Comprehensive Economic Study of the Methow Valley

TwispWorks Comprehensive Economic Study of the Methow Valley - cover

In 2020, TwispWorks commissioned a comprehensive economic study to better understand the structural changes occurring in the Methow Valley. Throughout 2020 and 2021 we launched four surveys, held Community Listening Sessions, and gathered data on tourism, part-time homeowners and remote workers. After hearing from over 1,000 residents, we are thrilled to announce that the study is complete. Thank you to everyone who participated in the surveys and listening sessions! We are proud to be part of this community!

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Executive Summary

Introduction

In conjunction with its core mission to support and enhance economic vitality in the Methow Valley, Twisp Works has completed an 18-month economic study that provides an in-depth understanding of the Methow Valley’s economy. The study addresses questions relating to tourism, vacation homes, residential building and other major industries, as well as economic disparity and resident attitudes on change and the future. Specific questions the study addresses include:

  • How much revenue does tourism generate through visitor and part-time resident spending?
  • How is this income distributed in terms of jobs, wages, and multiplier effects? What are the social costs of tourism and recreation?

Tourism not only draws visitors, but here-and-there residents. Amenity migration, or the in-migration of people in search of lifestyle and recreation, also factors into our economy. Forty-one percent of the homes in the Methow are vacation and part-time residences. The study answers questions such as:

  • How do second homeowners influence our economy in terms of spending, gifting, social capital, volunteerism, and income from outside the Valley?
  • Other than tourism what are the main drivers of our economy and how do they contribute in terms of gross revenue and jobs created?
  • How has the growth in second homes and nightly rentals impacted long-term housing?
  • How do commercial, small business, and nonprofits factor into the local economy?

While similar studies have been done (Room One Methow Valley Community Needs Assessment 2012, Methow Valley Long-term Recovery, Our Economy: getting by and getting paid in the Methow Valley 2016), there has been no single economic impact study that addresses all these factors.

Summary of Key Findings

  • Over a thousand homes were built in the Methow watershed between 2005 and 2020, the majority of which lay outside incorporated towns.
  • Today, there are 2,650 full-time residential homes and 1,966 part-time homes, with an estimated population of 6,400 full-time residents and 4,380 part-time residents. This growth has been fueled primarily by amenity migration, particularly during Covid-19. Economic Study - 61% of residents are full-time
  • Today, the Methow’s population is characterized by retirees, remote workers and long-time residents. Nearly 40 percent of the population is over 60 years old, with 20 percent under 18. Altogether, 60 percent of the population is not of working age. These demographics contribute to a shortage of workers and shrinking labor force.
  • The median household income for families who live and work in the Methow Valley is $57,779, with nearly 60 percent of working families making less than $55,000 a year. Economic Study - 60% working families make less than $55,000 a year
  • The overall demographic trends in the Methow Valley suggest that not only is the population aging as more retirees move to the Methow, but also that poverty is increasing among families with children and among working families in general. Working families face limited mobility and service wage jobs that have not kept pace with the rising cost of homes and property. In other words, wealth is concentrated in the incoming residents, while long term residents and local families face increasing economic disparity.

Economy

  • Today, nearly 30 percent of the jobs in the Methow lie in retail or recreation services, with another 16 percent in health care and education. Trade industries, including carpentry and construction make up nine percent of total employment, with self-employed people and small businesses comprising another 20 percent.
  • Living on service wages is difficult. Employees must choose between unskilled jobs with little upward mobility or becoming entrepreneurs themselves. Furthermore, they struggle to find affordable housing, childcare, and benefits in a tourist-oriented economy. These issues lead to an exodus of talented local youth who must find professional jobs and opportunities elsewhere, and a concurrent influx of educated professionals and remote workers who fill board memberships and the top few professional positions in the Methow Valley. This kind of rural restructuring is common in recreational areas, and likely to deepen in the future.

Tourism

  • This study found that roughly 476,746 visitors spend the night in the Methow Valley each year. Using the Dean Runyan average of $117/day in visitor spending, we estimate that tourism brings $55.7 million in gross revenue. Economic Study - 25% of the economy is dependent on tourism
  • This translates to roughly 450 tourist-related or service jobs in the Methow Valley. Using a 1.25 multiplier for the additional revenue generated by these jobs, we estimate an additional $13.9 million of spending in the local economy, adding up to a total of $69.7 million, or 25 percent of the total economy.

Housing and amenity migration

  • Responses to data collection suggest that 19 percent of the population are fully remote workers, and another 11 percent are supported by a spouse or partner who works remotely. All told, 31 percent of the Methow’s population derive at least part of their income from outside the Methow. Economic Study - 31% derive some income outside the Methow Valley
  • Part-time retirees reported spending an average of 128 days per year in the Methow Valley and $83 per day, while remote workers spend 92 days per year and $109 per day. Total part-time spending based on these averages equals $20.3 million per year. Using a 1.25 multiplier, we estimate the gross product for part-time spending is around $25.37 million per year, or around nine percent of the gross revenue generated in the Methow Valley.
  • The majority of remote workers made between $200,000-$250,000 per year, with a median wage of $202,000. This is five times the income earnings of the average household in the Methow Valley.
  • The impact of remote workers moving to the Methow, particularly during Covid-19 has had a direct impact on the housing crises. Real estate sales rose 54 percent between 2019 and 2020, and the average price of a home increased $105,000 between 2018 and 2020. Today, the median list price of a home in the Methow Valley is $499,000, up 14.7 percent from 2020.
  • As an industry related to part-time residents, residential building is by far the largest industry in the Methow Valley, comprising roughly $113 million on average and $145 million in 2020. This is over twice the revenue generated by tourism, and is the primary economic generator in the Methow Valley.

