Column: Florida retirement may lose some of its luster | Notice
The race to find service workers has been highlighted by large companies in recent weeks. Chipotle Mexican Grill Inc. raises its average wage to $ 15 an hour. McDonald’s Corp. increases his average wage to $ 13 an hour for his company-owned stores. Amazon.com Inc. says new hires for its fulfillment and distribution operations will be paid an average of $ 17 per hour.
And one of the under-recognized potential losers in this bidding war is retirement communities like The Villages in Florida.
From an economic developer’s perspective, making a big bet on retirement communities 20 years ago made a lot of sense. The baby boomer generation was to be the largest and richest generation of retirees in human history. There are well-worn north-to-south migration patterns, filled with ways for retirees to spend their investment portfolios, pensions, and social security income.
Just as the tech industry has benefited from the consolidation in San Francisco and the media industry from the consolidation in New York and Los Angeles, the “retirement industry” has been concentrated in warm, sunny states. from Florida and Arizona.
But retiree communities, by definition, are full of people who no longer work and therefore depend on the work of others. They require construction workers to build homes, healthcare workers to care for an older population, landscapers to maintain subdivisions and golf courses, and restaurateurs and other types of service workers. to exploit the amenities that make their communities desirable places to live.
There has been no reason to believe over the past two decades that we would have a shortage of these types of workers, thanks to weak labor markets after the recessions of 2001 and 2008, and significant immigration into the provinces. 1990s and 2000s. Today is a different story.
And this is a problem for communities that have bet their future on importing retirees.
When we think of the fast growing metropolitan areas in the United States, we could imagine Austin, Texas, or Boise, Idaho, which have been popular destinations for people leaving the West Coast in search of accommodation. cheaper. But the two fastest growing metropolitan areas in the 2010s were actually Myrtle Beach, South Carolina, and The Villages – two places favored by retirees.
The question now is how they will support their growth in an age when labor is not so cheap and retirees are not necessarily the groups of people in the best position to win job wars. auctions for service workers.
As is apparently happening everywhere, employers in the villages are reporting difficulties in finding workers at this time. Florida’s economy has been one of the most open throughout the pandemic, so there may be less reason to think its work situation will be improved by another pandemic-related recovery. Miami and Tampa are the country’s two hotel markets that have already made up for their losses from the pandemic.
In the 2010s, we were still relatively early in the wave of baby boomer retirements. There were many immigrant workers in Florida who had come to the United States in the 1990s and 2000s, and the state was recovering from a major housing market collapse in 2008 – all conditions that benefited communities in retirees.
The conditions stemming from the pandemic-related recession are much more difficult for employers and future retirees in the 2020s.
Pension and social security payments tend to grow only at the rate of inflation, so as costs rise faster in labor-intensive service industries than headline inflation, fixed-income retirees will be in a particular hurry. Those still in the workforce will be more likely to get pay increases that will put them in a better position to deal with rising costs.
A possible future for retirement communities can be glimpsed in what has happened in the tech industry over the past few years. Too much concentration of industry on the West Coast has driven up costs and led to a shortage of resources, forcing activity to be spread across the country.
Perhaps the growth of large-scale, single-purpose retirement communities like Villages will slow down, with growth shifting to lower-cost secondary markets in states like North Carolina or Tennessee. This presents an opportunity for developers in other regions which have relatively more labor, cheap land and warm weather, making them potentially attractive to retirees.
With younger baby boomers still in their late 50s, the retirement wave has years to run, making it a trend to watch as the economy faces a new era of workforce. less abundant and more expensive.
Conor Sen is a Bloomberg columnist and founder of Peachtree Creek Investments.