Nevada’s jobless rate goes down along with state’s work force

Nevada’s unemployment rate fell for the first time in four years in October.

So why aren’t economists and business observers smiling? Because the rosier statistics came from labor-force shrinkage rather than economic growth.

Nevada’s work force shrunk by 21,000 from September to October, and that 1.5 percent drop in the state’s labor base is why the jobless rate fell from 13.3 percent to 13 percent, according to the state Department of Employment, Training and Rehabilitation.

In Las Vegas, joblessness dropped from 13.9 percent to 13 percent, as 16,600 residents, or 1.6 percent of the labor pool, abandoned the work force.

The labor force contracted for two reasons: Discouraged workers have quit seeking jobs, so they no longer factor into the labor pool, and others who couldn’t find positions in Nevada have left for better prospects in other states.

The free-fall in the state’s jobs base did seem to take a break from September to October, hinting at potential stabilization in the labor markets, said Bill Anderson, chief economist for the employment department.

The number of jobs in Nevada stayed at roughly 1.18 million from September to October. But even stable unemployment will mean sustained “severe hardship” for many Nevadans, because the state’s economy is evening out with 75,100 fewer jobs than it had a year ago, Anderson said.

Nevada’s jobs base has returned to October 2004 levels, so the recession essentially wiped out five years of economic growth. Staying at that level for an extended period could mean long-term unemployment for thousands.

Plus, unemployment statewide is still nearly double the 7.7 percent it was at in October 2008. It’s also well above the national average of 10.2 percent. If you add discouraged workers who have stopped looking for jobs and part-timers who want full-time work, joblessness is closer to 20 percent.

You can find encouraging data “if you look hard,” said Jeremy Aguero, a principal in research firm Applied Analysis.

Hospitality declines weren’t as steep as expected, and the health-and-education category added jobs year over year.

But 8 percent of Nevada’s work force is in construction, and nearly 50 percent of that industry is out of work. Also, Aguero sees no consistent month-over-month gains in hours worked, wages earned or jobs formed.

Most ominous, a shrinking work force points to out-migration, a worst-case scenario for a state economy geared toward growth, Aguero said. “Testing the bottom is a first step in recovery, but it’s much too early to make the call that that’s actually what’s going on.”

Construction and hospitality continue to post the biggest job declines. The state’s construction sector peaked at 150,000 jobs in mid-2006, but dwindled to 83,700 in October. From September to October, the state’s hospitality sector cut 2,000 positions, for a jobs base of 307,700. That’s down 20,000 positions from 2008.

Other employment categories cutting positions year-over-year in October include information technology (down 5.4 percent), finance (down 3.3 percent), professional and business services (off 5.4 percent) and local governments (down 5.7 percent).

Education and health services fared well, adding 3,300 positions year-over-year in October for a total of 99,500 jobs.

State and federal governments also created jobs in Nevada, as did transportation and warehouse operations and metal-ore mines.

Unemployment trends will be uneven in coming months, with some relatively strong periods interspersed with a contracting jobs base, Anderson said. Over time, though, unemployment is likely to tick upward. The employment department continues to project an average unemployment rate of 14.8 percent in 2010, with peak joblessness hitting in the first half of 2010.

Bill Lerner, with consulting firm Union Gaming Group, noted that CityCenter, Cosmopolitan and the Hard Rock expansion will result in 25,000 new direct and indirect jobs in coming months. But Lerner noted that construction jobs lost upon project completions will erase some of those hospitality-sector gains.

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

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