Nevada unemployment reaches record 11.3 percent

Joblessness in Nevada set a record in May, and experts see few signs of an end to the state’s surging unemployment rate.

Unemployment reached 11.3 percent statewide in May, up nearly 1 percentage point from April’s 10.6 percent.

May’s number handily beats the previous high of 10.7 percent, set in December 1982, according to a Wednesday report from the Nevada Department of Employment, Training and Rehabilitation.

Joblessness in Las Vegas spiked from 10.4 percent in April to 11.1 percent in May.

Bill Anderson, chief economist of the employment department, said he was “surprised at the severity of the jump” from April to May.

But Anderson said the numbers could be a statistical aberration in the agency’s computer-model estimates. May joblessness might be overstated, he said.

Local experts say the figures make sense, given the state of the broader economy.

Companies in the struggling construction and hospitality sectors continued to lay off workers.

The construction sector dropped 1,200 jobs statewide, 1,100 of them locally, from April to May, possibly reflecting job cuts on major Strip projects including Fontainebleau and the Cosmopolitan.

Work has stopped on the bankrupt Fontainebleau, a $3.1 billion megaresort that employed 3,300 construction workers at its peak.

At least 350 workers lost their jobs in March when building on parts of the $3.9 billion Cosmopolitan stopped because of the need for redesigns.

“Any time you have a slowdown on a major project, it has to have an effect" on jobs, said Brian Gordon, of local research firm Applied Analysis. “If there’s not another job site for workers to migrate to, they’re certainly going to be looking for jobs.”

Because short-term numbers can show volatility, experts prefer year-over-year stats.

But those longer-range figures paint just as bleak a picture as the April-to-May data: Unemployment averaged 10.5 percent in the first five months of 2009, well above the 5.6 percent average in the same period of 2008, Anderson said.

What’s more, joblessness in May nearly doubled locally year-over-year, going from 5.7 percent to 11.1 percent, Gordon noted.

“These indicators suggest the broader economy continues to contract, and all businesses are trimming staff to respond to reduced demand for their products and services,” he said. “From a month-to-month perspective, the jump is significant. Year over year, it’s dramatic.”

Losses measured in real numbers are just as striking.

The state’s job base contracted 6.3 percent year over year in May, with employers cutting 81,500 positions. Nearly 60,000 of those cuts came in the Las Vegas area, which also experienced a 6.3 percent drop in its job base.

Nearly 155,000 Nevadans were unemployed and seeking work in May, with 112,700 of those residents living in the Las Vegas market.

Construction lost 21 percent of its jobs statewide, dropping from 120,600 positions in May 2008 to 95,300 jobs a year later.

Construction jobs in Las Vegas fell 17.3 percent, going from 95,400 jobs to 78,900 positions.

Companies in leisure and hospitality pared 6.7 percent of their workers from payrolls statewide, reducing staffs from 339,400 to 316,700.

Locally, the number of leisure jobs fell from 274,700 positions to 257,300 posts, or a 6.3 percent decline.

Other areas seeing noticeable declines included information technology, manufacturing and professional and business services, a category that encompasses accounting firms, law firms and other white-collar operations.

The news wasn’t all bad, though.

The combined category of education and health services grew 3.2 percent year over year in May, adding 1,300 positions statewide for a job base of 97,200.

In the spring alone, food services and drinking places created 2,500 new jobs, bringing on positions in two consecutive months, from March to April and again from April to May.

Observers said they’re loath to call a two-month string of gains in one corner of the economy an important trend, but Keith Schwer, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas, said the uptick in food-and-beverage hiring could hint at improved public sentiment.

Discretionary spending plummeted in the first quarter, as nervous consumers fretted over how deep the recession would go, Schwer said.

They loosened the grip on their wallets a little in the second quarter, as the downturn showed signs of easing and a federal stimulus measure reduced paycheck withholding and goosed take-home pay slightly.

Advertising campaigns offering discounts and price cuts also could have tempted consumers to spend a little more in March, April and May, Schwer said.

The employment department also released data Wednesday showing that the downturn has disproportionately hit Nevada’s big businesses.

Employers with 500 or more workers cut 11.4 percent of their work forces from the fourth quarter of 2007 to the fourth quarter of 2008.

Medium-sized businesses, those with 50 to 499 workers, lost 9.8 percent of their staffs in the same period. Companies with fewer than 50 workers saw employee counts fall just 4.4 percent.

Analysts say the discrepancy comes from the recession’s big effect on discretionary spending.

The downturn in consumer spending has savaged the bottom lines of gaming operators, which tend to be the state’s biggest employers.

It also might be easier to lay off workers at a bigger business. Employees at smaller companies typically perform multiple tasks, and many such businesses might have been operating as efficiently as possible, Schwer and Gordon said.

The recession has shown recent signs that a bottom is nigh.

Tuesday reports pointed to bigger than expected jumps in home construction and smaller than anticipated inflation in wholesale prices.

The International Monetary Fund even reversed earlier projections of continued contraction and issued new forecasts predicting slight expansion in the U.S. economy in 2010.

But unemployment lags recoveries substantially.

Since the end of World War II, job losses have tended to mount for a full year after a recessionary economy stabilizes and growth returns. That means joblessness in Nevada could rise beyond levels economists and experts predicted a few months ago.

Anderson wasn’t prepared to say unemployment would surpass his agency’s previously predicted peak of 11.5 percent, but he did say state economists would look anew at just how high unemployment might go.

Senate Majority Leader Harry Reid, D-Nev., issued a statement expressing concern for unemployed Nevadans and urging the formation of new jobs in the green economy and infrastructure.

“My thoughts go out to the thousands of Nevadans struggling to stay in their homes and find new jobs,” Reid said.

“While the news of Nevada’s record high unemployment rate is very unsettling, it underscores the importance of the work we’re doing to help the economy recover and stabilize. We must remain vigilant in our effort to create jobs by investing in Nevada’s renewable energy and transportation projects while continuing to help Nevadans who are struggling to get by.”


Contact reporter Jennifer Robison at or 702-380-4512.