Las Vegas Sun

September 30, 2014

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ECONOMY:

Las Vegas population in decline; will it reverse?

Despite Nevada’s economic woes, some experts predict growth returning in coming years

70,000

The difference between Nevada’s population last year and this year, according to state demographer Jeff Hardcastle. Official numbers from the U.S. Census Bureau, which the Legislature will base redistricting on, will be released in December.

$1,026

Cost of renting a U-Haul truck in Las Vegas to drive to Dallas. (U-Haul rentals have largely been spared in the recession.) Renting a truck in Dallas to drive here, however, costs about half this amount because the company needs more trucks here.
Jeremy Aguero

Jeremy Aguero

An economic shock causes a city’s main industry to falter, and its residents flee in droves in search of work elsewhere.

We could be talking about Seattle and its “Boeing recession” after the collapse of aerospace in the ’70s, or Odessa, Texas, in the ’80s after the price of oil plunged.

And according to some recent estimates of the region’s demographics, we might soon be placing Las Vegas in the same category.

Jeff Hardcastle, the state’s demographer, estimates Nevada has 70,000 fewer residents since last year, including about 50,000 fewer in Clark County.

Just as in those other cities, the population loss is in some ways entirely predictable.

“People moved here for economic opportunity, so we expected them to leave when some of those opportunities ran out,” said Jeremy Aguero, principal of the consulting firm Applied Analysis.

One need only check the price of a U-Haul. Renting a moving truck to drive to Dallas, which has been to a large degree spared during this recession, will cost you $1,026. Renting one in Dallas to drive here costs roughly half that because the company needs more trucks in Las Vegas.

Here’s what has likely happened so far, as Las Vegas enters its fourth year of recession: Thousands of workers, who have been laid off or lost their homes to foreclosure, have left the state to return to families in the East, California or Latin America. A prodigious birthrate, however, has helped Nevada replace some of those who have left, such that our population is either down a bit, flat or perhaps even up a bit.

Nevada’s official population number via the U.S. Census Bureau, which the state Legislature will use to redraw congressional and legislative districts, will be released in December.

The medium- and long-term pictures of local population trends are much less clear. The Sun interviewed economists, demographers, urban planners and community officials. Some say we have a bleak future, lumping us in with a long line of cities, often in the industrial Midwest, whose sadness never seems to abate, veering from economic contraction to population loss and back again.

Others express optimism that things will turn around relatively quickly and/or that the population loss or stagnation could be used to our advantage.

Let’s start with the optimistic scenario.

Rob Lang, director of Brookings Mountain West, moved to Las Vegas last year and thinks the worst is behind us economically, and, thus, demographically. “I’m not a believer in the grimmest scenario,” he said.

Lang, whose expertise is in urban planning and policy, relies on the demographic forecasts of the Washington-based firm Woods & Poole Economics, which forecasts fairly robust population growth here, of about 40,000 per year in Clark County, through the middle part of the decade. Lang said he thinks that estimate is likely a tad high and that actual growth will be more like 25,000 per year, mostly coming from new births, especially among Hispanics.

That population growth won’t happen, however, if there’s also a massive wave of Nevadans leaving the state. If there are no jobs, no one will move here, and people already here will leave.

Lang thinks if they were to leave, they would have left by now or will in the near future.

Aguero said he’s been somewhat surprised that more people haven’t left. His survey data show people have stayed because they are locked in underwater mortgages; they’ve put down roots here, which is a fairly surprising development; or they’ve decided there’s nowhere else to go.

Lang thinks our economic prospects are better than many of the doomsayers realize.

He points to cities hit hard by the savings-and-loan crisis of the early 1990s, which was a debt-fueled commercial real estate bubble that burst and left cities such as Denver, Houston and Phoenix reeling.

When those cities suffered their real estate collapses and finally cleared away the debris — with the help of the government’s Resolution Trust Corp. — they had an advantage relative to other cities: cheap real estate.

Similarly, Nevada real estate is again a comparative bargain next to California. As California recovers, residents there who aren’t underwater will be happy to sell their homes and move to Las Vegas for something cheaper and bigger.

Lang also thinks economic seeds — some unrecognized — are waiting to spring to life.

He cites the potential for Interstate 11 to Phoenix; the development of high-speed rail to Victorville, Calif.; the new terminal at McCarran International Airport; continued development of renewable energy projects; expertise in green building fostered by the construction of CityCenter; and the opportunity for Las Vegas to become a center for specialized expertise in the global gaming business, as Houston is in energy and Los Angeles in entertainment.

Even with population loss, Lang and some demographers argue, there could be some upside in the form of short-term fiscal relief. The absconders are likely unemployed, a drain on the unemployment insurance fund and possibly social services, while contributing little in the way of tax revenue.

Compared with Rust Belt cities, such as Pittsburgh, during their massive population losses, Lang said, “We have a better hand dealt to us.”

