Growth industries listed in NDA report on LV job market

David Strow

Wednesday, Feb. 6, 2002 | 11:09 a.m.

The need to diversify Las Vegas' economy has been a pressing issue for years. It has become even more urgent since Sept. 11, as a tourism slowdown takes its toll on the city's gaming and tourism industry.

But rather than employing a scatter-shot approach to attract non-gaming business, Southern Nevada must focus its diversification efforts on specific industries best suited to the realities of the area's workforce, a new study says.

The study, conducted through the Nevada Development Authority, suggested five industry "clusters" where diversification efforts should be focused: Entertainment, information technology, electronics, health care services and "call centers."

The study estimates about 22 percent of the area's employees work in the hotel and gaming industry. Diversifying the economy away from that concentration is an important goal, said Keith Schwer, director of UNLV's Center for Business and Economic Research.

"We have more ghost towns than any other state, because all of our eggs were in one basket (mining)," Schwer said. "It makes good sense to pursue diversification."

But only certain industries provide benefits, Schwer added.

"The best way to pursue diversification is to diversify away from your strength," Schwer said. "We need to iron out the business cycle."

The study provides a long list of suggestions to help diversification efforts, including establishing a regularly updated database of information about the Las Vegas labor market; a website to help information technology workers find jobs in the Las Vegas market; coordination of diversification efforts through the NDA; and reforms of the Clark County School District, the Community College of Southern Nevada and UNLV.

"Key regional executives often voiced complaints regarding the responsiveness of UNLV and CCSN to workforce development efforts," the study said.

Health care was identified by the NDA because of the area's tremendous demand for health care services, a trend driven by "advances in medical technology, a growing retiree workforce and a culture in which appearance is critical." In entertainment, "outside of Los Angeles and New York City there is nowhere in the United States where there is a concentration of musical and theatrical talent like that found in the Las Vegas area."

Information technology and electronics present a lucrative opportunity for the area as well, but one that faces challenges in Las Vegas, the study said. Just 0.1 percent of Las Vegas' workers can be classified as high-tech, the study estimated, compared to 17 percent in San Jose, Calif., 6 percent in Austin, Texas, 3 percent in Phoenix and 2 percent in Salt Lake City.

Moreover, the region faces a "brain drain," where departing workers are generally those with greater skills than those moving into the market. And the area's educational system is viewed by a majority of companies as being inadequate for training people for "new economy" jobs, the study claims.

Yet focusing on information technology is crucial, said Robert Schmidt, president of Demographic Solutions Inc., the firm that conducted the study.

"It's one of those things you can't do economic diversification without," Schmidt said.

And there is some base to build on for electronics, said Tim Snow, president of Thomas & Mack Development Group and chairman of the NDA task force that spearheaded the study.

"It's not a known fact, but Las Vegas has the largest concentration (of workers) for the creation of software and manufacturing hardware for the next generation of gaming equipment," Snow said. "That's truly an export business, because this equipment is sold all over the world."

One way the area can increase its IT base is by focusing on a particular sector within information technology, as other states have done, said NDA President Somer Hollingsworth. One possibility for the area is the field of "data mining," he said.

Currently the Department of Energy is moving forward with a project to consolidate and analyze data from the Nevada Test Site. With the involvement of the UNLV Research Foundation in such a project, a "cluster" of related companies centered around data mining could be formed in the Las Vegas Valley, Hollingsworth said.

"That's the first cluster we'll get involved in," Hollingsworth said. "It's something we can put in Southern Nevada, related to the Test Site, that's a natural for us to have."

Call centers have boomed in the Las Vegas Valley over the last several years, and the Las Vegas economy has several factors that contribute to their growth here, the NDA study said. Factors include a higher-than-normal rate of "computer literate" workers, a workforce accustomed to working around the clock shifts, and the willingness of workers to jump from job to job, "provid(ing) high-end marketing and administrative support centers with readily upgradeable personnel."

"Large companies with heavy administrative and marketing support are decentralizing those elements," Snow said."As a result of Sept. 11, they will probably accelerate that process. That's important to the Las Vegas Valley, because we're clearly a city that is conditioned to 24/7-type business conditions."

The study took pains to try to dispel the negative images of call centers, calling this term "an extremely shallow description."

Instead of low-wage, high-pressure telemarketing centers, many call centers today are high end "administrative and marketing support centers," the study said, with wages rising as high as $20 to $40 per hour.

But Schwer argued that the study doesn't back up one key assumption -- that "computer literate" workers can easily transfer into a high-end call center job.

"How reasonable is it to believe these people trained on computers could move? We don't know that from this study," Schwer said.

And even with higher wages, Schwer believes call centers may not provide the desired effect of economic diversification -- a more stable economy.

"Maybe I don't know enough about them, but they come and go based on all kinds of whims of business," Schwer said. "Setting up businesses that come and go is not diversification."