Las Vegas Sun

June 18, 2024

The economy:

Nevada’s jobless rate could hit 17 percent

citycenter jobs

Photos by Steve Marcus

Soon-to-be employees check in at CityCenter Career Center on Sept. 21.

One of the state’s leading economists forecast the jobless rate reaching 17 percent before it begins to decline.

The worse-case scenario is the jobless rate reaching 17 percent, said Keith Schwer, director of UNLV’s Business and Economic Research Center, who gave the most pessimistic estimate.

“Every business cycle is different,” Schwer said. “But because of (Las Vegas’) national recovery lag, coming out of the recession is likely longer than we’ve seen in the past.”

Economist John Restrepo said he expects 15 percent to 16 percent in the jobless rate, and economist Brian Gordon was the most conservative, estimating the rate peaking at 15 percent.

Although national indicators are pointing to an economic recovery for much of the U.S., few glimmers of job creation are on Las Vegas’ horizon.

A few gaming properties or expansions are opening through the end of the year, including the new towers at downtown Las Vegas’ Golden Nugget, the off-Strip Hard Rock and, of course, CityCenter.

The massive project has started notifying some non-MGM Mirage applicants that they will soon have jobs.

After the major job projects, more construction workers will loss their jobs, said Gordon, principal at Applied Analysis. However, there will be some demand in the gaming sector, because the hospitality sector is operating with tight staffing levels, he said.

“It’s not expected to be the boon it once was,” Gordon said.

Timing is everything, Schwer said, and Las Vegas’ economy needs visitors’ discretionary spending to increase.

As workers regain stable employment elsewhere, Las Vegas could be in for a slow recovery because people may be taking money once used as discretionary spending and tucking it away in savings and retirement accounts, said Restrepo, principal of Restrepo Consulting Group.

“When you have an economy that is largely reliant on discretionary spending, you’re going to have a lag,” he said.

Then again, considering how well the federal Cash for Clunkers program went — consumers responded eagerly to trading in their old, fuel-inefficient cars for new, higher mileage cars — it could soon be “business as usual,” an optimistic Schwer said.

If one were to consider other factors, such as those workers who have just given up or have had their full-time hours cut to part time, the jobless rate is probably at 20 percent or one-fifth of the workforce.

Restrepo said that figure, largely unreported, could hit 23 percent.

Another factor to consider, Restrepo said: job recovery.

As the local economy recovers, the jobless rate could hover around 10 percent for two years before returning to the pre-recession level that wavered around 5 percent, he said.

Las Vegas’ jobless rate increased 91.4 percent year-over-year, from 7 percent to 13.4 percent, according to the state’s Employment, Training and Rehabilitation Department. During that period, the state’s jobless rate went up 88.5 percent, from 7 percent to 13.2 percent.

The national rate has had a slower climb, up 56.5 percent, from 6.2 percent in August 2008 to 9.7 percent last month.

A recovery may be in the cards for the U.S., but the state will lag, chief state employment economist Bill Anderson said.

“Some analysts even argue that the recession is likely over, or will be in the near-term,” he said in a statement. “However, such positive conclusions cannot be drawn in Nevada, based upon a current assessment of labor market and economic activity in the state.”

The state has lost 84,400 jobs the past year, including 31,000 construction jobs and 24,000 hospitality jobs.

Initial claims for unemployment insurance benefits are up 11,000 for August, gaming wins are down $250 million and taxable sales have fallen $1.1 billion.

At a meeting with Las Vegas businessowners Sept. 22, Anderson said the state’s unemployment trust fund will be depleted by mid to late October, forcing the state to borrow from the federal government. Laidoff workers are eligible for 79 weeks of jobless benefit. The first 26 weeks are paid for by the state, the rest by the feds.

The state’s nine-member Employment Security Council will meet at 10 a.m. Oct. 6 in Carson City to determine the unemployment insurance tax rate for next year and to weigh options. In Las Vegas, a video feed will be at the Sawyer State Office Building, Room 4406.

The national jobless rate in August was 9.7 percent, up from 9.4 percent the month prior, according to the Labor Statistics Bureau. Michigan, whose auto industry has been hard, had the highest rate at 15.2 percent. Nevada was second.

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