Other analysts are less sanguine.

“Growth begets growth, and decline begets decline,” Aguero said.

Economists see the employment picture brightening in other states while remaining stagnant here, which is a recipe for flight. Unemployment in Las Vegas is 15 percent, but when workers who are involuntarily part time or who have quit looking are included, the figure is above 20 percent. Tourism has taken a hit, while the region’s other main industry, construction, has suffered a near-fatal blow.

“The other shoe probably hasn’t dropped quite yet,” said Jim Russell, a Denver-based geographer who specializes in migration trends and consults for economic development agencies. “It should get worse,” he said, referring to population decline.

The most obvious problem with population decline is reduced economic activity — fewer people in restaurants and stores, and, most crucially, fewer people to fill empty homes, warehouses and offices.

Other problems are less obvious. Chris Briem, an economist at the University of Pittsburgh who has studied his region’s population loss, pointed to the type of people who leave — young risk-takers — as being the very people needed to help transform an economy.

John Restrepo, an economics consultant and vice chairman of state government’s Economic Forum, said we shouldn’t be so sure that the people who have left are surplus construction tradesmen or unskilled tourism workers.

He said in the past 18 months, he’s come across maybe 100 educated professionals who have left town. Most are in the development industry, including engineers, bankers and lawyers. As for those who graduated from high school a decade ago and went on to elite colleges out of state — don’t expect to see them returning, he said.

It’s not clear that civic, business and political leaders are in the right mind-set for the painful decisions required to adjust to the change.

Briem said that in Pittsburgh during the 1980s, economic development specialists were too focused on the past and what is derisively called “smokestack chasing” — trying to bring back heavy industry that was gone forever.

Las Vegas is built around the growth model, with economic decisions based on the idea that another 100,000 people are on their way. Can we shake loose that mind-set, and build a new economic model?

Bill Flanagan, vice president of corporate relations for the parent organization of Pittsburgh’s chamber of commerce, said his city had to break the mind-set among its people that they could graduate from high school and get a good job at a mill.

“It changed the message: Suddenly, it was, you need an education and you need to get some skills,” he said. Pittsburgh now has one of the most resilient economies in America and one of the best educated work forces.

The talk here is of maintaining, at best, the state’s mediocre schools even as government inevitably shrinks to close the budget deficit.

Increasing educational attainment, which is one of the few surefire ways to bring economic diversity and innovation, is taking a back seat to other priorities.

“If the government can’t find the political will to address the problem of an educated workforce,” Russell said, “then you start looking like Detroit.”

Even the ever-optimistic Lang said Las Vegas needs to get it right and achieve some economic diversity before the next recession comes.

Restrepo was blunter: “The question I’ve been posing is this: Is the Las Vegas economic model broken? We know it worked very well for many years, but do we truly need to reinvent ourselves? And do we have the political will to do it?”

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  1. Who knows what will happen, Dip, at best the so called experts quoted in the article are just making an educated guess as to what will happen. We've been experiencing conditions almost as severe down here in Phoenix. You know there may be something to the idea that part of the loss in population is due to departing construction workers. When things were booming they were arriving here in droves and when the bottom fell out, you couldn't get a construction job if your life depended on it and they were and are leaving town just as fast. I prefer to see the glass half full. From what I can see this could be a great opportunity and things could get turned around for Nevada, if (and I know it's a big if) the politicians do what they are paid to do, which is to lead. I agree that the education situation needs to be addressed if there is to be any hope for the future. Also, the economy needs to diversify. Let us learn from the recent debacle. If we don't, there is no hope.

  2. Maybe Las Vegas needs a change of image, and one path to glory is to rename it. How about Fredericksburg, after the news editor that helped empower the local Morlocks into thinking they had opinions?

  3. Is that a bad thing, to have the city and state become smaller in population? Las Vegas is way over built, which created many of it's own problems. Without the housing bust and at the rate homes were being built, the low salaries paid, who in the hell could afford to live here? It's no wonder realtors and banks cheated the system.

  4. Numero Uno, all building of high density housing needs to stop. For that matter, any construction of buildings needs to occur on a carefully analyzed and planned action of doing so based on NEED and that it is SUSTAINABLE. Las Vegas has virtually painted itself into a corner with growth. There is a magnificent 40 year plan in place cooperatively created by the City and County Planning Commissions, left with a tad bit of wiggle room. But there are mitigating variables, such as WATER, a very essential and vital commodity without which, nothing happens.

    So sharpen your pencils all you want, when it comes down to putting it all down folks, Las Vegas must have growth that is SUSTAINABLE. Thank You.

  5. Bush & Chenny tore this country apart financially.
    Obama made promises he could not keep. We do not have leadership waiting in the wings. The United States is severly divided into the (Have's & Have not's).
    The (Have Nots expect to be taken care of by the Have's). It is not going to happen. We have too much Government. "Start there". It will not go away.

