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    Can Affluence and Affordable Housing Coexist in Colorado’s Rockies?

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    In the recreation-fueled, amenity-rich economy of Colorado’s Rocky Mountain region, there are two peak seasons: summer, with its rafting, hiking, fishing and biking, and the cold months filled with skiing and other winter activities.And then there is “mud season” — a liminal moment in spring when the alpine environment, slowly then suddenly, begins to thaw and only a trickle of tourists linger.It’s a period that workers in other places might bemoan. But for much of the financially stretched work force serving the assemblage of idyllic mountain towns across the state, a brief drop-off in business this spring was a respite.During a slow shift on a 51-degree day at the Blue Stag Saloon — a nook on Main Street in the vacation hub of Breckenridge — Michelle Badger, a veteran server, half-joked with her co-workers that “this winter was hell.”Crowds were larger than ever. And workers in the old Gold Rush town still enjoy the highs of the easy camaraderie and solid tips that come with service jobs in the area. But it was all sobered by the related headaches of soaring rents and acute understaffing, which left employees, managers and demanding customers feeling strained.Working in mountain towns like Breckenridge and others in Summit County — including Silverthorne, Dillon and Frisco — would feel like a fairer bargain, Ms. Badger and her colleagues said, if they could better afford living close by. Long commutes are common throughout America. But rental prices in hamlets among the wilderness on the outskirts of town are becoming burdensome too.Job growth has severely outpaced the stock of shelter throughout Colorado. Median rent in Frisco — which a decade ago was considered a modest “bedroom community” for commuting employees — is about $4,000 a month, according to Zillow, and 90 percent above the national median. Residential property prices in Summit County are up 63 percent in just the past year, even amid higher interest rates. Cash buyers buttressed by family money abound.The wage floor for most jobs in and around the county — from line cook to ski lift operator — is at least $18 an hour, or roughly $37,000 a year. Yet for those not lucky enough to land a rare slot in subsidized local employee housing, it’s not uncommon to live an hour or more away to attain a livable budget.As that happens, the contingent displaced by the rich ripples outward down rural highway corridors and, in turn, displaces the farther-flung working poor.Inequality has always been rampant within the orbit of popular destinations. But the financial knock-on effects of those ritzy spheres have expanded as the pandemic-induced surge in remote work has supercharged divides.Wanderlust-filled white-collar workers abruptly discovered that multiweek visits or even permanent relocations were possible for them and their families. Those seeking investment properties saw the opportunities of this hybrid-driven land rush as well, and pounced.Longtime residents have had a front-row seat.Matt Scheer — a 48-year-old musician who grew up on a ranch eastward in El Paso County, where “as soon as we could carry the milk bucket we were milking the cow” — is the sort of extroverted jack-of-all-trades who typifies the spirit (and the wistful brand) of Summit County.Matt Scheer feels lucky to have bought a house 11 years ago when homes were more affordable and mortgage rates lower. But he feels unable to move.Having moved near Breckenridge in the early 2000s to ski, hike, fly fish and work around town, he’s relieved that he managed to pick up his place in 2012 for $240,000 with a fixed-rate mortgage. Prices in his tucked-away French Creek neighborhood — a hilly, unincorporated patch with modest double-wide manufactured homes — have more than tripled.Though he’s a loyal resident with little interest in ever moving, Mr. Scheer said he “can’t really leave.”For a payout of tens of thousands of dollars from the local government, he recently signed onto a hefty “deed restriction” for his property, banning its use for Airbnb stays, limiting any potential renter or buyer to the work force of Summit, and limiting any potential resale price. And he did it with pride.It’s part of a growing program led by Breckenridge and other local governments to limit gentrification without licensing a large buildup of new developments. (Deed restrictions in destination areas got off to a quieter start in the 2010s but have ticked up.)Incumbent property owners willing to sacrifice lucrative short-term vacation rental income see it as a fair trade-off, key to keeping long-term residents and the dashing contours of their towns’ terrain. Policy critics, and frustrated local renters fighting over limited spots, say it is an inadequate tool for the scale and source of the problem: a lack of units.Those critics include the governor of Colorado, Jared Polis, who is skeptical that lump-sum payments to owners in exchange for deed restrictions will be a sufficient incentive to broadly move the needle on affordability.“There is no silver bullet,” he said in an interview. “But one of the areas that we have focused on is removing the barriers to additional home construction.” He added that “housing is not a problem that you can solve by throwing more money at the existing housing stock.”His sweeping legislation to ensure “a home for every Colorado budget” by pre-empting local land-use laws and directly loosening zoning rules statewide died in the State Senate in May, after some initial momentum. All but one of the mayors in the state’s Metro Mayors Caucus issued a letter opposing the plan.‘It’s Either Five Mil or Five Jobs’As politicians jockey, many resourceful Coloradans find ways to make do.Mr. Scheer, for instance, has picked up over 30 music gigs through the end of summer, paying about $100 an hour — though he acknowledges it’s his locked-in, lower housing costs that make his lifestyle workable.During a practice jam session and impromptu afternoon party of 20- to 40-somethings at Mr. Scheer’s place in the spring, his pal and fellow guitarist, Bud Hallock (the other half of their occasional duo band, Know Good People), explained the grind people face by echoing the playfully hard-nosed aphorism uttered around town: “It’s either five mil or five jobs.”