• Housing Crisis Threatens Local Economy

    Housing Crisis Threatens Local Economy

    The housing crisis in Greater Newport is impacting our businesses by limiting their ability to recruit and retain staff. Even with competitive wages, the gap between household income and the cost of housing in the region often forces people to reside in other locations in Rhode Island and Massachusetts. To gain greater insight into the issues business owners are facing, we checked in with three of our local employers.

    Impacts on Recruitment

    “It’s hard to attract talent to come to the island,” says Jack Murphy, President and CEO of BankNewport. “Of the 60 to 70 employees we’ve hired in the past two years, the majority live off-island.” In terms of hiring difficulties, says Murphy, “We’re a bank, we pay competitive wages, but we’re competing with other banks and these aren’t entry level jobs. It’s very hard.”

    Britt Riley, founder and CEO of The Haven Collection, echoes these hiring concerns. “People just can’t afford to come to work. It’s getting to the point where we’re paying well above average for the child care industry and offer great benefits, and even with that we’re finding that people are priced out of the area.”

    Even the Navy is not excluded from Newport’s housing crisis. Cornelia Mueller, Community Planning Liaison Officer at Naval Station Newport, notes that the naval station is expecting a significant number of students and their families this summer looking for housing in the area. She anticipates a deficit of approximately 70 housing units that the Navy does not have available on base.

    If this issue is not fixed in the long term, Mueller says that taxpayers should expect to see increases necessary to fund the military housing allowance. “The housing allowance for the military comes from taxpayers, and when the allowance is increased, those are taxpayer dollars that they use. Newport already has an increased allowance compared to other municipalities, and the more it goes up, the more taxpayers fund that.”

    A Drag on the Economy

    The housing crisis’s negative impact on the region’s residents is also echoed by Murphy and Riley. If the housing crisis continues, Murphy anticipates a slowing local economy. “Newport and this region is built on tourism, and it’s going to be a self-fulfilling prophecy that people are going to stop coming if the service [at restaurants and hotels] is not what they want it to be because it’s hard for people to find affordable housing.”

    Likewise, Riley has already seen and expects to see Aquidneck Island businesses struggle to maintain their hours or remain open as hiring issues mount. “We often hear many fellow business owners puzzled as to ‘where all of the job applicants have gone,’ when the reality of the situation locally is that they simply aren’t looking for jobs here because they can’t live nearby and are applying for similar jobs far closer to home.”

    The impact of Newport’s housing crisis on its workforce and talent attraction is undeniable. We are already seeing the results of a constrained housing market that has priced out the average earner in Newport, and these interviews with local business leaders show that these problems are being seen in all aspects of Newport’s economy. If not addressed, our housing situation will continue to limit our economic potential and overall quality of life.

    Erin Donovan-Boyle, CEO Greater Newport Chamber of Commerce Anne Jensen, Fourth Economy Consulting

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