At its core, economic development is about creating high quality, meaningful opportunities for gainful employment. This includes service jobs, middle skilled jobs, high tech, and soft skilled jobs. But who takes these jobs and what their preferences are (and what they can afford) is just as important as the job opportunities available.
Since the financial recession of 2008, access to talent has become the top challenge identified by companies across all sectors. For nearly a year now, the number of open jobs each month has been higher than the number of people looking for work. Employment projections indicate that, by 2022, Minnesota will need nearly 3.2 million workers to keep pace with historic rates of economic growth statewide. With just 2.9 million people over the age of 16 expected to be in the labor force and working, our state is expected to fall about 239,000 workers short. Employers must now work to chase talent versus the other way around. Thus, business retention and attraction are dependent upon workforce availability.
Who is this workforce, and what do they want? One of the key needs is housing. At a macro level, demographics are shifting towards a need for housing for aging baby boomers who are downsizing and millennials who now make up the bulk of the workforce.
Studies show that millennials are more diverse than previous generations and are delaying both marriage and children. They prefer cites where quality of life is high, but housing options may be tight. Education debt is a burden which is making it hard to save for a down payment. Their perception of real estate is also different than prior generations; millennials lived through the recession as kids and many felt its effects firsthand.
Because of these characteristics, millennials are often looking for smaller units that are rentals rather than home ownership. They seek connectivity to transit options, walkability within the community, and areas that are amenity rich. Think gardens, fitness facilities, pet friendly establishments, and certainly high-speed internet. Talented people aren't looking for a job; they are seeking an environment that stimulates and inspires.
More significant however, people need housing they can afford. The rising cost of construction and land prices, undersupply of desired units coupled with rising prices and mortgage rates has resulted in a real affordable housing crisis.
Add to this the stagnation of household income. While U.S. home prices have gained almost 60 percent since March 2012, household income is up a little less than 30 percent in the same period. This means a buyer with a $2,500 monthly housing budget has lost almost $30,000 in purchasing power.
So, what does this mean? To enhance economic development efforts in our communities we need the appropriate workforce to engage those efforts, and this workforce needs places to live. We are fortunate that people want to move to Douglas County. And as our communities attract more people, it's important to provide housing that meets their needs.
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Nicole Fernholz is the director of the Alexandria Area Economic Development Commission. In the Know is a rotating column written by community leaders from the Douglas County area.