“If you’re willing to put in the work, you’ll be able to,” argues Mr. Hallock, who moved out West shortly after graduating from St. Lawrence University in 2015. Mr. Hallock has three jobs, he said, adding, “I don’t think it’s the God-given right of anyone to come to a ski town and have it easy.”For many longtime residents and transplants alike, it has become harder to finesse: Even as Summit County adds waves of remote workers, it has experienced net negative migration since 2020. It’s a trend mirrored in the larger urban areas of Denver and Boulder, where the share of people working remotely is among the highest in the country, as homelessness rises.Breckenridge and other local governments are offering payments to some homeowners who agree to restrictions on how their property can be used and sold.Summit County is a draw for residents that enjoy outdoor activities like hiking, skiing and water sports.Seventy percent of residences in the county are second homes that sit vacant most of the year or serve as short-term rentals.Tamara Pogue, a member of Summit County’s governing board, said the mountain towns and valley cities of the Front Range near Fort Collins and Colorado Springs as well as those out by the Western Slope struggled with an “affordability issue” similar to the nation’s big cities for the same reason: “We’re supply-constrained.”“The problem is the average cost of a single-family home in Summit County so far this year is $2.14 million,” Ms. Pogue said. “Not one job makes that affordable.”The stock available is limited: 70 percent of homes in the county are second homes that sit vacant most of the year or serve as short-term rentals, she said, typically Airbnbs.As a single mother of three, Ms. Pogue bought a 1,400-square-foot duplex for $525,000 in 2018 — a rarity, if not an impossibility, now. She said a determination to prevent “mountain communities” from becoming “towns without townspeople” had driven her to become a staunch YIMBY, or a “yes in my backyard” supporter of home-building efforts, against the wishes of perceived NIMBYs, or the “not in my backyard” voices.Ms. Pogue and her allies argue that the relatively slow pace of building in the Rockies, despite the area’s popularity and rising prices, is a subtle form of denial.“Everyone wants to be here, whether they work here or not,” she added, “and so we have this spiral.”If, When, Where and How to Build MoreA few affordable-housing projects visibly chug along in Summit near the airport service road, not far from Kingdom Park Court, one of a handful of mobile home parks in the county with pricey lot rents. But getting middle-income developments greenlit can be a slog. Many proponents of limiting development note that about 80 percent of the county is restricted federal public land, putting a ceiling on what can be done. (There’s a nascent pilot program with the U.S. Forest Service to approve some apartments on leased land.) In the meantime, the well-off are gobbling up much of what’s left.Just north of downtown Silverthorne sits Summit Sky Ranch — a sprawling development with homes starting around $1 million, with a pledge of “bringing modern mountain living to over 400 acres of pristine natural beauty” in the valley. It quickly sold out and many have moved in, lured by a private observatory and private access to a river bend.Laurie Best, the longtime planning manager for housing in the community development department for the Town of Breckenridge, said she had emphasized deed-restriction policies and more generally trying to preserve existing units to reduce the need for new ones.Ms. Best and her backers have acceded to some construction at a slow and steady pace, but they staunchly oppose taller, dense multifamily buildings, which are not, as she put it, “consistent with the character of the town.”In several counties, there has been a swell in “conservation easements” — legal agreements between private landowners and local governments to guard wildlife and scenic open space by permanently banning development. The trend led the state to create a Division of Conservation in 2018 with an oversight commission to authenticate the contracts.A construction site in Silverthorne, Colo. Some officials and residents in the area have acceded to limited construction but are wary of adding taller, dense multifamily buildings.Eric Budd, a leader of a movement in Colorado called Bedrooms Are for People — which favors expanding land use and more widely permitting apartments, duplexes and triplexes — scoffs at the uptick in easements. He contends that what he tartly calls a “xenophobic attitude of ‘there’s only so much to go around’” is self-defeating.Trying to restrict access to a hot commodity — in this case, half of a state — won’t end well for anyone, he said, and a California-level, cost-of-living crisis is only five or 10 years away.Down in the foothills of the Rockies in Boulder, where Mr. Budd lives, school enrollment and the overall population have declined along with affordability, as remote-worker migration has picked up.In some sense, the arguments against restrictionism amount to a water-balloon analogy: squeezing leads to odd bulges in random places.Before the pandemic, Leadville, an old mining town 15 minutes from the trailhead of the highest peak in the Rockies, was an affordable harbor for working-class Hispanic employees of the nearby vacation economies: just out of reach of the affluence around Aspen to the west and resorts near Vail to the north.Since 2020, though, Leadville has become engulfed as those realms of wealth expand and overlap, causing rents and home prices to spike beyond what many can feasibly afford over time, with few other places to go.Second-home owners constituted half of all home sales in 2020 and 2021.The Downside of Good IntentionsKimberly Kreissig, a real estate agent, at a home she was selling in Steamboat Springs. She says an effort to build affordable homes yielded house flippers.Half of Colorado renters are officially defined as cost-burdened — spending more than 30 percent of their income on housing costs. And local economists suggest that the rate has ticked even higher in mountain locales.For Kimberly Kreissig, a real estate agent in Steamboat Springs, a year-round recreation hub with natural hot springs near Wyoming, the affordability crisis in “the high country” has no simple villain. For years, her practice in Steamboat — where the average home price is above $1 million, compared with $580,000 in early 2019 — included both upper-middle-class, first-time home buyers and luxury-market sellers.In 2018, she and her husband, a developer, broke ground on a dense, 50-unit multifamily project in Steamboat designed for people “in that $75,000 range,” she said — “for instance, my office manager here.”“We had grandiose plans that we were going to be able to sell these things for $300,000,” Ms. Kreissig said, but they were foiled by several factors.Even before Covid-19 struck, “the demand was just so through the roof that people were offering us more than list price right out of the chutes,” she said, with precontract bids coming in “twice as high as we anticipated.”Then, once lockdowns in early 2020 ended, the remote-working cohort swooped in — just as labor and material costs shot up for the contractors still finishing some units. Before long, many families she sold units to in 2019 for around $400,000 realized that because of the housing boom they had “over $300,000 in equity” in their homes — and with interest rates so low, they could parlay a different (or additional) purchase. Many apartment owners began independently flipping their units to investors and buyers of second homes who were willing to pay well above the list prices.The Yampa River flows through Steamboat Springs. With the pandemic’s onset, the area became a magnet for remote workers.Diners at a restaurant in Steamboat Springs, a year-round recreation hub with natural hot springs.