Las Vegas Sun

March 29, 2024

Nevada slammed for social factors

A national study grading states on their economic development efforts slammed Nevada, saying its "lack of economic diversity, weaknesses in workforce skills and innovation assets, and troubling social conditions could threaten its future."

The study by the Washington, D.C.-based Corporation for Enterprise Development gave Nevada D's in business vitality and development capacity. Nevada's performance grade was a C, down from an A in last year's study.

The study, however, noted that Nevada's employment growth rates remained strong, and the state ranked No. 1 in long-term employment growth and net migration.

"One note of concern is that although the annual average pay for jobs in Nevada was relatively good, it increased at a much slower rate than many other states," the study said. "Nevada should be careful that new jobs continue to have adequate wages."

Nevada has scored straight A's for performance over the last four years, but that grade suffered this year by the addition of numerous new social factors, something CFED said "reflect changing economic trends to provide a more complete picture of each state's economy."

These factors included infant mortality, uninsured low-income children, teen pregnancy, heart disease, home ownership rates, charitable giving, voting rates and crime rates. Nevada's scores in teen pregnancy, uninsured children, home ownership, voting and crime all ranked in the bottom 20 percent of all states.

One of the state's top economic officials took the organization to task for adding in those factors.

"Teenage pregnancies have nothing to do with what we do, but apparently they think it has a lot to do with economic development," said Bob Shriver, executive director of the Nevada Commission on Economic Development. "It's hard for me to see how that's going to be a study that dictates economic prosperity.

"Some of these studies kind of poke you in the eye, but when they're good reports, you like to cite them."

Bill Schweke, author of the Corporation for Enterprise Development study, explained why it includes social factors.

"Ultimately, economic development needs to be much more environmentally compatible and equitable," he said. "If it's leading to great inequality, it will lead to increases in teen pregnancy, for example."

Shriver also questioned the conclusion that Nevada's wages aren't growing at an acceptable rate -- since 1997, Nevada's average wage has risen to $14.12 an hour, up 16 percent.

But the study also raised issues that have long been concerns of Nevada officials.

Foremost were the factors included in "business vitality." Nevada's D score was largely attributable to Nevada's lack of economic diversity, graded worst in the nation. The study also took Nevada to task for low investments in manufacturing, with a ranking of 45 out of 50. These factors drove Nevada's business vitality score from a B in 1998 to a D in 1999.

But diversity's not an easy task in Nevada, Shriver said, since one new hotel-casino can hire as many people as all the nongaming companies attracted to Nevada by the commission in a year.

"Although our growth in manufacturing jobs is significant as a percentage, it's still difficult to catch up," Shriver said. "Are we a diverse economy? No. Are we getting there? Yes. That's what we've been working on for the last 18 to 20 years."

Still, the category wasn't an absolute negative for Nevada. CFED researchers noted that Nevada ranked No. 14 in the percentage of technology companies among all businesses, an area in which Nevada has traditionally been seen as a laggard.

"Growth in these and other new companies should help the diversity and competitiveness of the state," the study said.

Nevada's traditionally low grade in development capacity was kept down by extremely low scores in air quality, numbers of Ph.D. scientists and engineers and science and engineering graduate students. Nevada scored in the bottom three in all three categories.

"Potential for innovation in the state may be stunted" because of the lack of scientists and engineers, the study stated.

But Shriver said Nevada companies have proven able to attract such talent to their workforces from elsewhere in the country.

"We probably do export a lot of our graduates, but we're trying to change that by creating jobs and businesses at home," Shriver said.

Still, Nevada's grade in this category was kept from an F by three strong categories -- loans to deposits, tourism spending and sewage treatment, all ranking No. 1 in the country.

The CFED study is a peculiar turn of events for Nevada officials, who last week were praising the findings of Cambridge, Mass.-based Cognetics Inc. In its study, Cognetics ranked Nevada as the top state in the nation for starting and growing a small emerging business. Moreover, the study ranked Las Vegas as the top small metropolitan market for young companies.

"I like the Cognetics study, because it doesn't mix in subjective qualifiers," Shriver said.

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