Posted on: January 25, 2021, 01:59h.
Last updated on: January 25, 2021, 01:59h.
Nevada’s economy must expand beyond its gaming industry reliance and add other types of industries, two economic experts said. Their prescription comes in response to a recent call by Gov. Steve Sisolak (D) to diversify the industries in the state especially given the coronavirus economic downturn.
Currently, 30 percent of the jobs in Clark County relate to the gaming, leisure, and hospitality sectors, according to Stephen Miller, director of UNLV’s Center for Business and Economic Research.
We need to rely less on gather-together sectors, where people interact face to face, such as restaurants and bars, hotels and casinos, and so on, to address the pandemic recession,” Miller told Casino.org.
Shortly after the coronavirus outbreak last March, Nevada’s unemployment rate jumped to over 30 percent in April. Gradually, the unemployment rate partially recovered.
As of November, it was still over 10 percent. Unemployment levels are closely aligned to the drop in gaming revenue in locations like casino-dependent Clark County.
Even with the gradual improvement over 2020, in November gross gaming revenue (GGR) on the Las Vegas Strip totaled $349.8 million. That’s a 32.5 percent reduction from November 2019, according to Nevada Gaming Control Board reports.
Since November, Nevada’s gaming floors, bars, and restaurants also were forced by Sisolak to reduce occupancy to 25 percent of capacity. Several hotel-casinos additionally are shuttering hotels during the middle of the week due to lower reservations.
Tesla Factory Provides Some Diversity
But not all of Nevada has this kind of reliance. Miller gives the example of the Tesla Gigafactory located in Storey County’s Tahoe Reno Industrial Center. It is close to Reno which is in nearby Washoe County.
The plant manufactures lithium-ion batteries and electric vehicle components. It employed about 7,000 workers as of two years ago.
The region “is doing better through the COVID-19 recession because they have diversified their economy,” Miller said.
With this Tesla plant and similar changes, Washoe County’s reliance on jobs in leisure and hospitality went from 30 to 15 percent, Miller said.
Clark County has not been as lucky. A few years back, Clark County was hopeful about having a more diverse economy when Faraday Future was planning to build a $1.3 billion electrical vehicle plant in North Las Vegas.
But the company scrapped its plans in 2017. With the abandoned plans, the county lost the over 4,000 expected new jobs.
Looking back, Nevada’s effort at diversification through the Governor’s Office on Economic Development has been taking place in the state since the 2007-09 recession, Miller points out.
It illustrates an old adage: you need to work very hard to get lucky. And, getting lucky can take a long time,” Miller said.
John Restrepo, principal of Las Vegas-based RCG Economics, in theory agrees the state’s economy should become less reliant on traditional sectors like gaming.
“But I would use the word ‘developed’ instead ‘diversified,’” Restrepo told Casino.org. “Developed speaks more to the quality of a state’s economy and growth, e.g., the quality of jobs and industries.
“The current Nevada economy has become economically vulnerable over time, as the global economy and technology has changed. It doesn’t handle economic disruptions very well because it largely depends on this discretionary spending from outsiders — individuals and companies — as well as … large numbers of low-skill, low-wage workers,” Restrepo said.
He wants to see more investment in higher education and workforce training. There are more immediate steps to provide a stronger economy in Nevada, too.
These include widespread use of the COVID 19 vaccine and prompt distribution of another wave of federal pandemic relief, Restrepo said.
Also, the state would benefit from a “robust infrastructure investment program” led by the federal government, Restrepo said. But he provides a word of caution.
Nevada’s lodging and hospitality industry must also be protected “because it is the largest job and tax revenue producer in the state,” he said.
“Economic development is a realistic goal, but will take a lot of time, talent, treasure, and political will by the private and public sectors as I often say,” Restrepo added. “Nevada really has no choice if it wants to have a more resilient, sustainable, and modern economy.”
Sisolak Wants Nevada to Prosper in the Future
During this month’s State of the State address, Gov. Sisolak called for job growth and the attraction of new industries to Nevada.
“It’s not enough to just aim for a full reopening of our current economy,” Sisolak said. “We must look forward to the kind of economy that will let our state prosper in the future.”