Las Vegas Sun

July 31, 2014

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Jon Ralston:

Murder on the Nevada Express

Friday’s news of Nevada’s rising unemployment rate, which is both misleading and depressing, brought the predictable reactions from the state’s political elite in D.C.

We need to work together, Republicans shouldn’t obstruct, Democrats need to shift course. Spin, blather, drivel.

It is time for a dose of reality: This state’s economy is the worst in the country as a result of Murder on the Nevada Express, the derailing of a speeding growth train where the passengers rode along blithely, ignoring underlying infirmities and seeing no end in sight.

When the economy died, no one on board was innocent, and it takes no Hercule Poirot to solve this mystery. We all did it.

Guided and blinded by greed, the visionless community shepherds have led the sheep to slaughter through their decisions or lack thereof, allowing the lower and higher education systems to wither and local governments to be paralyzed by onrushing personnel costs.

Beyond the unbearably predictable and hollow partisan finger-pointing, expected and yet execrable, is the inexorable fact that Nevada is suffering disproportionately now because of a decade or two of denial by the public and private sectors.

In the short term, Nevada is captive to the national economy; in the long-term, the state must surmount its structural unsustainability. As numbers maven Jeremy Aguero put it to me, “The cyclical tide appears to be turning; our structural challenges are likely to haunt us for the next decade.”

Although Republicans blame the stimulus and “Obamacare” and Democrats lament Republican tax-cutting and tax-breaking, the depth of Nevada’s economic hole has nothing to do with anything passed on the national scene.

Don’t misunderstand: No state economy is immune from the recession. But what has happened in Nevada, especially Las Vegas, is a go-go-grow mentality that allowed le bon temps to roulez for 20 years as state and local government officials eagerly enabled private-sector opportunists who wanted to build, build, build and public-sector unions who wanted to grab, grab, grab.

And here we are.

In one sense, we mirror what occurred nationally, as one expert told me. “One of the major problems is everyone went out and borrowed money and built stuff,” he said. “In Nevada, money was easy to come by, nobody thought the growth would end and so we built strip malls, commercial centers, housing.”

And now thousands of those edifices lie empty, crushing debt has piled up and demand is gone. The construction industry was the No. 2 cash generator in Nevada (behind gaming) and it essentially does not exist anymore. Those jobs are not coming back anytime soon — if ever.

As the ever-thoughtful Aguero put it, “Many of the lost jobs were predicated on an unsustainable level of consumer spending (e.g., home equity extraction) and simply cannot be supported in today’s economy. The condition is acute in the construction industry, where two in every three positions have been eliminated since the recession began in December 2007. At the market’s peak, more than 12 percent of the state’s workforce was in construction — the national average was about 5.5 percent. We have years of effective inventory on the market, which means there is very little demand for new construction (or construction workers).”

As the great philosopher Steven Tyler might have put it: The past is gone. So now what?

To be clear, the rising unemployment number does not tell the whole story. As Aguero pointed out, “the unemployment rate is going up because more people are seeking employment, not because there are fewer jobs. This is in sharp contrast to the trend reported during most of the past three years. Moreover, core employment (generally defined as total employment less construction and government) has grown year-over-year in Southern Nevada for the past eight consecutive months with leisure and hospitality, business and professional services, and health and education services all adding positions.”

Good news. But 176,000 people are looking for work in an economy that will never look the same. It is as if the state has climbed onto the first rung of 100 on a ladder leading out of the hole.

There is no easy solution. Green dreams won’t do it — renewable energy jobs are temporary and the payoff is long-term. Economic diversification won’t work when the structural problems in the education system exist — all we can hope for is low-hanging fruit such as warehousing, factories, call centers. And the repugnant sloganeering and binary idiocy by mindless partisans — signing no-tax pledges or infusing more money — will not do the trick.

Putting the Nevada Express back on the tracks will take a bunch of smart people with vision getting together to agree on short- and long-term remedies. I don’t know who they are. But I’m pretty sure they’re not in Washington.

I just hope they haven’t left the state.

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  1. Just look around the Sun's offices and tell me unemployment isn't rising. Your best and brightest aren't simply leaving, they're being shown the door.

  2. One interesting fact is that many people, including Jon Ralston, have been telling the legislature for years that they can't and shouldn't just keep kicking the can down the road.

    Those of us who pay attention to what the Government is doing have pushed long and hard to get them to do something, anything that would alleviate the problems, to no avail.

    Alas, it would seem that our "leaders" are not leaders at all. They are simply followers of the party doctrine.

    And we the people are the ones that suffer. Remember that when you vote next election.

  3. For some strange incomprehensivable reason, the People of Nevada seem detached from the very politics that rule them. This phenomena puzzled me the day I moved here and continues. VOTERS should be screaming bloody murder, for over a century, really. Political corruption and "Kick the political can down the road," has meant that the MINING and GAMING INDUSTRIES have enjoyed massive TAX exemptions and have paid only a pittance in TAX REVENUE to NEVADA and the Citizens of Nevada for over 100 years!!!

    Everyone needs to take their fair share of responsibility in this slaughter and blight. The legal adults were NOT adequately or appropriately protecting minors nor fellow citizens for quite a long time. The "ME GENERATION" right?

    Our American society also has been permanently crippled by uncontrolled ILLEGAL IMMIGRATION, which has affected every aspect of American life, culture, and economics. Start with enforcing the laws we already have on the books please!

    VOTE for Representatives who don't take donations/contributions from MINING & GAMING, this next election cycle, please. Get to know who is running and what they are about, contact them about what you expect them to do if they are elected. It's a 2-way street.

    NO more building unless it is using previously used parcels. All building should be permitted based on IF it can be sustained with current WATER and ENERGY utilities. If not, don't build it, we are in a desert!!!!

  4. The problem is oil and... Bob635..taxing everyone out their last dime will not solve the problem..
    Rebuild the interstates? The interstates are empty..and that means no one is coming to Las Vegas..The roads in Nevada are in good condition..and yet..the casinos are empty..
    It is fit to remind everyone that Las Vegas was a filling station and a motel in a dusty and forsaken crossroads ..and what cosmic law of the universe states that Nevada "must" recover to the boom of the past 50 years..which was built on cheap oil..?
    I hear people say..We Have to find other energy sources..We Must build perpetual motion machines that generate more energy than they use..but..what cosmic law states that just because we need..that we can?
    What if we don't find a source ..there are always horses..and the stage can stop in Las Vegas..or the steam train..(dirty coal?) maybe not!