Build-up proponents argue that the military will transform Guam into an economic Shangri-La: an island of full employment and improved standard of living. Rector is a critic of that point of view, and his position finds support in the Draft Environmental Impact Statement (DEIS). Take housing, for instance.
Home ownership on Guam is at 48%, one of the lowest homeownership rates in the United States. It means a large number people are potentially vulnerable to what may be a build-up induced rental bubble. And Guam has a lot of people who are at risk to increase housing costs, according to data in a Guam Housing and Urban Renewal Authority study.
Out of Guam’s population of 175,000 (the figure used the study), there are 13,800 people (2,286 households) or 8% that are considered “hidden homeless,” or living in households in which more than one family share accommodations. There are another 42,500 people “at-risk” (10,600 households) or 24% who would become homeless in three months if their primary income was lost.
In sum, nearly a third of the island’s residents will have trouble absorbing housing cost increases.
The build-up’s proponents argue that new jobs and abundant overtime will mitigate cost of living increases. But that’s not what the DEIS says. This report was written with an enormous amount of wiggle room, and the best it can do is offer scenarios and assumptions.
One possibility, suggested by the DEIS, is that rising prices on Guam and housing shortages will reduce Guam’s desirability to people off-island, creating labor shortages. Wages may increase but prices of goods and services may rise even faster, the DEIS warns. It also suggest: An influx of new workers could cause increases in housing prices and/or crowded housing conditions and homelessness or simply eliminate the ability of new workers to move to Guam.
The DEIS frames the problem:
The essential dilemma of the construction boom period is as follows: Would the island economy generate several thousand housing units for the boom period that may remain vacant thereafter, or would the disincentives for such short-term housing production result in a shortage of housing during the construction period?A shortage of housing seems likely. The DEIS points out:
The spike in housing demand is expected to last only from 2010 to 2014 … substantial vacancy rates can be expected after the year 2015 and a significant housing glut is possible. This short window of high demand means those building rental housing might expect only up to four years to gain adequate returns on their investment, with longer-term prospects being highly speculative.The incentives to build new housing isn't there, which means the pressure will be on rents especially for middle income housing.
There isn’t a good outcome here for Guam. Crowded conditions will reduce the quality of life, and while jobs may increase there’s no guarantee that Guam’s residents, those most in need of the work, will fill those jobs. The pressure to supply labor, cheap labor especially, may lead to hiring of visa holding workers in service industry jobs. I realize that the Guam government wants to prevent that from happening, but once the market forces are unleashed this may be hard to control.
I started this piece with a view on Matt Rector. He argued for higher wages and challenged Guam’s lawmakers to do more to ensure that island resident get real benefit out of the build-up. He brought a fearless perspective to government. It is a perspective that's still needed in Guam's government.
The build-up will deliver every imaginable ill to the island. It’s artificial and not sustainable development. It will impact the environment, the culture, and cost of the living, and quality of life in extreme ways, and once you cut through the assumptions and scenarios described in the DEIS report, it's hard to conclude anything else.
For additional reading: Please also see: Notes on Jobs & Construction at We Are Guahan.
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