“For the people that are already ‘in,’ there’s a fair share of folks that are saying, you know, ‘I’m in, we don’t we don’t need any more growth,’” Ms. Kreissig said. “But you can’t stop growth.”“One flip near the end for one of the units was for $800,000,” Ms. Kreissig said. “We tried to be the good guys.”One way to respond to house flippers is through greater deed restriction, which Steamboat has enforced in a few neighborhoods, along with some short-term rental restrictions, not unlike other hot spots. The area has also benefited from the state’s Middle Income Housing Authority pilot program, which has put up a few buildings in town. But Steamboat still has a shortage of 1,400 units, according to a report from local authorities.A big break came when an anonymous donor recently purchased a 534-acre farm property, Brown Ranch, and turned it over to the Yampa Valley Housing Authority, with instructions that it be used for long-term affordable housing for local workers.It came as welcome news to the area’s middle class. And yet the sheer surprise, and luck, of the donation is indicative of broader, underlying tensions that typically drive community-level and state debates: Is more supply a threat to both cultural vibes and property price appreciation, or a win-win opportunity to flourish?Ms. Kreissig thinks it all comes back to “the kind of ‘not in my backyard’ mentality” that a silent majority holds.“For the people that are already ‘in,’ there’s a fair share of folks that are saying, ‘You know, ‘I’m in, we don’t we don’t need any more growth,’” she said. “But you can’t stop growth.”Adrift Between Uphill and DownNancy Leatham and her husband got back on their feet after lean times early in the pandemic. But when looking for a new house, she found that the booming housing market had far outpaced the good labor market. In March 2020, Nancy Leatham, 34, was making just above the minimum wage, living with her husband and their baby daughter in Idaho Springs — a little city above 7,000 feet wedged between a steep crag and an I-70 exit, far downhill from chic resort land.They struggled to get by “right during the height of the pandemic, when everything was shut down,” wiping out their income, she said. It felt like a repeat of her teenage years during the mortgage-induced financial crisis when her family’s business as excavation contractors — preparing sites for home construction — went belly-up, and their house was foreclosed upon.In spring 2020, “I had to start going to food banks and stuff to get food,” she said. “And we had to sell a car, and just stuff like that to, like, to make ends meet.”By 2021, her husband, Austin, had found a job at Walmart making $19 an hour, while she was promoted at Starbucks, becoming a manager at $18 an hour, plus bonus — and “we had our child tax credit,” she added.“I started looking for a house because we had really great income,” roughly $80,000 before taxes, she said. “I grew up in poverty, since 2008 especially, and we’d been living with food insecurity and stuff, so I was like ‘Look at us, we made it!’”But almost as soon as she started house hunting, she realized that, within months, the booming housing market had far outpaced the good labor market. They had been priced out of their sleepy, snowy town, after merely a few bidding wars. The average home price — $340,000 at the start of 2019 — is up 66 percent. Higher mortgage rates hurt, too.The Gold Mountain Village Apartments, where Ms. Leatham and her husband live, about 10 miles outside Idaho Springs, Colo.The Historic Argo Mill and Tunnel, a former gold mining and milling property, in Idaho Springs.Lower-income workers are being priced out of the area and face the prospect of “having to move downhill.”The average home price in Idaho Springs is up 66 percent since the start of 2019.Many of the Starbucks employees Ms. Leatham managed owned their homes rather than rented, she said, and “half left because they were able to sell their house off for considerably more than they were when they bought.”Hoping to buy or rent something bigger than what she called a “closet” apartment, Ms. Leatham, who now has a second child, is preparing for the cold reality of “having to move downhill” — though where exactly is unclear: 15 miles down the corridor, renters and buyers run into coveted areas near Golden and Denver.Recently, a woman visited the Starbucks Ms. Leatham works at, she said, and was dressed very much like an out-of-towner. They chit-chatted at the register, and the woman mentioned she was in town to check on a recent property purchase.Getting her hopes up for a nicer place, Ms. Leatham pried a bit:“I was like, ‘Oh, nice, what are you going to do with it?’ And she’s like, ‘Oh, it’s for rental.’”“And I’m like, ‘Oh, cool.’ And then she goes, ‘Short-term rental.’”“And then, I went ‘Dang it!’ But really loud, and I made her feel awful — I didn’t mean to make her feel that way.”Irresistible Allure, Harsh RealityBack up the I-70 corridor in Frisco, a sprawling Walmart parking lot often occupied by unhoused people living out of their cars and campers is tucked in front of a commercial complex with a high-end furniture store, a Whole Foods and a craft microbrewery.It’s one of the few places for the growing homeless population to go, since overnight parking is widely banned in Summit County, even in sparse hamlets like Blue River, perched just beyond Breckenridge above 10,000 feet.The effects of the global and national wealth parked in the Rockies often cascade downstream like the snow melt that carves the rivers. But it’s a force that can be identified in any direction.For many, if not most, homeowners in high-country counties like Summit, the hard truth is that only so much can be done if the very idea of mountain living — experiencing nature, removed from the bustling downhill hassles of the outside world — is to be maintained.“It’s funny, on our little block, there’s probably, you know, 10 homes — and on a beautiful day, which we have a lot of, you’ll see all of us standing out in our driveway, taking pictures,” said Ms. Best of Breckenridge’s community development department. “I must have the same picture 100 times because it’s so stunning when you go out there, and you’re still in awe of where we live. So I totally get the folks that want to be here.” More

