’s economy. As a result, they will be less likely to support tourism, especially at the ballot box (e.g., support will likely wane for the Lodging Tax and pro-tourism candidates). As that happens, it will become increasingly difficult for the Tourism industry to continue to grow at the rates it has become accustomed to and, in many cases, needs to meet its financial targets.
Conclusion #3: We’re dividing into three tribes
Among the other trends the COVID-19 pandemic has accelerated is the division of Jackson Hole and the surrounding region into three economic tribes.
The first tribe is those involved in tourism, a group anxious to make up for the big losses they suffered during the pandemic. Happily for them, their prospects seem good – by all indications Americans are eager to travel, disinclined to go overseas, and especially interested in national parks.
The second tribe is those working in Build & Equip industries. Coming out of their best year in at least a decade, the Build & Equippers are eager to keep the good times going.
Finally, there’s Everyone Else. While those not involved in Tourism surely appreciate the amenities tourism makes possible, they also seem to be increasingly impatient with increasing crowds, worsening traffic, and the other consequences of a growing tourism industry.
All this lays bare an issue that has always been there for Jackson Hole, but has never reached critical mass – the lack of direct economic alignment between the three tribes.
For generations, the community’s consensus view was that the region’s economic health depended on a strong tourism base. This view was bolstered by the facts that: a) many residents had at least an indirect financial stake in tourism’s success, and b) all other economic activities were essentially ancillary to tourism.
As technology has rendered Jackson Hole’s geographic isolation less constricting, though, this consensus view has been eroding. With increasing velocity, Tourism’s importance to the community’s economy is diminishing, while other economic drivers are gaining ground (particularly investments and location-neutral jobs, which have no direct connection to either tourism or, more broadly, the community as a whole). As this shift continues, the community will need to develop a new consensus about both tourism and how we develop our remaining private lands.
Conclusion #4: We face extraordinary growth-related stresses
Several qualities will hallmark the remainder of 2021:
- Record numbers of tourists.
- Record amounts of construction.
- Record demand for employees.
- Record shortage of rental housing for workers.
- Record effective population (due to a combination of a record number of tourists, a record demand for local employees, increasing numbers of location-neutral workers, and a record number of seasonal and permanent residents lured here by COVID-related concerns).
If, in turn, much or all of this comes to pass, several outcomes are likely:
- An epically-overworked and under-housed tourism workforce. Coming on top of a year of pandemic-related stresses, this will likely lead to a decline in service quality, increased burn-out, and the like.
- Record amounts of traffic
- Exceptional pressure on the region’s public lands, especially the national forests (as the national parks have greater resources and greater ability to control crowds).
If, in turn, much or all of this comes to pass, it will likely exacerbate the fracturing of the community into tribes, with Tourism competing with Build & Equip for workers and workforce housing, and Everyone Else railing at both Tourism and Build & Equip for compromising their quality of life.
Longer-term, the key issue will be addressing the issues created by the increasing strength of Jackson Hole’s location-neutral economy versus the increasing diminution of its tourism economy. Two specific threats loom large:
Maintaining a sense of community as location-neutral income increasingly overwhelms locally-derived income (e.g., when renting or buying a home, those earning location-neutral income can easily out-compete those earning locally-derived income); and
Figuring out how to adequately fund local government when it receives essentially nothing from location-neutral economic activity.
Challenge #1: Maintaining the community’s character
“Location-neutrals” are people earning their living from remote-work jobs and location-neutral investment income. As Jackson Hole’s population of location-neutrals grows, it’s becoming increasingly unclear how these folks will connect with the community.
Certainly not economically – someone earning their living by working remotely will care far more about national or global occurrences than local hotel occupancy rates or Grand Teton visitor days.
But absent that – absent a culture informed by many people working in tourism and most everyone else removed from the industry by only a degree or two of separation – what will bind us together? What will dampen the centrifugal forces pushing us apart from one another? What will sustain a culture where, as legend has it, you don’t know whether the person next to you is a liftie or a millionaire?
That is the fundamental threat facing Jackson Hole’s character. How do we maintain the “we’re all in this together” quality when, increasingly, we’re not all in it together? At least not economically.
For generations, people have moved to Jackson Hole for a variety of reasons, but stayed for a common one: they fell in love with the community. They stayed because it was home to a group of people willing to accept a harsh climate, geographic isolation, and other privations in exchange for the privilege of living in a place of beauty and wonder; a group of people who shared the ineffable sense that, rather than your job or your bank account, what mattered in life was the world around you.
