Impaired Recovery

Santa Fe’s economy is on an upturn, at least by some measures.

Taxable gross receipts are up from the same time last year and the year before, coming in at $360.5 million in November, the latest numbers available. That figure marks an estimated 50% increase from November 2020 and a 22% increase from 2019.

The city’s economic recovery “is expected to continue, albeit at a more moderate pace in the coming months,” reads a December report from the city Finance Department.

State health officials say the Omicron surge in COVID-19 cases (which isn’t reflected in the latest gross receipts) is declining, which bodes well for businesses reliant on tourists feeling safe enough to travel.

But the road to steady prosperity for Santa Fe businesses still appears uncertain.

Last August, SFR spoke with business owners, workers, city and state officials and economists about the city’s economy a year and a half into the pandemic. What emerged, in part, were reports of supply and staffing shortages across industries, from construction to hotels and restaurants (and a theory that workers’ declining tolerance for low pay and poor conditions was among locals’ hiring struggles.)

Those concerns have persisted over the past six months, some business owners say, with little hope for improvement anytime soon.

Homebuilders are anticipating lumber being unavailable in the coming months, according to Valerie Montoya, the new president of the Santa Fe Area Home Builders Association and co-owner of Boss Builders, which designs and builds custom homes.

Montoya tells SFR the company ordered doors for a new house in October and has yet to receive them, for example. The supplier says some lumber mills will soon stop taking new orders temporarily to catch up on backlogs.

Labor, too, has been in consistently short supply, Montoya says. Boss Builders has about 25 employees and would like to hire between 10 and 15 more people, with starting pay ranging from $17 to $20 an hour.

Montoya points to the rising cost of living in Santa Fe as a possible cause of trouble hiring. Rent for one-bedroom apartments has shot up by 40% since late 2018, according to real estate group CBRE’s Albuquerque office.

“It’s expensive to stay in Santa Fe because the cost of living is so high,” Montoya says. “Rent is really expensive here. A minimum wage or a job right out of high school is probably difficult.”

Evidence of the city’s increasing unaffordability is everywhere.

About a month after exploring Santa Fe’s economic recovery, SFR reported on people working as teachers, security guards and servers who are struggling to make ends meet, as local politicians have declined to raise the minimum wage for private sector employees.

Some businesses, including Boss Builders, have raised wages or offered bonuses in an effort to attract and retain staff.

La Fonda on the Plaza—which is celebrating its 100th anniversary—has also taken such measures, with every employee receiving year-end bonuses after the hotel’s unexpected good fortune.

On a recent afternoon, guests gather in the lobby after checking in, a bartender mixes cocktails and a couple dozen people eat at La Plazuela, the hotel restaurant, under twinkling lights and a grand chandelier.

“We had a very stellar 2021 which we were not anticipating,” Jenny Kimball, chairwoman of the board of La Fonda, tells SFR. “We had employee and supply problems, but we had a lot of business. We had a lot of tourists traveling, people eating and drinking. So from that point of view, we had a good year.”

Despite the financial success—taxable gross receipts for the accommodation and food service industry hit $43 million in November, up from $18.4 million for the same month in 2020—the hotel’s food service operation continues to be understaffed.

“We’ve been good with most of our other positions—housekeeping and the front desk, surprisingly,” Kimball says. “It’s mainly been like the rest of the country. It’s the kitchen and the bar and the restaurants. That’s been consistent through COVID and it hasn’t changed.”

The hotel’s La Fiesta Lounge didn’t serve food last month because some employees got sick, Kimball says, leaving the already understaffed kitchen unable to keep up with demand from customers in the bar.

In recent months, Kimball says, La Fonda hasn’t had issues with supply as much as food costs, especially for meat. That’s led to an increase in menu prices.

Reservations also dropped off in December and January following the rise of the Omicron variant, which made its appearance in New Mexico on Dec. 13.

“As those numbers really came up, our business fell off the cliff,” Kimball says. “I think people weren’t comfortable traveling. The employees got Omicron. Our business has been reflective of the virus. When the virus goes down, our business goes up and when the virus goes up, our business goes down.”

Over at the Railyard, Opuntia—which reopened in a new location in October 2020—has been grappling with the same problems.

At $8 to $10 an hour plus tips, co-owner Todd Spitzer says the restaurant’s servers make a higher wage than the average in Santa Fe. Still, he’s looking at about a 40% vacancy rate.

“There’s a huge segment of the workforce that seems to be missing for various reasons,” Spitzer tells SFR, adding that he used to think unemployment benefits or stimulus checks were the root cause but when those dried up, there wasn’t much of a change in the volume of applicants.

Spitzer says his existing staff was overworked and emotionally drained from dealing with customers who are impatient over wait times or don’t want to wear masks. In response, Opuntia now closes an hour earlier at lunchtime and only serves dinner two nights a week, instead of five.

For some local business owners, including Spitzer, there doesn’t yet seem to be a light at the end of the tunnel.

“We have these giant garage doors that we can open up in the summer so it feels safer, but other than that I don’t think anything else is going to change anytime soon,” Spitzer says. “So now we’re just trying to deal with where we’re at and not trying to plan for the future being way better and awesome. Eventually it will be but who knows when that is and so we gotta figure out how to get there.”