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    New Union Leaders Take a Harder Line

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    Pushed by angry members, unions representing actors, autoworkers and UPS employees are becoming increasingly assertive under new leadership.Shawn Fain is not a typical president of the United Automobile Workers union.Mr. Fain recently declined a symbolic handshake with the chief executives of the major Detroit automakers, a gesture that traditionally kicks off contract negotiations. He is seeking an ambitious 40 percent wage increase for rank-and-file members — in line, he says, with the pay gains of those corporate leaders over the past four years. And in a video meeting with members last week, Mr. Fain threw a list of proposals from Stellantis, the maker of Chrysler and Jeep, into a wastebasket, saying it belonged in the trash “because that’s what it is.”On one level, the circumstances that produced the union’s more aggressive leadership are idiosyncratic. Mr. Fain, who won his position in March, is the first president in the union’s history, dating back nearly 90 years, to be elected directly by its members. The change took place after a major corruption scandal engulfed two of his predecessors and several more union officials.But on another level, the forces that swept Mr. Fain into power are the same ones that have borne down on unions across a variety of industries: a feeling among members that they have spent years enduring out-of-touch leaders, meager wage growth and concession-filled labor agreements, which forced some to do similar jobs as co-workers for less pay.“We kept being told, ‘This is a good contract,’” said Shana Shaw, a U.A.W. member who has worked at a General Motors plant in Missouri since 2008. “And our members are saying, ‘It’s not a good contract!’”The long-simmering rage helps explain why, in addition to Mr. Fain, several prominent unions are now in the hands of outspoken leaders who have taken their membership to the brink of high-stakes labor stoppages — or beyond.Sean O’Brien, president of the International Brotherhood of Teamsters, has repeatedly referred to corporate leaders as a “white-collar crime syndicate” and warned that a strike of the union’s 300,000-plus United Parcel Service members appeared inevitable. (The union recently reached a tentative agreement that members are voting on.)Just after a union of more than 150,000 Hollywood actors called a strike in July, Fran Drescher, president of SAG-AFTRA, said that she was “shocked by the way the people that we have been in business with are treating us.” She added: “It is disgusting. Shame on them!”The companies, including UPS and the automakers, have indicated that they are willing to increase compensation but cannot jeopardize their long-term viability. The large Hollywood studios have offered actors pay increases but say they must be able to adapt to the decline of traditional television.Some executives have called out the unions’ more confrontational gestures. “The theatrics and personal insults will not help us reach an agreement,” Mark Stewart, a top Stellantis official, said in a letter to employees after Mr. Fain literally discarded the company’s proposals.And channeling members’ anger is not without risk: It can raise expectations and make it difficult for leaders to finalize contracts. Mr. O’Brien is facing a “vote no” campaign organized largely by UPS part-timers who argue that the union did not secure large enough raises.The populist approach is not unique to labor unions. The 2008 financial crisis and the grindingly slow recovery produced a more militant style of politics that upended established institutions around the world. The crisis helped lay the groundwork for the unexpected support of Bernie Sanders and Donald Trump in the 2016 presidential race.If anything, unions were slower to adapt to the rising anger than other institutions, largely because they were less democratic.In 2018, UPS employees voted down a labor contract negotiated by the Teamsters leadership, which created a new category of lower-paid drivers. The union’s president, James P. Hoffa, who had served in the position for nearly 20 years, used a procedural rule to impose the contract anyway.But even the change-averse labor movement could not withstand a final blow: Covid-19, and union members’ anger over their perilous working conditions as corporate profits grew at one of the fastest rates in decades.“There’s a historical memory of all the concessions they made,” said Ruth Milkman, a sociologist of labor at the Graduate Center of the City University of New York, referring to union members. “And they feel shafted. The C.E.O.s are sitting pretty with all this pandemic money that didn’t go into their pockets.”Many nonunion workers saw their wages rise rapidly thanks to a tight job market, but contracts negotiated before the pandemic often locked union members into smaller wage increases as inflation surged.Mr. O’Brien has tapped into that resentment.A vice president and ally of Mr. Hoffa in the mid-2010s, Mr. O’Brien ran to replace him in 2021, deriding his predecessor for foisting concessionary contracts onto members. He vowed to raise pay for part-timers at UPS — an unusual concern for a would-be Teamster president, even though part-timers make up a majority of the union’s members there — and secured a significant wage increase.Fran Drescher, center, president of SAG-AFTRA, came to channel her members’ anxiety over declining pay because of the rise of streaming.Jenna Schoenefeld for The New York TimesOther union leaders have followed a similar arc. In 2021, Ms. Drescher ran for president of SAG-AFTRA, the actors’ union now on strike, on the union’s moderate slate and narrowly won. But she came to channel her members’ anxieties over the rise of streaming, which has led to longer gaps in work for many actors and more limited royalties as shows are reused less often.“The streaming contracts negotiated back at the beginning of this, when certain individuals thought this would be a fad, set us up for failure,” said Linsay Rousseau, a SAG-AFTRA member who works primarily as a voice actor. She said Ms. Drescher’s outspokenness had won over even members who voted against her.In some cases, outraged rank-and-filers have taken matters into their own hands. Edward Hall, a rail worker and local union official in Tucson, said he decided to run for the presidency of the more than 25,000-member Brotherhood of Locomotive Engineers and Trainmen in early 2022. The union’s longtime president had arrived to hold a town-hall meeting about labor negotiations that had dragged on for over two years. But, Mr. Hall said, he was unable to provide frustrated members with a timetable for a deal. (Dennis Pierce, the former president, declined to comment.)Mr. Hall was elected last fall, shortly after Congress intervened to enact a labor agreement that members of several rail unions had voted down. Many workers felt the agreement did not go far enough to rein in a system of railroad operations that sought to minimize equipment and employees.“It was profitable for them,” Mr. Hall said, referring to rail carriers. “But for lack of a better way to put it, it made life on the railroad hell for regular employees.”The combination of agitated members and more assertive leaders can sometimes pry loose concessions from employers even without a strike, especially amid a worker shortage. This year, rail carriers began voluntarily addressing one of the workers’ biggest concerns: the lack of paid sick days.At UPS, Mr. O’Brien spent months preparing his members for a possible strike, even holding training sessions for strike captains and practice pickets. The pressure appeared to yield significant gains in the recent tentative agreement between the two sides, including more than $7 an hour in raises over the five years of the contract.In an interview last month, Mr. O’Brien said the Teamsters’ actions under his leadership had made the strike threat credible. “We’ve been striking since I took over,” said Mr. O’Brien, pointing to other companies where the union represents workers. David Pryzbylski, a labor lawyer at Barnes & Thornburg who represents employers, said the strident rhetoric of union leaders often reflected a genuine shift in workers’ attitudes. Still, he added, negotiations more often hinge on fundamentals like a company’s profitability and the union’s ability to disrupt operations through a strike, making it wise for employers to ignore the bluster.“A lot of times that stuff stops: They go out and say what they wanted to say, they send up a signal flare and move on,” Mr. Pryzbylski said. “If you start responding, it stays in the news cycle.”Sean O’Brien, president of the International Brotherhood of Teamsters, in white, has repeatedly referred to corporate leaders as a “white-collar crime syndicate.”Jenna Schoenefeld for The New York TimesThe full-throated demands can also backfire in economic terms. Yellow, a trucking company with 30,000 employees, declared bankruptcy several months after talks with the Teamsters broke down. The company’s chief executive said in a statement that the Teamsters’ intransigence drove Yellow out of business, though analysts note that the company showed signs of mismanagement for years.The risks may be even higher in industries under pressure to embrace a new business model.The major U.S. automakers have said that they need the ability to team up with nonunion battery manufacturers to secure additional capital and expertise. But Mr. Fain, the new U.A.W. president, has said that the failure to organize more battery workers was a major failure of his predecessors, and that battery workers must receive the same pay and working conditions that union workers enjoy at the Big Three.Many U.A.W. members say the tension between the automakers’ goals and the union’s indicates that a strike will be hard to avoid when their contract expires in mid-September. But they do not appear to be shrinking from that possibility.“We have an extremely well-oiled machine,” said Ms. Shaw, who also serves as a co-chair of the organizing committee of Unite All Workers for Democracy, a reform group within the union that assembled the slate of candidates Mr. Fain ran on. “We’ll be ready to go if happens.” More

