Friday, Nov. 26, 2010 | 2 a.m.
Economists have been pleasantly surprised by early estimates of hiring for the holiday retail season. Nationwide, retailers hired 150,000 workers in October in preparation for the all-important holiday buying season, matching the pre-recession year of 2006.
But as with so much else during this Great Recession, the picture is less bright in Southern Nevada.
“It’s difficult to compare to 2008 and 2009,” said Nevada economist Bill Anderson, referring to the lackluster holiday hiring of the crisis years. “But I expect something similar this year.”
That’s the bad news. Let’s start with the good news coming from the rest of the country, which hopefully will spread to Nevada, even if not this year.
The National Retail Federation predicts holiday spending will be up 2.3 percent this year over last. Granted, last year was atrocious, but the increase indicates the all-important American consumer may be taking a respite from paying down debt to do some buying this season.
Consumers across the country are still being cautious but are starting to buy, said Jerry Nickelsburg, senior economist with UCLA’s Anderson Forecast.
To meet the demand, retailers are hiring.
The consulting firm Challenger, Gray & Christmas is forecasting that retailers could add 600,000 to 650,000 workers this holiday season, up 30 percent compared with last year. (The National Retail Federation doesn’t forecast seasonal hiring.)
CEO John Challenger said retailers aren’t just trying to meet demand. They’ve also done extra hiring and training to improve customer service in the hope that the effort will lead to a competitive advantage and higher sales.
In other words, they’re investing in their work forces.
This is a significant departure from the past few years, when many companies slashed payrolls and hoarded cash to ride out the recession. Now, apparently, at least some companies think there’s money to be made investing in new workers.
But the recession has been so crushing in Nevada that battered consumers are almost certainly unready to begin really spending again. While there will be some seasonal retail hiring, it will pale compared with other regions.
“The downturn still lingers on where you are,” said Nickelsburg, of the Anderson Forecast. “Retailers who look at the situation realistically see that consumers aren’t seeing enough of a rise in income to translate into a good economy.”
A recent report by the Retail Association of Nevada, prepared by local consulting firm Applied Analysis, shows in brutal detail what the recession has done to Nevada consumers.
From September 2008 to September 2010, average weekly wages decreased 10.7 percent, while average weekly hours were down 7.5 percent.
Wages per capita, which is all the income earned divided by the total number of Nevadans, were down 18 percent as of the first quarter of this year compared with early 2008.
That huge reduction has of course been driven, to a large degree, by the 14.1 percent unemployment rate, which is probably above 20 percent when part-time workers who would rather be full time and those who have given up looking for jobs are added to the total. There’s also the anti-wealth effect. The “wealth effect” refers to consumers’ propensity to spend more if the value of their investments and homes are rising. But 80 percent of Las Vegas mortgages are underwater, meaning the home is worth less than what is owed. So instead of a “wealth effect,” local consumers are enduring its opposite.
Add it up, and Nevadans just don’t have the money to be splurging on gifts.
Alyson Bettelman, who prepared the study for Applied Analysis, said that although the outlook looks a little better this year, there’s just no escaping job losses and wage cuts.
Nevada taxable sales have been rising, up 4.1 percent for the 1st quarter of fiscal 2011 compared with a year ago. How could this be?
Nevada took a hit in the recession because fewer tourists came and those who did spent less money. Now, the reverse is happening: The economy is recovering elsewhere, and some tourists are returning.
Perhaps those tourists will spend money in stores that are now too rich for many Nevadans.