Over the past several decades, this has slowly changed. As a result, Jackson Hole is increasingly feeling like every other haunt of the well-to-do.
In some ways, this homogenization is the inevitable outcome of America’s economic and social system, one which incentivizes turning something unique into a commodity. But because most American communities are organized around economic self-interest, there is no road map for Jackson Hole to follow should tourism cease to bind us together.
All this creates an extraordinary challenge for not just Jackson Hole, but the entire Tetons region and beyond.
The challenge is this: In the face of rapid technological change and extraordinary economic pressure, can the greater Tetons community find a way to hold onto the qualities that make it a community? Or will it succumb to the forces of homogenization, and in so doing undermine the bonds that form its distinctive character? The answer is far from clear, especially because there are really two questions here:
- Can Jackson Hole can chart a different course?
- Does Jackson Hole even want to chart a different course?
There is no clear answer to either question.
Challenge #2: Preserving and protecting the area’s ecosystem
Historically, two factors have molded Jackson Hole’s character: the region’s ecosystem, and the sacrifices born of its geographic isolation.
Today, thanks to changes in technology, the economy, and transportation, living in Jackson Hole requires increasingly fewer sacrifices. What remains intact is the ecosystem – it’s the one thing that binds together the community’s three tribes of Tourism, Build & Equip, and Everyone Else.
Unfortunately, though, the ecosystem faces two threats.
One is from the region’s influx of built amenities, the golf courses and spas and trappings of commerce that make every high-end community in the world increasingly look and feel and behave like every other high-end community in the world. These amenities are wonderful, but they are also commodities. More importantly, they also distract residents and visitors from fully appreciating just how extraordinary the region’s natural qualities are.
The other threat is the pressures on the region’s ecosystem. Some of these threats – most notably climate change – are basically beyond local control. Others, though, can be addressed locally.
Groundwater pollution. Habitat fragmentation. Road expansion. All these and more are things we can control, because all are the result of us taking our ecosystem’s health for granted.
But we can’t take it for granted. Want proof? 97% of Teton County’s land is publicly owned – the second-highest percentage of any county in the nation. Yet despite this extraordinary level of ecosystem protection. many of our streams are rated as “polluted.” A surprising amount of our groundwater is fouled. And a growing amount of our large mammal habitat is becoming fragmented.
All this and more is exactly what’s occurred in every other once-pristine place on the planet. As a result, we’re in the process of learning what these other places have already learned: Pursuing economic growth while ignoring environmental consequences doesn’t work out well for ecosystems.
Sadly, it’s becoming increasingly obvious that this approach isn’t working out well for Jackson Hole, either – we may be special, but in this regard we’re not unique.
Where Jackson Hole is unique, though, is in how dependent we are on the health of our ecosystem. Why? Because it’s the foundation of not only our region’s economy, but also its character.
Combined, our ecosystem and our character are driving our economy’s boom, attracting free-spending tourists and Build & Equippers even in the face of the worst public health crisis in a century. Yet because of that boom, we risk compromising both the health of our ecosystem and the distinctiveness of our character. And should we do that, we’ll render ourselves just another community with high-end amenities located in a beautiful setting.
There are lots of beautiful places with high-end amenities, but lots of places aren’t Jackson Hole. Our community’s history suggests we are capable of not only envisioning a different, better, and forward-looking way of doing things, but turning that vision into reality. Indeed, doing so is at the core of the community’s character.
The question now is whether that character can survive the extraordinary technological and economic pressures buffeting Teton County. If it can, it will be because the community has recognized that, while economic health is necessary, it is not sufficient. Indeed, prioritizing economic health over all other considerations is antithetical to what Jackson Hole has been for its entire history. It will also be fatal to keeping it Jackson Hole the special – if not unique – place so many, many people want it to continue to be.
Bonus Analysis #1 – How we’re coping
Graph 5 shows the monthly sales of local liquor stores.
The magenta-colored bars show sales from April 2020 – January 2021; i.e., the 10 full pandemic months for which data are available. The light purple bars are the same 10 months the year before.
During the 10 pandemic months, local liquor store sales were up 17.5% over the same 10 months the year before.
As the pandemic wore on, liquor store sales grew even faster. During the most recent seven months of July 2020 – January 2021, liquor store sales were up 22.1%. Some of this may have been due to the growth in tourism during the second half of 2020. It’s also fair to assume, though, that some of it was due to locals increasingly finding solace in a bottle from the slow-but-relentless grind that has hallmarked the pandemic.
Bonus Analysis #2 – How we’re equipping
When it registers with the state, every business selling taxable goods in Wyoming is assigned the four digit North American Industrial Classification System (NAICS) code appropriate for its industry.