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    Indiana Tests if the Heartland Can Transform Into a Chip Hub

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    Over the past 14 months, Indiana began converting 10,000 acres of corn and bean fields into an innovation park. State leaders met with the chief executives of semiconductor giants in South Korea, Taiwan and Japan. And they hosted top Biden administration officials to show off a $100 million expansion of chip research and development facilities at a local university.The actions were driven by one main goal: to turn Indiana into a microchip manufacturing and research hub, almost from scratch.“We’ve never done anything at this scale,” said Brad Chambers, who was Indiana’s commerce secretary in charge of economic development. “It’s a multibillion-dollar commitment by the state to be ready for the transitions that are happening in our global economy.”“We’ve never done anything at this scale,” said Brad Chambers, Indiana’s commerce secretary.Kaiti Sullivan for The New York TimesIndiana’s moves are a test of the Biden administration’s efforts to stimulate regional economies through the $52 billion CHIPS and Science Act, a landmark package of funding that is planned to begin going out the door in the next few months. The program is intended to bolster domestic manufacturing and research of semiconductors, which act as the brains of computers and other products and have become central to the U.S. battle with China for tech primacy.The Biden administration has promised that the CHIPS Act will seed high-paying tech jobs and start-ups even in places with little foundation in the tech industry. In a speech in May last year, Commerce Secretary Gina Raimondo, who oversees the chips program, said she was looking at how the program would help “different places in the heartland of America.”She added, “I think we will really unleash an unbelievable torrent of entrepreneurship and capital opportunity.”Gina Raimondo, the U.S. secretary of commerce, is overseeing the CHIPS Act program. Jared Soares for The New York TimesThat makes Indiana a prime case study for whether the administration’s efforts will pan out. Unlike Arizona and Texas, which have long had chip-making plants, Indiana has little experience with the complicated manufacturing processes underlying the components, beyond electric vehicle battery manufacturing and some defense technology projects that involve semiconductors.Indiana now wants to catch up to other places that have landed big chip manufacturing plants. The push is supported by Senator Todd Young, a Republican from Indiana, who was a co-author on the CHIPS Act and has been a leading voice on increasing funds for tech hubs. Companies and universities in Indiana have applied for multiple CHIPS Act grants, with the aim of winning awards not only for chip manufacturing but also for research and development.Some economists said the Biden administration’s goals of turning farmland into advanced chip factories might be overly ambitious. It took decades for Silicon Valley and the Boston tech corridor to thrive. Those regions succeeded because of their strong academic research universities, big anchor companies, skilled workers and investors.Many other areas don’t have that combination of assets. Indiana has for decades faced a brain drain among some of its more educated young people who flock to larger cities for work, according to the Indiana Chamber of Commerce. Some industrial policy proponents see the investments as a way to reverse that exodus, as well as a broader trend toward deindustrialization that hollowed out communities in the Rust Belt.But it’s unclear whether the program can achieve such ambitious goals — or whether the Biden administration will judge it to be more effective to spread out investments around the country or concentrate them in a few key hubs.“Many pieces have to come together,” said Mark Muro, a senior fellow at the Brookings Institution. He added that the federal government’s plan to initially put $500 million into tech hubs was too small and estimated it would take $100 billion in government aid to create 10 sustainable tech hubs.Indiana does have some advantages. The state has ample land and water — which are necessary for large chip factories that use water to cool equipment and rinse silicon wafers — and it has relatively stable weather for the highly sensitive production process. It also has Purdue University, with an engineering school that has promised to turn out the technicians and researchers needed for chip production.Yet the state faces stiff competition. In January 2022, Indiana lost a bidding war to Ohio over plans by Intel, the big U.S. chip-maker, to build two factories valued at $20 billion.“We learned a lot of lessons,” Mr. Chambers said about the failure. The biggest, he said, was to have a more attractive package of land, infrastructure and work force programs ready to offer big chip companies.A year later, Indiana won a $1.8 billion investment from SkyWater, a Minneapolis-based chip-maker, to build a factory with 750 jobs adjacent to Purdue’s campus.SkyWater, a Minneapolis-based chip maker, plans to invest $1.8 billion in a factory in Indiana. SkyWaterIndiana beat out four other states vying for SkyWater’s chip facility.SkyWaterState leaders acknowledge that any tech transformation could take years, especially if there is no anchor plant by even larger chip manufacturers such as TSMC, the world’s biggest maker of cutting-edge chips.Mr. Young said he and other state leaders were in talks with big chip makers for a contract that would compare to the $20 billion that Intel committed to Ohio. But “all net new job creation in my lifetime has been created by new firms and young firms,” he said.Indiana’s chip-making metamorphosis is now centered on a tech park, LEAP Innovation District, in the town of Lebanon near Interstate 65, which connects Indianapolis and Purdue in West Lafayette. The town is surrounded by 15,000 square miles of corn and bean farms.The park began taking shape along with the CHIPS Act. In 2019, Mr. Young was a co-author of the Endless Frontier Act with Senator Chuck Schumer, a Democrat of New York and then the Senate minority leader. The bill was the precursor to the CHIPS Act.As the bill wound through Congress, Mr. Young was in regular contact with Eric Holcomb, Indiana’s governor, and Mitch Daniels, then Purdue’s president, on details of the proposal. Mr. Young said Indiana’s manufacturing roots would be its asset, if the state’s factory sector could transition to making advanced chips.“I realized that Indiana and, more broadly, the heartland stood to disproportionately benefit from the investments that we would be making,” he said in an interview last month.Mr. Holcomb and Mr. Chambers then created a plan for a tech manufacturing park. Within months, they began buying corn and bean farms in Lebanon for what became the LEAP Innovation District.In September, Ms. Raimondo and Secretary of State Antony Blinken toured Purdue University’s clean rooms, seen here, for chip research.Kaiti Sullivan for The New York TimesPurdue is also working on a $100 million expansion of semiconductor research and development.Kaiti Sullivan for The New York TimesIn May 2022, Mr. Holcomb unveiled LEAP and began installing new water and power lines and a new road there. Mr. Holcomb, Mr. Chambers and Mr. Young also traveled to more than a dozen countries to meet with the executives of chip companies like SK Hynix and TSMC. They offered cheap rent in the LEAP district, tax incentives, access to labs and researchers at Purdue, and training programs at the local Ivy Tech Community College.Some of the work paid off. When Indiana beat out four other states for SkyWater’s $1.8 billion chip facility, the company said it was impressed by the coordination between state leaders and Purdue’s new president, Mung Chiang, who launched the nation’s first semiconductor degree programs to nurture workers for chip makers.Mung Chiang, Purdue University’s president, has rolled out a semiconductor degree program to nurture chip workers. Kaiti Sullivan for The New York TimesIn September, Mr. Chiang invited Ms. Raimondo and Secretary of State Antony J. Blinken to tour Purdue’s clean rooms for chip research and to see plans for a $100 million expansion of semiconductor research and development, including 50 new faculty to work on advanced chip science.“I think you have all the ingredients,” Ms. Raimondo said in a discussion with Mr. Holcomb and Mr. Chiang during the visit. Indiana officials now await word on how much CHIPS Act funding they may get. Some early results from the LEAP district initiative offer a mixed picture of where things might go.In May 2022, the park landed its first tenant — Eli Lilly, the pharmaceutical company, not a chip maker. More

