Governor praises state’s job growth as business creation muddles along

CARSON CITY — Nevada’s private sector job growth ranked second in the nation last year, showing strong gains in an economy that was hammered by the recession, the governor’s office announced this week.

Figures recently released by the U.S. Bureau of Labor Statistics show that Nevada added jobs at a rate of 4 percent in 2014, trailing only North Dakota’s gain of 4.6 percent.

Since then, however, North Dakota’s overall job picture has dimmed considerably with the fall of oil prices, said Elliott Parker, an economist and professor at University of Nevada, Reno.

All told, Nevada employment totaled 1.06 million jobs in 2014, an increase of 40,700 new jobs over the year.

Gov. Brian Sandoval, who has made economic development and job creation a priority of his administration, said the ranking shows Nevada’s economy is on a healthy course after flat-lining during the recession.

“We have gone from the fastest-growing state in the nation, to the state hit hardest by the recession, to the state that, once again, is near the top of the rankings,” the governor said.

So far the job growth has come in familiar sectors.

“Most of the job growth is in the usual areas: food service, bars, casino hotels, retail sales, health care, and warehousing/transportation,” Parker said. “There is significant growth in construction, and that used to be a major source of growth. Mining is down, manufacturing is small.

“There is a little growth in professional services, but not enough to say there is any diversification,” Parker said.

DECLINING UNEMPLOYMENT

Nevada’s unemployment rate dipped to 7 percent in May, down 0.1 of a percentage point from the previous month and nearly half of what it was at the height of the recession in 2010. Employers statewide added 8,000 jobs in May, with leisure and hospitality accounting for more than half, 4,700, bringing total sector employment to 356,000.

But the labor force also grew, with 5,300 people entering the market to look for work. That’s why job growth didn’t carve a bigger chunk out of unemployment, which remains well above the national average of 5.5 percent.

Nevada also posted big year-to-year job increases in May: At 1.25 million jobs, the state had 41,500 more positions in May than a year earlier, for its highest jobs count since September 2008 and a job-growth rate of 3.4 percent. The national rate was 2.2 percent.

Leisure and hospitality gained 15,600 jobs in the first five months of 2015. Construction was up 4,600 jobs through May, and trade, transportation and utilities employment is up 7,800 during that period, according to Bill Anderson, chief economist for the Department of Employment, Training and Rehabilitation.

Sandoval is focusing economic development efforts on establishing a high-tech economy and new-business creation. Economists say the effort is laudable but will take time.

BUSINESS CREATION IDLES ALONG

A recent Bloomberg News report listed Nevada in the middle of states for new business creation as of the last quarter in 2014 over the previous year, somewhere between 2 percent and 3 percent.

That’s not surprising, said Stephen Brown, professor and director of the Center for Business and Economic Research at UNLV.

“We’re not opening up new businesses as fast as some other states,” Brown said. “But the businesses that are here are growing pretty strongly.

“We’re not rapidly re-creating the Nevada economy,” he said, adding that Nevada’s economic restoration “looks a lot like the Nevada economy of 15 years ago.”

But Brown said that doesn’t mean Nevada’s economic future will mirror its past.

“We need to be patient,” he said, noting the state’s efforts to focus on high-tech companies such as Tesla in Northern Nevada and Switch, a Las Vegas-based company that plans to expand its data centers at both ends of the state.

According to Bloomberg News, the top state for business creation was Massachusetts, which saw the number of businesses grow by 5.6 percent in the fourth quarter of 2014 from the previous year. Illinois, Oregon, Delaware and Georgia rounded out the top five.

To meet the demands of a changing economy, the 2015 Nevada Legislature approved a huge influx of money and sweeping education reforms pushed by Sandoval to improve the state’s underperforming education system and prepare students for a high-tech global economy.

“The overall trend is, it’s going to be awhile for us to change the reputation of Nevada to attract these firms,” Parker said.

“The real issue is whether we can start changing the narratives. See your education system get off the floor,” he also said. “When that starts happening … then we can start seeing that pay off.”

Brown agreed.

“Those are all seeds that we’re planting,” Brown said. “These are seeds we hope will grow into big trees.

“Trees that grow fast don’t tend to last as long as trees that grow slowly,” he said.

Contact Sandra Chereb at schereb@reviewjournal.com or 775-687-3901. Find her on Twitter: @SandraChereb.