Nevada’s unemployment rate could be pushed above 30%, doubling 2007-09 recession

Nevada could have the largest number of unemployed workers in the US due to the coronavirus pandemic. In a state where an estimated one in three workers is employed by the leisure and hospitality industry, 320,000 Nevada workers are at risk, twice the number in the late 2000s, which could push Nevada’s unemployment rate above 30 percent, according to a recent report by Las Vegas-based economic research firm Applied Analysis, reported by The Wall Street Journal.

There are 441 casinos in the state of Nevada, including gambling spots Las Vegas, Reno, Lake Tahoe and Laughlin who had more than $12 billion dollars in gambling revenues last year, according to the Nevada Gaming Control Board.

Las Vegas’s economic downturn during the recession of 2007 to 2009 was deeper and longer than in many other U.S. metro areas, said economist Stephen Miller at University of Nevada, Las Vegas (UNLV). “It looks like that will be the same case this time around,” he told WSJ.

Casino companies are projected to lose $39 billion in the next 12 to 18 months, which is how long it will take for the industry to recover if casinos stay closed for 30 to 90 days, according to the Applied Analysis report, which was commissioned by the Nevada Resort Association, a casino-industry trade group.

Nevada’s economy is among the least diversified in the U.S., with 50% of the state’s output attributed to tourism, said Jeremy Aguero, a principal analyst with the firm. Tourism is likely to take longer to recover than some other industries as consumers may resist flying and being in crowded spaces, according to analysts. Las Vegas is likely to see a staggered reopening of casinos based on demand. The city attracted more than 42 million visitors last year, and tens of thousands of people worked serving them—in huge convention spaces, restaurants and bars, shows, concerts and at poker tables and slot machines.

Local casino operators in recent years have increasingly focused on revenue that isn’t derived from gambling, in response to changing consumer demand. A sports industry has blossomed, starting with the arrival of the Vegas Golden Knights hockey team in 2017. The NFL’s Las Vegas Raiders are set to begin their first season this year (after relocating from Oakland, California) in the $1.9 billion Allegiant Stadium, still under construction. In February, the overall number of visitors to Las Vegas was up 4.5% compared with last year.

But as the reality of coronavirus settled in, casino operators including Wynn Resorts Ltd. and MGM Resorts International began shutting down temporarily, followed by a state order that every casino close its doors. The governor’s office has warned that the lost tax revenue will necessitate up to $689 million in cuts from Nevada’s $8.9 billion two-year budget.

Nevada lost 170,000 jobs between 2007 and 2011 and was a hotbed in the foreclosure crisis. Four out of five jobs lost were in real estate, tourism and retail, according to a state report.

After the recession of the last decade, Nevada leaders put together a plan to diversify the state’s economy away from consumption-focused industries. In the Reno area—the state’s other casino hub—a Tesla Inc. battery facility, a Switch Inc. data center and other manufacturing and technology companies have opened in recent years. These companies are still operating, or will more easily reopen after the health crisis, said Mike Kazmierski, chief executive of the Economic Development Authority of Western Nevada.

More than 164,000 people in Nevada filed first-time unemployment claims in the last two weeks of March, a record number that has overwhelmed the state system. In Las Vegas, more than 40 emergency food-distribution sites have been established.