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    Is Good News Finally Good News Again?

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    Economists had been wary of strong economic data, worried that it meant inflation might stay high. Now they are starting to embrace it.Good news is bad news: It had been the mantra in economic circles ever since inflation took off in early 2021. A strong job market and rapid consumer spending risked fueling further price increases and evoking a more aggressive response from the Federal Reserve. So every positive report was widely interpreted as a negative development.But suddenly, good news is starting to feel good again.Inflation has finally begun to moderate in earnest, even as economic growth has remained positive and the labor market has continued to chug along. But instead of interpreting that solid momentum as a sign that conditions are too hot, top economists are increasingly seeing it as evidence that America’s economy is resilient. It is capable of making it through rapidly changing conditions and higher Fed interest rates, allowing inflation to cool gradually without inflicting widespread job losses.A soft economic landing is not guaranteed. The economy could still be in for a big slowdown as the full impact of the Fed’s higher borrowing costs is felt. But recent data have been encouraging, suggesting that consumers remain ready to spend and employers ready to hire at the same time as price increases for used cars, gas, groceries and a range of other products and services slow or stop altogether — a recipe for a gentle cool-down.“If you go back six months, we were in the ‘good news is bad news’ kind of camp because it didn’t look like inflation was going to come down,” said Jay Bryson, chief economist at Wells Fargo. Now, he said, inflation is cooling faster than some economists expected — and good news is increasingly, well, positive.

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    Year-over-year percentage change in the Personal Consumption Expenditures index
    Source: Bureau of Economic AnalysisBy The New York TimesMarkets seem to agree. Stocks climbed on Friday, for instance, when a spate of strong economic data showed that consumers continued to spend as wages and price increases moderated — suggesting that the economy retains strength despite cooling around the edges. Even the Fed chair, Jerome H. Powell, has suggested that evidence of consumer resilience is welcome as long as it does not get out of hand.“The overall resilience of the economy, the fact that we’ve been able to achieve disinflation so far without any meaningful negative impact on the labor market, the strength of the economy overall, that’s a good thing,” Mr. Powell said during a news conference last week. But he said the Fed was closely watching to make sure that stronger growth did not lead to higher inflation, which “would require an appropriate response for monetary policy.”Mr. Powell’s comments underline the fundamental tension in the economy right now. Signs of an economy that is growing modestly are welcome. Signs of rip-roaring growth are not.In other words, economists and investors are no longer rooting for bad news, but they aren’t precisely rooting for good news either. What they are really rooting for is normalization, for signs that the economy is moving past pandemic disruptions and returning to something that looks more like the prepandemic economy, when the labor market was strong and inflation was low.As the economy reopened from its pandemic shutdown, demand — for goods and services, and for workers — outstripped supply by so much that even many progressive economists were hoping for a slowdown. Job openings shot up, with too few unemployed workers to fill them.

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    Monthly job openings per unemployed worker
    Note: Data is up to June 2023 and is seasonally adjusted.Source: Bureau of Labor StatisticsBy The New York TimesBut now the economy is coming into better balance, even though growth hasn’t ground to a standstill.“There’s a difference between things decelerating and normalizing versus actually crashing,” said Mike Konczal, director of macroeconomic analysis at the Roosevelt Institute, a liberal research organization. “You could cheer for a normalization coming out of these crazy past couple years without going the next step and cheering for a crash.”That is why many economists seem to be happy as employers continue to hire, consumers splurge on Taylor Swift and Beyoncé concert tickets, and vacationers pay for expensive overseas trips — resilience is not universally seen as inflationary.Still, Kristin Forbes, an economist at the Massachusetts Institute of Technology, said it was too simple to argue that all signs of strength were welcome. “It depends on what the good news is,” she said.For instance, sustained rapid wage growth would still be a problem, because it could make it hard for the Fed to lower inflation completely. That’s because companies that are still paying more are likely to try to charge customers more to cover their growing labor bills.And if consumer demand springs back strongly and in a sustained way, that could also make it hard for the Fed to fully stamp out inflation. While price increases have moderated notably, they remain more than twice the central bank’s target growth rate after stripping out food and fuel prices, which bounce around for reasons that have little to do with economic policy.“We are closer to normal now,” said Michael Strain, director of economic policy studies at the American Enterprise Institute. “It makes it seem like good news is good news again — and that’s certainly how investors feel. But the more that good news becomes good news, the higher the likelihood of a recession.”Mr. Strain explained that if stocks and other markets responded positively to signs of economic strength, those more growth-stoking financial conditions could keep prices rising. That could prod the Fed to react more aggressively by raising rates higher down the road. And the higher borrowing costs go, the bigger the chance that the economy stalls out sharply instead of settling gently into a slower growth path.Jan Hatzius, the chief economist at Goldman Sachs, thinks the United States will pull off a soft landing — perhaps one so soft that the Fed might be able to lower inflation over time without unemployment having to rise.But he also thinks that growth needs to remain below its typical rate, and that wage growth must slow from well above 4 percent to something more like 3.5 percent to guarantee that inflation fully fades.“The room for above-trend growth is quite limited,” Mr. Hatzius said, explaining that if growth does come in strong he could see a scenario in which the Fed might lift interest rates further. Officials raised rates to a range of 5.25 to 5.5 percent at their meeting last month, and investors are watching to see whether they will follow through on the one final rate move that they had earlier forecast for 2023.Mr. Hatzius said he and his colleagues weren’t expecting any further rate moves this year, “but it wouldn’t take that much to put November back on the table.”One reason economists have become more optimistic in recent months is that they see signs that the supply side of the supply-demand equation has improved. Supply chains have returned mostly to normal. Business investment, especially factory construction, has boomed. The labor force is growing, thanks to both increased immigration and the return of workers who were sidelined during the pandemic.Increased supply — of workers and the goods and services they produce — is helpful because it means the economy can come back into balance without the Fed having to do as much to reduce demand. If there are more workers, companies can keep hiring without raising wages. If more cars are available, dealers can sell more without raising prices. The economy can grow faster without causing inflation.And that, by any definition, would be good news. More

