Only 1 job sector is outpacing inflation in Clark County. It’s not hospitality

Only one job sector’s real wage in Clark County has kept up with the rate of inflation since the end of the pandemic, leading to the region’s growing affordability gap, according to a UNLV economist.

And it’s not the hospitality sector, which drives the region’s economy.

“Looking at it by industry, only those working in information technology in Clark County have seen their wage growth constantly outpace inflation through the end of 2024,” said Andrew Woods, director for the Center for Business and Economic Research at UNLV.

Approximately 19,900 people work in information technology in Clark County, he said.

In comparison, about 303,800 people work in the leisure and hospitality sector in Southern Nevada, according to the Nevada Department of Employment, Training and Rehabilitation.

Woods said the uncertainty over real wage growth is the main dataset that showcases Las Vegas’ growing unaffordability.

Real wages, which is earnings after being adjusted for inflation, on average, in the U.S., have outpaced inflation since May 2023, however in Clark County that number has been ” less consistent, with steady real wage growth only beginning in 2024 as price pressures really started to ease due to the higher for longer interest rates.”

Wage growth (the increase in average wages and salaries) in Clark County has been in the positive since the first quarter of 2024, however it was largely down during 2023. Woods said this the number to pay attention to, if wage growth is keeping pace with the cost of living.

“The way I think about it is two sides of a coin or a balance sheet, so we’re talking about cost but we’re also talking about affordability,” he said. “But I think what is also important for this conversation is that on the other side of that is are wages growing and are they outpacing a particular rate of inflation,” he said.

The Las Vegas Valley’s economy has been sluggish this year, as a drop in tourism has bit into the region’s profits and job market. Major casinos on and off the Strip have responded with price reductions and deals to try and lure back tourists however it remains unclear if and when the hospitality sector will recover from its slump.

The Federal Reserve recently cut interest rates again, part of a series of cuts that started in 2022 and Woods said this is the key driver of the overall economy as the government’s push to stem out of control inflation that started during the pandemic is still their top priority.

Las Vegas should look to health care if it wants to diversify and expand its economy as the sector is growing quite rapidly in the valley, Woods said.

“Where we forecast job growth is in health care, warehousing, real estate, professional and business services,” he said, along with an all other jobs that don’t fit into a specific category. “Food and accommodation is still expected to be one of the largest contributors to total job growth through 2031 with 10,310 jobs, but health care is forecasted to add 10,630 jobs.”

The real estate side of the coin

Home prices in the Las Vegas Valley have essentially doubled since the start of the pandemic, according to Redfin, and there has been little price relief since then due to a number of factors including a slowdown in homebuilding, a lack of land to develop and elevated mortgage rates. Active listings rose in the valley 20.7 percent in September month over month, the second largest increase out of any metro region in the country and home prices are essentially flat from last year.

Redfin’s chief economist Daryl Fairweather said the overall U.S. housing market is still paying for the economic damage caused by the pandemic and the subsequent massive spike in inflation as Las Vegas was certainly not immune to this.

“During the pandemic, prices went up quite a bit across the country and in Las Vegas, and then in 2023, mortgage rates started to go up by the fastest amount we’ve ever seen on record,” she said. “They went from 3 percent for a 30-year fixed-rate to close to 7 percent and that really made affordability much worse. So homebuyers are having a really hard time affording homes, nationally and in Las Vegas and that has caused a lot of buyers to look at the rental market instead.”

The U.S. housing market along with Las Vegas is still “locked,” said Fairweather because a lot of homeowners and homebuyers were able to access low rates during the pandemic.

According to Freddie Mac, 30-year fixed-rate mortgages dipped below 3 percent for a brief moment in the fall of 2020 and have been above 6 percent since 2022.

Fairweather said this has been the driving force for the overall housing market for some time now.

“Prices haven’t come down because sellers they still have these great mortgage rates they got during the pandemic and they’re not willing to give those up unless its for a justifiably high price, so prices remain high, sales remain low and affordability remains low and the market is kind of stuck still.”

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.