Columnist Hal Rothman: Explaining how runaway growth will keep demand high for workers in Las Vegas Valley

Hal Rothman

Sunday, Dec. 18, 2005 | 8:13 a.m.

Hal Rothman is a professor of History at UNLV. His column appears Sunday.

A developer friend of mine was trying to hire a general contractor for a project. He talked to the man in September, and they agreed in principle to a price for his services.

When they spoke again in October, the contractor had doubled his fee. "What?!" the developer shouted. "Supply and demand," the contractor replied. "Be glad you can get me at all."

The year 2006 poses important challenges for the Las Vegas Valley, and near the front of the queue is labor. Our most unusual feature is the perennial labor shortage. We never have enough workers to fill the jobs available.

Nowhere else in America is ordinary work so highly prized. Nowhere else is labor as well compensated in comparison to the level of skill work that is required.

Economists have long regarded 5 percent unemployment as "full employment," when all who actively seek jobs have secured them. Except for the immediate aftermath of 9/11, Las Vegas has remained at or under 5 percent unemployment for most of the last decade.

This odd circumstance is a historical condition as well as a current one. It has been true since the construction of Hoover Dam.

The 5,000 jobs at its peak were not enough for the additional thousands who flocked here to land a job at a time when one-quarter of the American workforce did not have one. Many found their hopes dashed. The second largest expenditure during the mid-1930s in Las Vegas was the federal dole for those who could not get on at the dam.

The perennial shortage remains and we always need workers. And no wonder. Between January 1995 and January 2005, the valley added more than 350,000 jobs.

That's a lot of homes and mortgages, bank accounts, dinners out and lessons for children. And that's also a lot of recruiting out of state to persuade people to come here and put down roots here.

But come they must if we are to sustain ourselves. Economic expansion in the valley is completely tied to growth.

Our entire way of life here depends on growth, on the expansion of the tourism industry, on construction and land development, and on the ongoing influx of people whose presence creates new jobs and other opportunities.

Everyone recognizes this issue, but only a few attempt to do anything about it. MGM Mirage recently sent recruiters to the Latino career fair, recognizing the largest local pool of potential workers, Latino high school kids who will enter the workforce in the next couple years.

This is a sound strategy, but the larger problem remains. Locals alone cannot fill the jobs that will come available in the near future.

As 2006 dawns, the labor situation looks even tighter. The ever-growing economy creates new demands for skilled and semi-skilled labor, demanding more teachers, architects, doctors, dentists and pizza delivery people.

With an unemployment rate just below 4 percent in October, a full point below theoretical full employment, the prospect of finding a new pool of workers already living in the valley is pretty slim.

In the most simple terms, labor shortages drive up labor costs. Rising labor cost drives up the price of everything that uses labor. But finding that labor may prove more difficult than paying it.

With construction alone jumping from roughly 80,900 workers in March 2004 to 107,200 in October 2005, the pressure on the labor market will continue to be enormous.

And with housing prices still sky high, recruiting labor may prove problematic. Even for professionals, the cost of living here may serve as a deterrent.

Las Vegas has always been an opportunity stop. If people don't perceive opportunity here, they're less likely to come.

There are still guys who stand on D Street or even on suburban street corners waiting to be hired as day labor, but they are fewer in number. Demand exceeds supply even on the fringes.

We've got more work than we have labor right now. It's a paradox likely to get worse in the next 12 months. The need for labor will get more acute as we move into the next phase of growth.

We will continue to import labor, and it will remain a scarce commodity. If we can't get the labor, it will be harder to sustain the economic miracle that recent Las Vegas has been.