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    Frontline Workers: How Has Your Commute Changed During the Pandemic?

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    If you have never had the option to work from home because your job must be done in person, tell us how your commute has shifted over the past three years.Cities and workplaces have been upended since the pandemic began. Some people moved from cities to suburbs. Stores and restaurants moved out of busy downtown areas. Train and bus schedules shifted.The New York Times is reporting on how commuting has changed over the last three years for people who have never had the option to work from home because their jobs must be done in person — in health care, hospitality, food service, manufacturing, building maintenance, sanitation, public safety, you name it. We’d like to hear about your experiences. We may use your contact information to get in touch with you, and we won’t use your submission without first confirming with you that it’s OK.Tell us about your commute. More

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    Strong Economic Data Buoys Biden, but Many Voters Are Still Sour

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    Voters continue to rate the president poorly on economic issues, but there are signs the national mood is beginning to improve.President Biden and his aides are basking in what is arguably the best run of economic data to date in his presidency. Inflation is cooling, business investment is rising, job growth is powering on and surveys suggest rising economic optimism among consumers and voters.Polls still show Mr. Biden remains underwater on his handling of the economy, with voters more likely to disapprove of his performance than approve of it. Yet there are signs that voters may be brightening their assessment of the economy under Mr. Biden, in part thanks to the mounting effects of the infrastructure, manufacturing and climate bills he has signed into law.The run of positive economic news comes as his administration looks to credit “Bidenomics” for a sustained run of positive data.The economy grew at a 2.4 percent annual rate in the second quarter of the year, handily beating economists’ expectations, the Commerce Department reported last week. Price growth slowed in June even as consumer spending picked up. The Federal Reserve’s preferred measure of year-over-year inflation, the Personal Consumption Expenditures Index, has now fallen to 3 percent this year from about 7 percent last June — easing the pressure on Mr. Biden from the economic problem that has bedeviled his presidency thus far.And in less visible but significant ways, there are signs that Mr. Biden’s signature economic policies may be starting to bear fruit, most notably in a steep rise in factory construction. Government data released Tuesday showed that boom continued in June, with spending on manufacturing facilities up nearly 80 percent over the previous year. The manufacturing sector as a whole has added nearly 800,000 jobs since Mr. Biden took office and now employs the most people since 2008.“The public policy changes that have been put in place over the past two years are now starting to show up in the data,” said Joseph Brusuelas, chief economist at RSM. He said the increased investment was “undoubtedly linked” to government policies, in particular the CHIPS Act, which aimed to promote domestic manufacturing, and the Inflation Reduction Act, which targeted low-emission energy technologies to combat climate change.As Mr. Biden gears up for his re-election campaign, perhaps what is most encouraging to him is that consumer confidence is rising to levels not seen since the early months of his tenure in the White House, before inflation surged. Measures by the University of Michigan and the Conference Board suggest consumers have grown happier with the current state of the economy and more hopeful about the year ahead.That change in attitude may reflect an underlying economic reality: The combination of cooling inflation, low unemployment and rising pay means that American workers are seeing their standard of living improve. Hourly wages outpaced price gains in the spring for the first time in two years, giving consumers more purchasing power.National opinion polls still show a sour economic mood — but it appears to be improving slightly.In a new New York Times/Siena College poll, 49 percent of respondents rated the economy as “poor,” compared with 20 percent who called it “excellent” or “good.” That’s an improvement from last summer, when 58 percent of Americans in another Times/Siena poll called the economy “poor” and just 10 percent rated it “excellent” or “good.”Administration officials attribute the economy’s strength, particularly in the labor market, to the direct aid to individuals, businesses and state and local governments that was included in the $1.9 trillion stimulus package that Mr. Biden signed into law in 2021.Economists generally blame that same stimulus package for some of the rapid spike in inflation that ensued largely after its passage. But the recent moderation in price growth is emboldening officials to cite the bill as more of a positive factor, saying it helped keep consumers spending and businesses operating, speeding the return to a low unemployment rate.“The American Rescue Plan was designed for both getting the economy back up and running but making sure there was enough wiggle room to deal with challenges that could come down the pipeline,” Heather Boushey, a member of Mr. Biden’s Council of Economic Advisers, said in an interview. “And that has been, I think, very, very successful in getting people back to work. This has been the sharpest recovery in decades, in terms of job creation. We have outperformed our economic competitors.”Economic officials inside and outside the administration warn that risks remain as policymakers seek to achieve a so-called soft landing, bringing down sky-high inflation without triggering a recession. And many Republicans dispute the president’s claims that his policies have bolstered the economy. They note that inflation remains well above historical averages and that for many American workers, wage gains under Mr. Biden have failed to keep pace with rising prices.“Even if inflation ‘is less,’ those prices are not going down,” Gov. Ron DeSantis of Florida, a Republican presidential candidate, told Fox News this week. For a middle-class family, “affording a home is prohibitive,” he said. “If you look at the median income compared to the median home price, there’s a bigger gap than there was when the financial crisis hit after the big housing increase in 2006 and 2007. Cars are becoming less affordable; people feel that squeeze.”Some forecasters, including at the Conference Board, continue to predict the economy will fall into recession by the end of the year. They cite indicators that have frequently signaled downturns in the past, most notably the rapid decline in lending from both small and large banks.Tightening credit conditions, as reported this week by the Fed, “are consistent with G.D.P. growth slowing to recession territory in coming quarters,” researchers at BNP Paribas wrote this week.Yet most independent economists agree that the U.S. recovery has been stronger than expected. They are less united on how much credit Mr. Biden’s policies deserve for it. The decline in inflation, they say, is mostly the result of the Fed’s aggressive efforts to combat it, helped along by some good luck as oil prices have fallen and the pandemic’s disruptions have faded.Consumer confidence is rising to levels not seen since the early months of Mr. Biden’s presidency.Amir Hamja/The New York TimesThe resilience of the labor market — and the strength of the broader economy — is almost certainly the result, at least in part, of the trillions of dollars of aid that the federal government pumped into the economy in 2020 and 2021, which helped prevent the widespread bankruptcies, foreclosures and business failures that stymied the recovery from the Great Recession a decade and a half ago. But much of that came under President Donald J. Trump, and economists disagree about how much Mr. Biden’s stimulus package specifically helped the recovery.Still, recent economic developments have seemed to bear out one of the arguments that Democrats made early in Mr. Biden’s term: that the risks of doing too little to help the economy outweighed the risks of doing too much. Too little aid could leave the U.S. economy facing another “lost decade” of slow growth similar to the one that followed the last recession. Too much aid might cause inflation — but that, unlike slow growth, is a problem the Fed knows how to solve.Risks remain in the months to come. Inflation could pick back up, particularly if oil prices continue to rise, as they have in recent weeks. The job market could deteriorate, leading to a sharp rise in unemployment. Many forecasters still expect a recession to begin this year or early next.Drawing a straight line from government policies to economic outcomes is always difficult, especially in real time. But recent economic data has, at the very least, looked consistent with the Biden administration’s theory of how its policies would affect the economy.Administration officials point in particular at what they have begun referring to as the “hockey-stick graph”: a steep upward climb in investment in factory construction over the past two years, which they attribute to spending and tax incentives in several bills that Mr. Biden championed and signed into law. Those include bipartisan measures to boost infrastructure and advanced manufacturing, and a bill passed last year by Democrats when they controlled Congress that focused heavily on spurring new development in low-emission energy technologies to combat climate change.Private-sector analysts have largely agreed that policies have played a significant — though hard to quantify — role in the manufacturing construction boom in recent months. That, in turn, has helped to fuel a surprising increase in business investment more broadly, which helped lift economic growth in the spring even as consumer spending slowed.Even Treasury officials acknowledge significant risks to the economy in the months to come. Privately, many of Mr. Biden’s aides express at least some uncertainty about whether a soft landing is now assured.But the combination of solid growth, low unemployment and cooling inflation has made forecasters increasingly optimistic that the United States can avoid a recession that many of them once thought was inevitable.“You’ve got to look at that and say the probability of a soft landing has gone up,” said Jay Bryson, chief economist at Wells Fargo. More