Small business

  • Based on TwispWork’s outreach during Covid-19 as well as responses on the SBEG, we estimate there are 525 businesses in the Methow Valley, with 991 employees. This equals a total of around 1,500 residents who are supported by small business.
  • Methow Valley businesses are very small. Forty-four percent of businesses reported having no employees, and 19 percent employed one to three employees. Only 14 percent claimed to have four to 10 employees, and six percent had more than 10. Economic Study - 44% of businesses have no employess
  • Although the data is skewed towards businesses particularly impacted during Covid-19, a full 47 percent of businesses made less than $25,000/year, and the median annual income for a business was $40,404.
  • Small business owners cited that beyond finding and retaining quality employees, their primary obstacles to running a business in the Methow was the seasonality of tourism and fire events that impact tourism. Reliable Internet or Broadband was cited as an issue of importance.

Quality of life

  • Social integration and a sense of wellbeing are indicators of a successful, healthy economy. Employees came in behind employers when asked to rate their social integration and wellbeing. Only eight percent of employees gave their social integration a high score, versus 33 percent of employers, and only 21 percent of employees gave their sense of wellbeing a high score, versus 33 percent of employers.
  • While many residents feel welcome and participate in the community, 30 percent of respondents expressed that they were unable to be involved in the community to the extent they desired because of lack of time and socioeconomic status. Economic Study - 30% are unable to be involved in the community
  • Resident attitudes differed on environmental versus social issues. Local residents were more concerned about overpopulation, gentrification and the disappearance of agricultural lands, while retirees and remote workers were more concerned about climate change and forest fires, and local residents were more concerned about all social issues than either retirees or remote workers. For example, 18 percent of local residents were very concerned with increasing poverty, compared to only five percent of remote workers, and 22 percent of local residents rated affordable housing as very concerning, compared to eight percent of remote workers. However, all residents rated social issues as less concerning than environmental ones. Economic Study - Chart listing concerns
  • The wellbeing index and quality of life measurements suggest that those with less financial and social capital feel less engaged or welcome in the community than those with higher means. Whether for reasons having to do with socio-economic class, time, political orientation, or residency status, feelings of social alienation are an undercurrent to the dominant narrative that everyone loves the Methow and that there are many ways to be involved.

Future of the Methow

  • Overall, residents’ comments on their thoughts and concerns for the future of the Valley illustrate a clear consensus on the negative impacts of more people moving into the Valley and what it might become.
  • 1,053 qualitative comments were analyzed and five themes emerged including gentrification, overcrowding, climate change, ‘looks great,’and ‘culture wars.’
  • By and large, gentrification arose as the biggest issue, with 38-48 percent of the comments in this category. Gentrification comments had to do with the rising cost of homes, increasing economic disparity, the sense that the Methow is becoming like Jackson Hole or Aspen, and differences between urban and rural residents.

Five Areas of Action

In light of the structural changes occurring in the Methow Valley, five general areas of action are recommended. While many groups are already working on these issues, solutions must take a multifaceted approach and will include a variety of stakeholders and organizations.

  1. Affordable housing
    Multiple steps can be taken to mitigate the housing crises. A few options include reallocating LTAC funds to fund affordable housing projects, imposing deed restrictions on home sales for local or working residents, private equity financing through the Methow Investment Network, construction of affordable housing units and multiple dwelling residential homes.
  2. Aging population and local youth
    While our population is aging rapidly, we lack the medical facilities and services to support it. In addition to encouraging in-home health care workers and an expanded assisted living facility, the Methow needs more support services like yard and home maintenance, rideshares, and other services that allow elders to live at home longer. The construction of accessory dwelling units and multiple family housing could further alleviate our housing crises, the ability for young people to live in the Methow, and allowing elders to live with families. Additionally, a remote learning or educational center would allow local youth to gain job training or degrees while remaining in the Methow Valley.
  3. Affordable childcare
    Quality, affordable childcare is in high demand in the Methow. Private equity investment in two or three in-home daycare centers would alleviate the demand for childcare and help families maintain jobs or educational opportunities.
  4. Alternatives to building, investing deeper in tourism
    While residential construction and real estate sales comprises the bulk of the Methow Valley’s economy, building and water resources to go with it are finite. Looking ahead, we need to find alternatives to residential building such as investing in agricultural tourism and value added products created locally. While most residents were concerned about population growth and feel we are already maxed out with the number of tourists we have, retaining more income from existing tourists would maximize profits while preserving agricultural land around the watershed. Following the examples cited in this study, the Methow Valley needs more infrastructure around agricultural tourism including viticulture and winetasting, farm-to-the table enterprises and manufacturing products that can be produced locally.
  5. Address differences between new, part-time residents and locals
    As we have seen, marked difference in attitudes exists between residents and an undercurrent of tension between the haves and the have-nots. Local organizations can play their part to educate incoming residents (and visitors) on ethical building practices, ethical travel practices, and how to become part of the community, rather than changing it. While various organizations have taken action in the past, a renewed commitment to educating our population on the socioeconomic diversity that exists, the problems of housing, childcare, livable wages, and the differences in attitudes between people could enrich the resident experience and bring light to existing socioeconomic divides.