For the first time in years, new-year economic forecasts are optimistic.
A recent jobs reports showed the state’s lowest unemployment rate and highest number of employers since 2008. Compounded with Las Vegas’ record number of visitors in 2014 and Nevada’s booming population, all signs point to a successful economic recovery. But there’s more to the story than what the numbers tell. As jobs return to the region, the Las Vegas that emerges will look different from the one that went into the recession.
In January, the Nevada Department of Employment, Training and Rehabilitation reported the state unemployment rate dropped to 6.8 percent in December, continuing a steady decline from the recession high of 14 percent in 2010.
The 6.8 percent accounts only for people actively looking for work. Factor in job seekers who have given up or can find only part-time work, and the state unemployment rate hovers around 15.3 percent. That broader measurement is still a vast improvement from 2010, when it included nearly a quarter of Nevada’s workforce. But experts say that ideally, it should be only a few percentage points higher than the rate for active job seekers.
“We’re continuing to move on a moderate job recovery trajectory,” economist John Restrepo said. “The glide path is in a positive direction, but it’s not a big spike. It’s growing steady, and it’s getting stronger every month.”
In the short term, measurements like month-to-month job growth, job growth by industry and average weekly wage can provide clearer insights into the state of our economic health.
Wages in Southern Nevada remain stagnant when adjusted for inflation, and the average worker clocks 33 hours per week, compared to the state pre-recession high of 38 hours.
But job growth by industry shows Las Vegas is on track. The market is at 94.8 percent of what it was at its peak in December 2007 (936,300 jobs) and has grown 11.3 percent since its low in January 2011 (797,200 jobs).
In a breakdown of today’s job market by sector, the makeup is similar, though not identical, to pre-recession days.
Leisure and hospitality still holds the largest share of the job market, in fact slightly more now than than at its peak, but remains about 7,100 jobs away from a full recovery. Leisure and hospitality has been the second-fastest sector to recover, thanks to growth in the Asian economy and renewed focus on baccarat and nightlife to help counter losses in traditional gaming.
With the second-largest share of the job market, trade, transportation and utilities is up 2,700 jobs from its 2007 high point. That’s thanks in part to increased retail demand as the economy recovers, with a reliance on logistical hubs such as Nevada to move goods. Experts say the arrival of Tesla Motors will continue to drive the sector’s growth going forward.
Similarly, jobs in professional and business services — typical office, retail and entrepreneurial gigs that make up the market’s third largest sector — have grown to surpass their pre-recession numbers as the economy as a whole improves.
Where jobs haven’t come back is in construction, which shrank from the market’s fourth-largest private sector to the sixth. Though the sector has bounced back by more than 18 percent over the past four years, the construction workforce still is less than half of what it was at its pre-recession peak.
That's not necessarily a bad thing, Restrepo said.
“It’s right around the national average, right where it should be,” he said. “Construction jobs are transitional. They’re not permanent.”
As Nevada’s job market starts to return to historical norms, experts say the challenge remains changing the economy so advanced industry sectors such as manufacturing and health services take on larger shares.
We’re getting there. More than half of Southern Nevada’s job growth last year was in high-value, high-paying industries such as STEM jobs and education and health services.
Still, a recent report from the Brookings Institute shows Nevada still ranks second to last nationally for advanced industry jobs, which the report called the country’s best chance for returning to pre-recession prosperity levels.
“It’s a question of how do we develop the economy as opposed to just diversifying it,” Restrepo said. “It’s a long process that requires time, talent, treasure and political will. And we’re just getting on that long road.”