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    Job Turnover Eased in June as Labor Market Cooled

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    The NewsJob turnover decreased in June, the Labor Department reported on Tuesday, suggesting that the American labor market continues to slow down from its meteoric ascent after the pandemic lockdowns.A flier advertising open positions at a job fair in Minneapolis.Tim Gruber for The New York TimesThe NumbersThere were 9.6 million job openings in June, roughly the same as a month earlier, according to the Job Openings and Labor Turnover Survey (JOLTS).Employers have tightened the screws on hiring in recent months, with job openings falling to their lowest level since April 2021 as the economy responds to tightening monetary policy.The most notable changes in June were not in job openings but in hiring and quitting. There were 5.9 million hires in June, down from 6.2 million in May. And the quits rate, a measure of workers’ confidence in the job market and bargaining power, decreased to 2.4 percent, from 2.6 percent in May and down from a record of 3 percent in April 2022. The number of workers laid off was 1.5 million, about the same as in May.Quotable: ‘The labor market is unbalanced.’“We’re still in an economy where the labor market is unbalanced,” said Michael Strain, an economist at the American Enterprise Institute, “with the demand for workers substantially outpacing the supply of workers.” There are roughly 1.6 job openings for each unemployed worker.Why It Matters: The economy moves closer to a ‘soft landing.’Over the past 16 months, as they have sought to curb inflation and make sure the economy does not overheat, Federal Reserve policymakers have pursued the coveted “soft landing.” That means bringing down inflation to the Fed’s target of 2 percent by raising interest rates without causing a significant jump in unemployment, avoiding a recession.The June JOLTS report provides more optimism that the Fed is approaching that soft landing, as demand for workers remains robust while tapering gradually. Inflation remains high by historical standards — at 3 percent, according to the latest data — but has eased substantially.“This is a really strong labor market that is staying strong but slowing down,” said Preston Mui, a senior economist at Employ America, a research and advocacy group focused on the job market.At the end of their meeting last Wednesday, policymakers raised rates a quarter-point, and the Fed’s chair, Jerome H. Powell, said its staff economists were no longer projecting a recession for 2023. But Mr. Powell left the door open to further rate increases and said the economy still had “a long way to go” to 2 percent inflation.Background: It’s been a good time to be a worker.As the U.S. economy rapidly rose out of the Covid-19 recession in 2020, a powerful narrative built: “Nobody wants to work.” There was some truth to that hyperbole. Employers had a hard time finding workers, and workers reaped the rewards, quitting their jobs to find better-paying ones (and succeeding).With quit rates falling in recent months, the so-called great resignation appears to be over, if not receding, and the continued downward trajectory of job openings implies that employers are less eager to fill staffing shortages.Employers are not hiring with the fervor they were a few months ago, but they are not yet casting aside workers, who might not lose the gains they have achieved during the pandemic recovery.What’s Next: The July jobs report lands on Friday.The Labor Department will release the July employment report on Friday. The unemployment rate for June sat at 3.6 percent, a dip from 3.7 percent in May but higher than the 3.4 percent recorded in January and April, the lowest jobless rate since 1969.June was the 30th consecutive month of gains in U.S. payrolls, as the economy added 209,000 jobs, and economists surveyed by Bloomberg expected the economy to have added another 200,000 jobs in July. Fed policymakers will be watching the report closely, but one more month’s data will arrive before they next convene Sept. 19-20. More