The first two digits of the NAICS code represent a broad industrial category. For example, “44” and “45” are both Retail. The third and fourth digits indicate a more specific sub-category; e.g., 4421 is “Furniture Stores,” 4422 is “Home Furnishings Stores,” and 4431 is “Electronics and Appliance Stores.”
For me, perhaps the weirdest single sales tax-related figure coming out of the entire pandemic was one showing that, in January 2021, an out-of-state business classified as an “Other Miscellaneous Store Retailers” reported selling $24.6 million in taxable goods to people living in Teton County.
This figure was epically huge, exceeding the category’s sales for the previous 5.5 years combined. As a result, I called Wyoming’s Department of Revenue to see if it was a typo. They did some research, and confirmed it represented the December 2020 sale(s) made to Teton County residents by just one business in Washington, DC.
Additional research showed that the “Other Miscellaneous Store Retailers” category is comprised of five sub-categories:
- 453910 – Pet and Pet Supply Stores
- 453920 – Art Dealers
- 453930 – Manufactured (Mobile) Home Dealers
- 453991 – Tobacco Stores
- 453998 – All Other Miscellaneous Store Retailers
Piecing it together, in December 2020, someone living in Teton County purchased from a Washington DC vendor:
- $25 million in pets and/or pet food; and/or
- $25 million worth of double-wide trailers; and/or
- $25 million in fine Cuban cigars and other tobacco products; and/or
- $25 million worth of art.
In this game of Clue, my bet is on a well-to-do resident purchasing $25 million in art for their Jackson Hole home. Yet more proof of the growing importance of Build & Equip-related expenditures to Teton County’s economy.
And at that one household, it must have been a very merry Christmas indeed.
Bonus Analysis #3 – The coming train wreck
Since the beginning of 2005, I have measured the column inches of Help Wanted and Rental Housing ads in each week’s Jackson Hole News&Guide. Although a variety of internet-based classified ad forums have popped up in recent years, by all indications the News&Guide’s classified ads remain the region’s foremost medium for Help Wanted and Rental Housing advertising.
Graph 7 shows what’s occurred with Help Wanted ads over the last 16-plus years. The solid blue line is the 52 week running totals; the blue bars are each week’s column inches.
The graph’s big takeaway is that Help Wanted ads quickly respond to downturns in the local economy – they nose-dived following the onset of the Great Recession, and did so again once the pandemic hit. Over the last few months, though, they’ve begun to climb again.
Graph 8 is structured like Graph 7, but looks instead at Rental Housing ads. The two trends basically move in opposite directions: When there’s a big demand for workers, housing supply goes down; and vice-versa.
The striking thing about Graph 8 is what’s happened over the last several months. After remaining fairly steady through the end of last summer, over the past seven months the News&Guide’s 52 week running total of Rental Housing ads has been in free-fall. It hit its all-time low in the first week of December 2020, and has set a new low every week since.
For every week’s paper since the beginning of 2018, Graph 9 shows ratio of Help Wanted ads to Rental Housing ads. In the most recent edition of the News&Guide, for every one column inch of Rental Housing ads there were eight full columns of Help Wanted ads – an entire page plus one additional column.
Driving this dynamic has been the ever-shrinking amount of Rental Housing listings. How bad is it? In the 16 years of newspapers ending with the 2020 Thanksgiving edition, only 16 editions – 0.8% – had 10 inches or fewer of Rental Housing ads. In the 17 papers since Thanksgiving 2020, every single one has had 10 inches or fewer. And only two of them had as many as 10 inches.
As Graph 10 indicates, employers sense there’s a problem looming.
In particular, looking at the six weeks between early February and mid-March – i.e., the six weeks before the pandemic struck in 2020 – 2021’s Help Wanted ads ran 22% ahead of 2019’s count, and 26% ahead of 2020’s.
Most striking of all, though, is that the News&Guide’s March 24, 2021 issue had a level of Help Wanted ads not normally seen until late May.
Combine this level of Help Wanted anxiety with the record-setting shortage of rental housing, and it seems likely that summer 2021 will be highlighted by a record demand for labor and a record shortage of housing. Then throw in anticipated record tourism levels plus a year of accumulated pandemic-related stress, and it seems likely the coming months will be a pressure cooker for all those living and working in Jackson Hole.
Knowing this, it will serve us well if we can reach even deeper into our reserves of patience, understanding, and empathy for all those working to keep the community going.
To download pdf version of the three papers examining different facets of Jackson Hole’s economy, please follow these links: