Las Vegas Sun

November 21, 2017

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Another dreary report

Brookings study should prompt Las Vegas to diversify its economy

The latest economic snapshot of the Intermountain West from Brookings Mountain West, a collaboration of the Brookings Institution think tank and UNLV, offered further evidence of the dire need for Southern Nevada leaders to develop a plan that expands the valley’s employment base beyond its heavy reliance on tourism and real estate.

As the Sun’s Dave Berns has reported, 53 percent of the jobs in Las Vegas are tied to gaming, real estate, food and drink, the largest percentage for any major U.S. city. Gaming was pummeled by the Great Recession because consumers sharply reduced discretionary spending, and Southern Nevada is still reeling from the collapse of its housing market.

That explains why Las Vegas is one of only four metropolitan areas among the nation’s 100 largest that is in the bottom 20 for both the severity of its recession and the sluggishness of its recovery, Brookings found.

Other cities in the Intermountain West, including Salt Lake City, Provo, Denver and Colorado Springs, Colo., haven’t been as deeply affected by the recession. Mark Muro, co-director of Brookings Mountain West, told Berns the reason for that is each has “enough diversification to insulate against the worst carnage of the crash.” What those cities have that Las Vegas lacks is greater reliance on health care, high technology, manufacturing and overseas exports.

Nevada prides itself as a low-tax state, but that certainly hasn’t done much to diversify the state’s economy. Major corporations with large numbers of well-paid employees haven’t flocked to this state. Nevada has been stingy with its spending for decades, and Las Vegas is paying the heavy economic price for living on the cheap.

A key to economic diversification in Southern Nevada would be to make a far greater investment in education. A highly trained workforce would entice major corporations to move here. Employees would also be more willing to move to the valley from out of state if they knew their children could get a good education here.

Investment in modern transit systems also would make Southern Nevada more attractive to employers. This formula has worked in other metropolitan areas that have been willing to make a greater financial commitment to their communities.

Fixing the state’s broken tax system, which relies too heavily on tourism, is one way to generate more revenue that can be used to make those investments. The more Las Vegas diversifies its economy, the more the tax burden is spread out so that everyone can enjoy a greater standard of living.

None of this will happen, though, until Southern Nevada political and business leaders get more serious about economic diversification. Some leaders met in January at UNLV at a well-meaning conference, “Nevada 2.0: New Economics for a Sustainable Future,” but it will take far more than such occasional gatherings to develop a comprehensive strategy that serves Las Vegas well in the coming decades. Perhaps the Nevada Economic Development Commission headed by Lt. Gov. Brian Krolicki and the Nevada Development Authority need to be beefed up.

Until Las Vegas learns from the Great Recession, expect to read more tepid economic reports about Southern Nevada for years to come.

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