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To Reignite Its Light, Las Vegas Needs To Diversify

<p>Rodrigo Gonsalez walks along the Las Vegas Strip as he finishes up a night of impersonating Elvis. Gonsalez, a welder by trade, turned to street performing in the absence of construction jobs in the city. </p>
Julie Jacobson

Rodrigo Gonsalez walks along the Las Vegas Strip as he finishes up a night of impersonating Elvis. Gonsalez, a welder by trade, turned to street performing in the absence of construction jobs in the city.

Las Vegas' unemployment rate is down, but it's still over 13 percent. Not too long ago, it was around 15 percent.

The city of lights is also home to the country's highest foreclosure rate.

But before Las Vegas epitomized the housing bust, it was the epitome of the housing boom. And that was all tied to the city's legendary gaming industry.


"People were building housing for other people building housing. We were building it for the hotel workers," says Rob Lang, who runs the Intermountain West - Brookings Institution at the University of Nevada, Las Vegas.

Now those jobs — building houses — are gone.

"That's the biggest share of unemployment," Lang tells NPR's Robert Siegel. "It's 100,000 displaced workers in that industry across the state, the majority being in Las Vegas. And in gaming, by contrast, you know we bottomed in '09. There are 16,000 jobs added. And, of course, the gaming operations outside of Las Vegas — in China, in Singapore — are booming, and that wealth is accruing to the management of those firms."

So, the real hurt is in construction. Even so, there are silver linings to that cloud. You can see them in every cul-de-sac.

Affordable Housing


If you happen to be looking for a second home — or like Richard Smith, of Altus, Okla., you're about to retire and move — then real estate agents like Terri Monroe, in suburban Henderson, Nev., have no shortage of houses to show you.

Monroe shows off a 2,100-square-foot house with a modern kitchen and huge garage for $219,000.

"In 2005, it would have sold for $450,000 to $500,000," Monroe says. The house lost more than half of its value.

Monroe says the real estate market is looking up, slightly. But no one expects homebuilding to return to what it was: 12 percent of the state's economy, the second-biggest local industry.

Vegas Needs More Than Gaming

Of course, there's no question about what's No. 1: gaming.

And if people elsewhere praise the job-creating powers of small business, in Las Vegas, big business, big hotel owners, historically drive the economy.

Carolyn Goodman, the mayor of Las Vegas, cites a common rule of thumb — the ratio of population growth to increases in the number of hotel rooms is 6 to 1.

People up in the Silicon Valley need to be coming down here because the weather is perfect — it's the ease of everything here.

If you look at the imaginative high-rise hotels in Las Vegas — mock-ups of Venice, Paris, New York City, Luxor, Camelot — and keep that 6-to-1 ratio in mind, you can feel how Las Vegas became, as it used to be, the fastest-growing city in America.

These days, the hotels are full, thanks to low room rates, but it's widely, if anecdotally, observed that the tourists are spending less than they used to.

When tourism fell off in the recession, work on a planned new hotel-casino, the Fontainebleau, stopped. Then the Sahara — a mainstay of the Strip since 1952 — closed its doors last year. It had employed 1,050 people. And with over 1,700 rooms, apply Goodman's 6-to-1 ratio, and you can see that the Sahara's end was very bad news.

That raises the question: Shouldn't the metropolitan area of 2 million start diversifying its economy? Goodman says, yes.

"We definitely want to attract the businesses into the state in the different industries," she says. "[Information technology] is incredibly important and programming and people up in the Silicon Valley need to be coming down here because the weather is perfect — it's the ease of everything here."

Signs Of Economic Hope

The city of Las Vegas is home to just under 600,000 of the area's residents, but it has managed to keep alive a kind of local public works program, flying in the teeth of the downturn.

A symphony hall, the Smith Center, is going to open next year — that's something this showbiz capital never had. And its construction has provided more than 3,000 skilled jobs.

There's also going to be a new city hall — the old one, where Goodman's husband, former mayor Oscar, held office for 12 years — is going to become headquarters for online retailer, which is planning to employ 1,000 people there. Zappos moved from San Francisco to suburban Henderson a few years ago. And now it's moving downtown.

Zach Ware of Zappos met Siegel at an offbeat, cafe-cum-art gallery and lending library called The Beat, where there's a collection of vinyl albums that the customers can play on an old-fashioned turntable.

Ware says Zappos' anti-hierarchical, informal ways fit well with Las Vegas.

And, he said, there's a real advantage for a business that runs 24-7 to be in a city that never sleeps.

"That's what's so nice about Las Vegas," he says. "We see it as this really vibrant, rich community that also happens to have this 24-hour infrastructure. Not only because of the Strip directly, and the tourists that are there, but because of the people that work there. They work three full shifts and they need to eat at 4 o'clock in the morning. Not because they've been out all night but because they're getting up or finishing work."

Rob Lang says the Las Vegas area has some other natural opportunities to diversify. For one thing, he says, because so many people in the area still have lives in Southern California or elsewhere, they tend to do some things back home like seeing a doctor or going to the hospital. In the rush to build so many casinos, so fast, the region didn't grow normally.

"We only have about 60 to 65 percent of the predicted medicine we should have," he says. "Backfilling medicine would add 10,000 to 20,000 jobs in that sector alone. So there [are] prospects of diversifying the economy by just right-sizing the rest of the economy to what would be predicted for 2 million residents."

And there are some big Internet businesses nearby, including much of what we call the cloud — as in cloud computing.

Lights Will Shine

But there's a problem for Las Vegas as it looks ahead. For decades, it was the city where a high school education and a will to work could get you a good job — making beds, serving drinks, parking cars — a job with union benefits. You could buy a home and a piece of the American dream.

It wasn't about education. More sophisticated businesses will need a better-educated workforce. They will also need the amenities to attract professionals, amenities like very good schools that the area is lacking. But Lang is hopeful about the long term.

"We're advantaged by having relatively low-cost housing, relatively low-cost industrial space," Lang says. "This has happened before. Go check in with the cities that were left for dead at the end of the [savings and loan] crisis. They were Dallas, Phoenix, Denver. 'Shut out the lights,' they said."

In Las Vegas, where there's a museum devoted to neon signs, people figure the lights will shine for some time.

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