July 6, 2015 - 5:50 am
CARSON CITY — On paper and with high-profile projects rising from the Nevada desert, the state’s economic recovery is in full swing. The jobless rate is down and companies are moving to the region, all good news for a state hit hard by the Great Recession.
But a new analysis being released today shows many communities in the Silver State are still struggling and have a long way to go in the cycle of economic rebirth.
Economic Innovation Group, a Washington bipartisan policy group, found that 33 percent of Nevada’s population lives in economically distressed communities, the highest percentage in the nation.
Georgia, South Carolina and Mississippi followed, each with 25 percent of their populations living in economically distressed communities. At the other end of the spectrum were states like Wyoming, North Dakota, Vermont, Iowa and Idaho, with distressed populations of 1 percent or less.
The index is based on a number of factors, including education levels; housing vacancy and unemployment rates; poverty levels; median income ratios; percent change in employment; and percent change in establishments in ZIP codes across the country. They were largely based on Census data from 2013 and five-year Census Bureau surveys on communities and business patterns.
“When you factor all those, you get a much different picture for Las Vegas and Nevada … so much so that Nevada ranks most distressed in the country,” said EIG co-founder and Executive Director Steve Glickman, a former White House senior economic adviser under President Barack Obama.
EIG’s mission, according to its website, is “to catalyze broad-based economic growth by leveraging the power of entrepreneurs and investors through innovative public policy.”
Although Nevada gives tax breaks to lure companies that meet criteria to the state, Glickman said that alone is not enough to jump-start new business growth.
“The reality is that no individual incentive will be enough anywhere,” he said. “It has to come from a hybrid of private investment, state action, as well as some kind of federal policy changes.”
HARD HIT FOR NEVADA
Though Nevada’s economy has made gains in the past few years, the index shows just how devastating the recession was for the state and Las Vegas in particular, said John Lettieri, co-founder and EIG senior policy director.
“What’s happening today may look a little bit better but it’s not too far off,” Lettieri said of the data.
Of major metropolitan areas around the country, the EIG analysis ranked Las Vegas as having the fourth highest percentage of population in economic distress at 45 percent. It trails only Detroit, 94 percent; Memphis, Tenn., 50 percent; and Fresno, Calif., 49 percent.
Lettieri said there is a correlation between communities in economic distress and the depth of the housing crisis that saw home prices plummet, leaving many homeowners upside down on their mortgage.
That negative equity also diminished private investment capital, a revenue source often tapped by people seeking to start their own business.
Of the top 25 most distressed ZIP codes in Nevada, 13 are in Las Vegas or North Las Vegas.
Glickman and Lettieri point to the Downtown Project in Las Vegas, a $350 million urban renewal endeavor backed by Zappos CEO Tony Hsieh, as the kind of development that is possible with enough financial backing.
“We think it’s the right type of experiment to be rooting for,” Lettieri said.
While the EIG report card puts Nevada’s economy as distressed, another analysis suggests a tool for improvement is being forged.
A recent index on entrepreneurship from the Kauffman Foundation said Nevada jumped 11 spots from 2014 to 2015 to 10th in the nation for startup activity. Las Vegas ranked 11th in metropolitan areas, up from 14th.
“The focus on startups is really great. And really important,” Lettieri said. “New businesses are the engine for new jobs. “
Many will fail. “That’s the nature of startups,” he said.
But even failed startups generate buzz that feeds a startup ecosystem, he said.
“For the long term, that is going to be the pathway out of recession.”
Assemblywoman Dina Neal, D-North Las Vegas, knows obstacles and challenges are great in trying to spur economic growth in the city’s poorest communities.
“It was no surprise to me,” she said of the EIG index. “But I was happy to see it and I was happy to see it only because I felt like someone wants to have this conversation. And that’s always good because it starts with dialogue.
”It starts with putting it out on the forefront,” she said.
Neal pointed to other sobering statistics that underscore EIG’s findings.
She noted a report by Three Square, a nonprofit food bank serving a four-county region in Southern Nevada. Two ZIP codes referenced by the EIG report as being economically distressed — 89030 and 89115 — also have high populations considered “food insecure.”
In 2013, nearly a quarter of those residents were considered “food insecure,” defined as lacking access at times to enough food for an active, healthy life.
“When you look at … how many pounds they delivered, it was over 500,000 pounds of food that they delivered to 89115 and for 89030 it was over 1 million pounds,” Neal said.
She also pointed to a 2011 community profile from the city of North Las Vegas that broke down demographics by ZIP codes within the city. For 89030, 26 percent of residents graduated from high school or obtained a GED certificate; 32 percent had less than a ninth-grade education, and 25 percent attending some high school but didn’t graduate. Only 2 percent had an associate or bachelor’s degree. The population as a whole was mostly minorities, with 74 percent Hispanic and 14 percent African-American.
Neal said the per capita annual income for the area is $11,746.
All those factors, she said, need to be considered when talking about economic development and job growth for different areas in the state.
In the just ended legislative session, she successfully pushed a measure, Assembly Bill 399, an economic “gardening” bill that sets up a two-year pilot program focused on growing existing businesses through use of information and technology.
“My bill is about education, helping businesses understand the use of data so you can build the appropriate model for those communities you would like to serve,” Neal said.
Neal and EIG agreed that lifting up distressed areas will require a push to bring opportunity directly to residents in the community, whether it be job training or new businesses.
“We have to go to these places and actually meet them where they are,” Glickman said. “These people are not leaving these areas.”
Neal said that makes it important to cluster services, whether it be adult education programs or job-training workforce development programs.
“It’s been a slow rise,” Neal said. “But I think that with economic gardening, with the current data and us being aware and using it successfully, I think we can really change the dynamic.”
Contact Sandra Chereb at email@example.com or 775-687-3901. Follow @SandraChereb on Twitter.