  6. A smaller Las Vegas can be a better Las Vegas. People have very short memories, and even this essay looks back only about 15 years, willingly drinking the Kool-Aid of "growth for growth's sake."

    The massive population boom of 1994-2006 was false in most traditional senses of the word "boom." It was largely an illusion caused by a heavy influx of essentially migrant construction labor and a concurrent shadow population of home investors.

    Meteopolitan Las Vegas was healthiest when it had 1 million residents and 25 million annual visitors. There needs to be an assessment of the Las Vegas story that reaches back further than 1995 for its historical perspective. Without that, people will be stuck trying to replicate the illusion of 2003, when the reality of 1993 is a better starting point as we move forward.

  7. Good post James, right on mark.

  8. Being a construction worker used to be like farm work, you moved where the work was.

    The problem we have now is many of the construction workers that came here have been staying here even though there is no work. Some of the union commercial construction workers have not seen a job in over two years yet they are still hanging out here.

    I can understand part of it because there is not a lot of construction work anywhere right now but they either have to move on or learn to do something else. Union commercial construction work will not be coming back to Vegas in a big way for many years.

    Vegas will come back, it always does bigger and better each time there is a downturn but it takes time. If you don't have work, move on and find it. The public system can not hold out forever taking care of you.

  9. Think as the nation is a home.

    What's is the expenses you cut on thought times? Normally is the entertaining expenses, thats is the reason why this city is seen thought times, this is a city who lives from entertaining.
    What we can do?
    Diversification of the local economy or waiting to the recovery of the nation economy. The very last expense that you do, when you have a relief, is in entertaining.

    Some people wants bring Las Vegas to his initial status, remenber on the very beginning Las vegas was a point on middle of the desert for watering the caravans crossing and over here you could found fun (drinks, gamble, protitucion, etc.) now they want Las vegas be a point on the desert where the people who come here to leave his radiactive waste can find fun (drinks, gamble, protitucion, etc.) NO YUCCA MOUNTAIN.

    In conclusion, there are two option, change the revenue source or wait; maybe the second could take too much time. So maybe there is only one option.

  10. "Lang also thinks economic seeds -- some unrecognized -- are waiting to spring to life.

    He cites the potential for ...; the development of high-speed rail to Victorville, Calif.; "
    -----
    Victorville? VICTORVILLE?

    Population in July 2009: 110,921.
    Estimated median household income in 2008: $52,999
    Estimated per capita income in 2008: $17,418
    Estimated median house or condo value in 2008: $246,700
    Median gross rent in 2008: $1,153.
    Percentage of residents living in poverty in 2008: 21.3%

    Victorville - A small city of 110K with a per capita of 17K and a poverty rate of 21%.

    Now there's a reason to spend 100s of millions of tax payers money on high speed rail. A real who's who of destinations. If this is an example of urban, state and national planning, well, it's no wonder the nation is broke.

    Hey honey, one more reason to move to Vegas.. high speed rail to Victorville. And while Victorville has grown greatly since 2000, I doubt the primary reason is access to Vegas.

  11. A whole lot of words from a whole lot of people...saying essentially...NOTHING.

    Newspaper "filler' is getting to be a bad habit for the RJ and Sun.

    There has been "noticeably less" news focus on human interest pieces.

    Of course, the reason why is clear.

    But PEOPLE are still the central theme in a socially evolving society.

    Hey! We may have just discovered something here!

  12. All I know is that Las Vegas was a better place to live when I moved here back in '85 and the population was a lot smaller. I for one will not shed any tears if a few more people where to decide Vegas ain't for them.

  13. "The problem we have now is many of the construction workers that came here have been staying here even though there is no work. Some of the union commercial construction workers have not seen a job in over two years yet they are still hanging out here."
    __________

    Well, one of the reasons they have been staying put is because they have continued to get unemployment benefit extensions. I know a couple of guys in the carpenters union and they haven't worked in a couple of years now on a union project, yet they still collect unemployment along with doing under the table "side work". But I suspect all this will change now that the election is over and the Democrats don't need to buy votes.

  14. I hate Bush and Cheney MORE than the next guy, but to say THEY caused the housing crash is ignorant. Yes, they did de-regulate some of the key pieces and cause the OVERALL financial downturn, but it was just GREED that caused the housing crash. Too many people buying too many houses at obviously overinflated costs.

    Now, I feel bad for the couple who only owned the one home and was honestly committed to doing the right thing, but most of the loss was from specualation, and GREED.

  15. 435 seats in the House of Representatives will be reallocated among the states based on population. Dividing the current estimate of the U.S. population by 435 gives about 714 thousand people per Representative. At that ratio, Nevada would have to have had a 2010 population of 2.8 million to get a 4th Representative. But it looks like we only had a population of about 2.6 million.

  16. A smaller Las Vegas, around 1985 was a better Las Vegas in many ways.