Sunday, May 10, 2020 | 2 a.m.
Nevada has one of the least-diversified economies in the nation, such that even other tourist hot spots such as Hawaii are better equipped to handle the economic hit from the coronavirus pandemic.
That’s according to Jeremy Aguero, an analyst with Applied Analysis.
“We’re more dependent on tourism than almost any economy is on any single industry,” he said. “We’re more dependent on tourism than Detroit is on automakers or Seattle is on aerospace or Nashville is on music and entertainment.”
Aguero said a recession caused by coronavirus business closures has arrived in Nevada, where revenues from gambling and tourism have come to a virtual halt since mid-March.
The result: Around 300,000 residents filed jobless claims during the first month of the state’s nonessential business shutdown, which in normal times was the typical number of requests made in a year. Nevada’s unemployment rate reached 16.8%, the highest in the state’s history, by late April.
Economic think tank Heartland Forward’s analysis of unemployment claims filed between March 1 and April 25 found that only six states have a higher number than the Silver State. The hardest-hit state, Hawaii, comes in at 30.3%.
“Here in Southern Nevada, we’ve lost one out of every four private-sector employees,” Aguero said. “If that’s not the definition of a recession, I’m not sure what one is.”
The U.S. unemployment rate hit 14.7% in April, a level last seen during the Great Depression, as 20.5 million jobs vanished in the worst monthly loss on record, the Associated Press reported. In addition to the millions of newly unemployed, 5.1 million others had their hours reduced in April.
Though some businesses are beginning to reopen in certain states, factories, hotels, restaurants, resorts, sporting venues, movie theaters and many small businesses are still largely shuttered.
Nevada gradually started to reopen some of its nonessential businesses on Saturday, but the resort corridor is still at least two weeks away from receiving the OK to again conduct business. And that’s only if there isn’t a spike in COVID-19 infections caused by loosening restrictions.
“We are not done with this fight. We cannot put our gloves down now,” Gov. Steve Sisolak said.
Nevada’s connection to tourism is arguably stronger than any other state. The gaming industry sends about $2 million a day to the state in taxes and fees, and Aguero’s firm suggests that the pandemic’s impact on the gaming industry could affect up to 320,000 employees.
Diversifying Nevada’s economy is something Nevada lawmakers have discussed for decades. But in the hunt to attract new business, the incentives offered could end up having a negative impact on a state in the long run, Sisolak said.
For example, if a tax break offered to attract a business is too great, the state may not actually receive large-scale benefits by the business’s arrival.
Nevada, for instance, outbid Arizona, Texas and New Mexico in the early 2010s for the Telsa gigafactory to be built near Reno. Under the deal, Tesla will spend 20 years free from sales tax and 10 years without paying property tax, and it could benefit from nearly $1.3 billion in tax benefits, according to reports.
Still, it could be worth the investment. The factory created more than 7,000 jobs — 40% more than promised — and an additional 8,200 jobs in other local businesses since opening in 2014, according to the Associated Press.
Rep. Steven Horsford, D-Nev., whose district makes up much of North Las Vegas and a sizable portion of the state’s rural area, has said that a diversification of Nevada’s economy is much needed. Horsford, along with Rep. Bobby Scott, D-Va., introduced the Relaunching America’s Workforce Act, which would provide job training and sets aside $2.5 billion for “state dislocated worker grants,” which Horsford said is necessary for hospitality workers who may not have a job at the end of the pandemic.
“Nevada is one of the hardest-hit states in the country, and roughly 400,000 Nevadans have already filed for unemployment insurance benefits since mid-March, and many in our workforce will not have jobs to return to when we begin to recover from this pandemic,” Horsford said in a statement. “As the nation begins to recover from the COVID-19 pandemic and we relaunch our economy, we must do everything we can to support those who have lost their jobs and revitalize those businesses that have suffered economic devastation.”
The Associated Press contributed to this report.